Don't Fight The Fed
Moral Hazard On Full Display In Europe
Meanwhile, the ultimate example of moral hazard is playing out even as I write. Back in mid-summer the headlines were dominated by the Spanish debt crisis as yields on Spanish debt breached the critical 7% level. Mariano Rajoy, Spain's PM was running around like Manuel asking everyone in Europe to help his country. Finally Mario Draghi stepped up and made the statement that the ECB will do whatever it takes to save the Euro. That one public message intended for the markets, kicked off the mother of all short covering rallies in the Euro which is only now starting to reverse. And of course, Spanish bonds rallied as well since they instantly became Wall Street's new "no brainer" trade of the year given that the ECB was going to print money to buy Spain's bonds. Fast forward to today and Spanish yields are out of the red zone, so now Rajoy is claiming that Spain no longer needs ECB assistance (which would require a bailout with attendant stipulations). As always, you can't make this garbage up. Full Retard on every level. As ZeroHedge states in the linked article, now the markets need to take back all of those gains, just to teach Manuel a big fucking lesson as to how the real world works.
As I have said many times throughout this shit show, what we are ALREADY witnessing in real time is a lurching, slow motion clusterfuck that gives the illusion of stability even as it slowly becomes unglued. When we hit the acceleration phase, the time to prepare will be long over and unlike 2008 will take the vast majority by surprise.