In National Lampoon’s “Vacation”, Chevy Chase is about to go skinny dipping with a dazzling Christie Brinkley in the middle of night at a hotel pool while his wife and kids are sleeping nearby. He’s amazed that he’s even in this position. The chance to skinny-dip with a beautiful model.
As he’s freezing on the edge of the pool trying to psyche himself up for whatever may be about to happen and to somehow summon the courage to follow through with his (and many other men’s) fantasies…he says to nobody in particular “This is crazy, this is crazy…”
I can only imagine the leaders of the EFSF (European Financial Stability Fund) must be going through something very similar as they offered bonds to prop up the Euro, hoping in vain that someone would buy them.
In an effort to create the illusion of stability in the Eurozone, they offered hundreds of millions in bonds designed to create a safety net for european banks and sovereign debt.
Just one problem with that plan, though. NOBODY BOUGHT THE BONDS. The EFSF had had to resort to buying much of its own fund offering…so essentially, they are the rescuers, and all the pressure’s on them – the entire organization was created specifically for this purpose, TO RESCUE THE EUROZONE…they’re supposed to swoop in, deploy a safety net and, ready, and set and…uh…Not. So. Much.
Nobody wants those dog bonds.
So the EFSF bought back their own bonds. The funders are funding themselves?
You can just imagine the EFSF in their boxers at the edge of the pool, psyching themselves up for the re-purchase of the bonds they just offered 48 hours before in an effort to create the impression that the implosion that appears to be coming isn’t actually coming.
“This is crazy, this is crazy…”
Issuing bonds and then buying them back is the personal equivalent of taking a loan to cover the cost of a loan and then convincing yourself that you’re making progress because you paid off a loan.
Meanwhile, gold prices continue to hold steady in the face of a strengthening dollar. Which means that while gold’s nominal value seems flat, its value as compared to a host of other currencies is continuing to increase. Gold buyers are smart to invest now, though much of the increases are disguised by the strong dollar, investors will soon be rewarded.