Euro on ‘Death Watch’ After Investors Spurn German Bonds Investors began to fear the worst for the euro after unusually weak demand at an auction for bonds from Germany, the region’s largest economy. One analyst went so far as to put the currency on a “death watch.” Euro bills AP Germany sold just 60 percent of the 6 billion euros in 10-year bunds it brought to auction, about the weakest demand seen for the country’s debt in the currency’s 16-year history, economists said. The rejection of debt from Europe’s safe harbor marks a new stage for the crisis. “No bunds wanted equals no Euros wanted equals the Euro death watch,” wrote Mark Steele, an analyst with BMO Capital Markets. “We have seen many poor German auctions. This is not the issue. The issue is how badly the euro is doing after the weak auction.” The euro [EUR=X 1.3354 0.0011 (+0.08%) ] fell more than 1 percent against the dollar to a 7-week low against the Greenback. The currency threatened to break through the October lows that came amid the height of turmoil in Italy and Greece. Both countries would go on to install new Technocrat leaders, lifting confidence in the currency briefly. Euro / US Dollar FX... (EUR=X) 1.3354 0.0011 (+0.08%%) Exchange The European Financial Stability Facility does not give the European Central Bank the same firepower or freedom of the Federal Reserve, which it utilized in the aftermath of the U.S. credit crisis with two rounds of massive purchases of Treasurys (QE) [cnbc explains] . Germany has been reluctant to follow the Fed’s lead and buy up other countries bad debt because of fear over inflation. German Chancellor “Merkel has been opposed to using the ECB as a monetizer of debt,” said Dennis Gartman of The Gartman Letter. “Germany doesn’t even like to think in these terms, but they may not have a choice.” RELATED LINKS Now Germany Is Having Trouble Has Bank Run Begun in Europe? Weak German Bund Auction Highlights Euro Fears Europe Crisis: Bond Market Closing to Sovereign Countries Wealth In Asia 2011 - Special Report Recent reports have hinted at different workarounds of the euro treaty being discussed to effectively replicate quantitative easing in Europe. One option discussed was for the ECB to lend money to the IMF, which in turn would buy the toxic debt before it could spread to yet another country. “It’s too late for a bazooka,” said Mitchell Goldberg, president of ClientFirst Strategy. “Now we need inter-continental ballistic missiles. This is getting worse very quickly.” Beyond the money Investors had kept buying German bonds as they fled crisis after crisis in the region: first in Ireland, then in Greece and Italy, and now in Spain and Belgium. But Wednesday, 10-year bunds dropped significantly after the failed auction, pushing the yields above 2.05 percent, but perhaps more importantly above the U.S. treasury with the same maturity for the first time since early October. “We are seeing the end of the euro currency as we know it,” said Brian Stutland of Stutland Volatility Group. “I don't see a single thing that causes the euro to rally other than the Fed announcing a ‘QE3’ in which they buy euro foreign debt.” http://www.cnbc.com/id/45418399 This does not bode well for the EU. So, investors will flock to the dollar and shun the junk euro. _
November 23, 2011, 1:56 PM ET Bond Vigilantes Make Their Votes Known in Europe They may have retired in the U.S., but the bond vigilantes are alive and well in Europe. The stunning lack of interest in Wednesdays sale of 10-year German bonds shows the so-called fire walls incessantly talked about to contain the euro-zone sovereign debt crisis are nowhere to be found. Instead, the fire blazes out of control. As reported, Germany was only able to sell 3.6 billion euros of a planned 6 billion euros in 10-year bunds, among the safest debt on the planet. Yields had been declining in Germany as institutional investors already are ditching the IOUs of just about every other European country. Wednesday, German yields rose. If Germany, the strongest and safest European country, now has to struggle to finance itself, the two-year-old European sovereign debt crisis has reached a new and even more dangerous phase. Fast and significant action is needed, though the democratic systems in place in each of the affected European countries and in the still partial connection between those countries make swift and strong action extraordinarily unlikely. Bond investors dont care about the difficult and time-consuming struggles of representative democracies to coalesce around needed change. Thus the brilliant phrase, bond vigilantes, coined by U.S. Democratic adviser James Carville back in the 1990s to describe the push for U.S. budget-deficit cutting provided by bond types back then. Probably the only reason those vigilantes arent also back in action in the U.S., given this democracys parallel inability to lay out a credible long-term deficit reduction plan, is that Europe is worse off and the money has to sit somewhere. Markets, it has been famously said, swing between greed and fear. Fear is the stronger emotion. And while it might be prudent for each institutional investor to sell Europe now and ask questions later, just to be safe without true regard for the facts in each nation, the collective result of all those individual prudent decisions is a staggering negative. Remember the autumn of 2008. Just as then, the collective actions of the sell Europe crowd threaten the day-to-day foundation of markets. That foundation, including the ability to roll over debt at reasonable prices, allows companies and nations to live and breathe. There is a significant disconnect between the every person has a vote doctrine of representative government and the blunt collective power of money and markets. Most of the time this disconnect is hidden and doesnt really matter. In times of crisis, as we have seen in Europe, it can become the only thing that matters, overshadowing coalition governments, parliamentary squabbles, constitutional prohibitions and all the rest. The voters live here, the money doesnt. The money can vote with its feet and the money is doing so. http://blogs.wsj.com/economics/2011/11/23/bond-vigilantes-make-their-votes-known-in-europe/
i see gold bullion dumping http://www.reuters.com/article/2011/11/23/us-markets-precious-idUSTRE7AK1M520111123 but the rare older gold coins keep chugging upward..the idiots are pouring there euros into us dollar bills. dont they know were broke to?
