Posted by Karl Denninger
Don’t believe the carnival barkers.
This morning we were treated to a nice rocket shot at about 4:00 (Central) in the Euro – an extraordinarily violent move that initiated when it was rumored that Greece had secured the terms of their “bailout.”
But then the TV cameras rolled, and there was no actual firm announcement.
Remember folks, this is the same procedure that everyone tried to run on you two years ago – first with “Subprime is contained”, then after Bear Stearns when “we have stabilized the situation”, then with Paulson’s “Bazooka” for Fannie and Freddie, and finally with the incessant, daily catcalls from Gasparino on the monoline insurers being bailed out, rescued, and being “well-capitalized.”
All these pronouncements did was pump the market higher than it should have been at the time and make the damage worse when recognition of mass insolvencies was forced to the forefront.
The insolvency itself happened long before, but by allowing people to lie investors were severely damaged instead of being properly concerned and acting to protect themselves.
So it is occurring again, this time in the sovereign debt realm. Greece is not a €30 billion problem it is more like €200 billion.
Worse is the fact that if Greece is bailed out with some sort of rescue package of new loans they will have simply made the situation worse by loading up more debt on an overlevered nation.
And finally, Greece is just the first of many – Spain, Portugal, Italy and even Great Britain anyone?
How’s that all going to work out?
Here’s the truth – it’s not.
Extreme caution is mandatory here folks. You’re not going to be told the truth – not by our government or anyone else’s. If a dislocation and “disorderly” bond market collapse gets going you will not be told in advance, but large players will be, and be position to profit significantly – at your expense.
There are no promises here, other than one absolute – you will be lied to by the governments of the world.
Trade and invest accordingly.