Monday, March 7, 2011

More Info on Geithner's Odd Trip to Germany

The Treasury is filling in more details about Treasury Secretary Geithner's trip to Germany.

According to the Treasury,  Secretary  Geithner will visit Frankfurt and Berlin, Germany on Tuesday

In the morning, Secretary Geithner will arrive in Frankfurt for meetings with President of the European Central Bank (ECB) Jean-Claude Trichet and President of the German Bundesbank Axel Weber. Following that, Secretary Geithner will depart Frankfurt for Berlin.

In the afternoon, Secretary Geithner will meet with German Finance Minister Wolfgang Schäuble. Following the meeting, Secretary Geithner and Minister Schäuble will conduct a joint press availability at the Ministry of Finance in Berlin.

Later, Secretary Geithner will hold a bilateral meeting with German Federal Minister for Economics and Technology Rainer Brüderle.

In the evening, Secretary Geithner will depart Berlin for Washington, D.C.
This trip continues to look very odd to me. A one day trip to Germany to meet with everyone involved in German finance and economics.  Geithner has to be laying down the law about something.


  1. My guess is it's either about the ECB raising interest rates or the German vote on the scope of the new Euro bailout fund this Friday. We can't have higher interest rates and/or bondholders taking haircuts, can we?

    European Central Bank Wants to Unload PIIGS Bond
    March 4, 2011,1518,749140,00.html

    "Movement on the front could now come from a less obvious corner -- that of German Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble. Merkel's conservative Christian Democratic Union (CDU) party's group in parliament is strictly opposed to the purchase of state bonds through the EFSF, but SPIEGEL has learned from sources that neither Merkel nor Schäuble feels bound in their vote in Brussels to the parliamentary group's position.

    The chancellor and finance minister are opposed to the direct purchase of bonds by the EFSF, but they are not opposed to troubled countries taking loans from the rescue fund in order to buy back their own bonds from the market. Because the bonds would be bought back at a discount rate, the private sector would also be held indirectly liable for the losses, fulfilling a key demand that Merkel has been pushing for."

    German Groups Urge Hard Rules for Euro Zone
    March 6, 2011

    "BERLIN (Reuters) — Germany’s main business lobbies on Sunday called on countries sharing the euro currency to adopt tough rules on fiscal discipline at a summit meeting on Friday aimed at sorting out Europe’s debt crisis.

    In an open letter to euro zone leaders, the chiefs of four industry associations urged countries to adopt the German proposals.

    “We thus support the government’s proposals for solid budgets and competitive European economies,” they wrote. “Collectivizing debt — as is being debated — would on the contrary overburden strong states and weaken Europe.”

    Germany, with the backing of France, wants euro zone countries to make a competitiveness pact at the meeting in Brussels in exchange for increasing the scope and capacity of an emergency bailout fund.

    Financial markets are monitoring the situation, particularly because Germany is reluctant to pour more money into the fund. The surprise announcement last week that the European Central Bank may raise interest rates this spring heightened anxiety about Europe’s ability to contribute to the global recovery."

  2. It is unlikely Turbo Tax Timmah can teach the fiscally conservative and responsible Germans anything about economics. They have forgotten more about economics than Timmah will ever learn.

  3. The trip is of the upmost importance as he has gone to communicate the important truth as I relate in my article Dollar Rally Commences As The Seigniorage Of Quantitative Easing Fails ... I write the US Dollar started to rally as stocks surged in advance of a major sell off. A global stock, bond and currency rout is underway, which will result in a a global sovereign debt crisis, as well as a dollar liquidity crisis, ending in Götterdämmerung, that is an investment flameout.

    Seigniorage, that is moneyness, failed on February 22, 2011 as the value of distressed securities, like those held in Fidelity Mutual Fund FAGIX turned lower in value. It was at this time that quantitative easing failed and inflation destruction commenced turning world stocks, ACWI , lower.

    Urban Dictionary defines inflation destruction as the fall in investment value that accompanies derisking and deleveraging out of investments that were formerly inflated by money flows to, and carry trade investing in, high interest paying financial institutions, profitable natural resource companies, and high growth companies.

    A dollar liquidity crisis is coming from the exhaustion of quantitative easing.

    Stocks, bonds, and commodities are all going to be falling lower as the monies that the US Federal Reserve are now pumping into the global economic system fail to stimulate and actually turn toxic.

    Bonds, BND, have entered an Elliott Wave 3 Decline.

    World Government bonds, BWX, and International Corporate Bonds, PICB, have entered an Elliott Wave 3 Decline as well. Today’s fall lower in world government bonds suggests that a sovereign debt crisis has commenced.

    Commodities, DJP and US Commodities, USCI, turned lower as seigniorage, that is the value of the distressed securities at the Fed, approximated in value by the mutual fund FAGIX, together with the 30 Year US Government Bonds, EDV, adn the 10 Year US Government Notes, TLT.

    The US Dollar rose today as dollar ill-liquidity and demand for dollars commenced.
    Bloomberg reports: “The US dollar, $USD, (traded by the 200% ETF, UUP), may reverse declines that have seen the currency drop 3.5% this year after bets on its depreciation against its major counterparts climbed to the most on record, according to UBS AG. Bets on the dollar weakening, so-called net shorts, surged in the week ended March 1 to the highest since the CFTC began publishing the data in 2003. “Investors should prepare for possible unwinding of these negative bets against the dollar, which are extreme at the moment.”

    The Russian Ruble, XRU, and the Swiss Franc, FXF, the Swedish Krona, FXS, and the Euro, FXE, were today’s loss leaders.

    The Euro, FXE, traded lower at 138.42 today having risen from 119 in June with the announcement of the EFSF Authority. Might the EFSF Monetary Authority Rally be over? I say so!