jeudi 6 octobre 2011

Y-a-t-il une limite dans le Casino ?

Voici un nouvel article de Peter Tchir qui est devenu un de mes analystes favoris.
C'est un spécialiste du crédit  qui est diffusé fréquemment sur Zero Hedge.
Son suivi des problèmes de dette souveraine est très pointu et très à jour (il publie très fréquemment).

Je souscris totalement à son point de vue. En résumé, plus on retarde l'échéance de la restructuration de la dette et du défaut de paiement et plus les risques augmentent.

La stratégie de cordon sanitaire des gouvernants européens revient à augmenter la mise à chaque nouvelle manche, avec une augmentation croissante des risques systémiques.

Voici le texte original en anglais (j'ai essayé d'inclure la traduction Google pour les non anglophones, mais c'était trop inintelligible, et j'essaie de garder un certain niveau de français correct dans ce blog. Désolé mais dans ce cas je préfère fournir la version originale.).

Via Peter Tchir of TF Market Advisors

Europe is in the midst of doubling down again. In May 2010, Europe was going to save Greece to prevent the "problems" from spreading into Ireland and Portugal. In August 2010, Europe decided to save Ireland, Portugal, and provide more to Greece to stop the problem from spreading. In early 2011, Europe starting buying Italian and Spanish bonds in addition to Portuguese, Irish, and Greek bonds to stop the spread of the "problem" into Italy and Spain. In July, they increased the effort to save Italy, Spain, Portugal, Ireland, and Greece so the "problem" wouldn't spread to the banks. Now, in October, they are going to save Dexia and the banks and Italy, Spain, Ireland, and Greece, to save the world.

Europe has doubled down every chance they have had, and lost every time. The length of time before they are opening their wallet to put some more money on the table is decreasing. They are calling the pit boss over to see how much credit the casino will give them for their watch and car (they know they will win this time, so it's okay). They know their luck has to turn and this time they will win. Heck, they might even hit blackjack will everything on the line. Either that or they are at the table limit, they have run out of room to double down and are about to have to slink back to their room trying to figure out how to explain where their savings went and why they no longer have a watch and a car.

We are at that moment where the dealer is shuffling and we are waiting to see what hand Europe will be dealt. Maybe this time it will finally work. I doubt it, since the "problem" isn't dumb markets, it's an inability to pay back what is owed. No one is addressing the fact that too much debt has been incurred.

So let's assume for a minute that this latest strategy works. Europe spends some money and buys chunks of banks (I'm not sure why bank shares aren't acting as though they will be diluted, but c'est la vie). Let's assume EFSF gets fully funded, that it borrows some money to buy even more European debt and equity stakes and at same time ECB lends money to the bank based on any asset the bank wants to fund. Whew. Stocks are up and everything is "fixed". Frankly nothing is fixed, but Skilling will get some lawyers to sue the EU for copying his business practices.

But what happens if we get another round of weakness. It certainly seems plausible to me since the problems of ultimately paying back the debt haven't been solved. That next round of weakness, if we get it, will likely be caused by a global recession. Yes, at times it is easy to forget that allegedly the world economy is still growing right now. Europe seems to be going out of its way to create a black swan situation. If we get back into crisis mode, it will be because of weak economies (and there are signs even the mighty Germany is struggling) and this round of money shifting will make it even harder (or impossible) to bet one more time.

It is not too late for Europe to stop the madness. Let Greece default. Let Portugal and Ireland negotiate real haircuts on their debt. Let some weak banks (even large weak banks) fail. Then provide support. Support the best of the rest. Provide infusions. Create new institutions where necessary. Stocks will be lower, but a floor can be provided. Future growth potential can be created. By trying to avoid near term pain, they are ensuring that the next time, the market will be a lot lower before it bottoms and they will have fewer tools. Maybe the rating agencies will save Germany and France from themselves and downgrade them before they do irreparable damage to their own ability to borrow money.

Once again, I would be more excited about what Europe was trying to do if TARP had worked as well as people seem to say it did. Stocks did not bottom until long after after TARP was put in place. We also bottomed at a much lower level. Stocks were actually up a couple of days after Lehman defaulted. I often wonder how much of the bottoming process was just time and price and "fundamentals" rather than specific policies? I know that is contrary to everything our own Fed chairman believes, but I still believe that waiting until you see the white's of their eyes" makes policy far more effective and leaves a lot more ammunition in reserve.

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