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[jaidenjhsc714-blog]

The Banker Bailout Trend Has Hit Europe

"If you go into the woods with a weapon and meet an angry bear, and you make a great noise firing off your ammo but miss the bear, the sound only scaring it off for a while prior to it comes back at you again, and you keep shooting the gun and making an excellent sound but continue to miss, the bear catches on, and so do you. You realize you're almost out of rounds, that firing more will most likely be unproductive since you truly aren't a shooter and the rounds don't go where you aim them. However because simply making a sound had worked in at least scaring the bear away for a while, maybe you can conserve yourself by just waving the gun and making a great deal of sound. You understand it's an act of desperation not likely to prosper - however it might. So it's worth a try, and what else can you do anyway.

This week reserve banks and euro-zone authorities showed us that is the circumstance they're in.

In the U.S. the Federal Reserve, consistently threatened by a stumbling financial healing, has actually fired off rounds of quantitative alleviating each time, accompanied by significant hubbub. The result was restricted, the threat soon returning. And it's ended up being arguable whether shooting off the quantitative easing was itself helpful, or if the short-term reprieve each time was simply due to the hope raised by the accompanying rhetoric.

The threat of the economy slowing dramatically has actually returned again this summer, and this time the Fed seems just able to make a sound about having more ammunition it might employ, however not even ready to expose what it is, let alone fire it off at the issues.

In Europe, euro-zone officials have been firing off repeated rounds of ammo to no get for more than two years. Each time the financial obligation and banking crisis has actually soon come back at them a lot more aggressively, and they have waved additional weapons they might use and made a great deal of sound that periodically raised hope.

Several weeks ago they guaranteed a bazooka of a weapon, hatched out at an emergency situation top conference of the European Union, which was reported with a lot of sound. That boosted markets and terrified short-sellers away, but for only a really brief duration, up until it was realized it was a weapon developed by a divided committee and did not have a timing system and trigger.

When the crisis came back at them a number of weeks ago still more aggressively, with Greece and Spain both threatening to blow up the euro-zone, European Reserve bank President Draghi jumped in saying the ECB would lastly do as markets had been requiring and bring unmatched firepower into action, ""and think me it will suffice.""

It was enough noise to scare the bear away for numerous days, but fooled many times, it only moved into the bushes where it might see and see if the ECB really had such weapons and would have the ability to utilize them.

And it didn't.

Draghi was expected to reveal the supreme weapons on Thursday early morning. Expectations were for at least massive buying of the bonds of distressed Greece, Spain, and Italy, and much easier terms for their rescue.

Instead, he offered an interview in which he essentially said, 'Uh gee, the weapons are harder to bring than I recognized, and I do not appear to have others ready to assist me today. However we'll attempt to come up with a plan to help possibly at our next meeting'.

As the Financial Times put it under a heading 'Draghi Eliminates Hopes of Immediate ECB Action', ""Mario Draghi required that struggling eurozone countries turn to exist rescue funds before any intervention by the ECB in bond markets ... Mr. Draghi stated the ECB ""might consider"" once again purchasing short-term government financial obligation of troubled countries however would anticipate them to stick to the ""stringent and reliable conditionality"" imposed by the EFSF.""

So in both the U.S. and Europe, it's back to reliance on rhetoric and guarantees from reserve banks to possibly utilize effective weapons at some point in the future.

There were 3 'fantastic expectations' events scheduled today. The first two, the Fed's FOMC conference on Wednesday, and the ECB meeting on Thursday were big frustrations.

Luckily, the third, the Labor Department's monthly employment report for July, came through remarkably. Although the unemployment rate all of a sudden ticked up from 8.2% to 8.3%, there were 163,000 brand-new jobs developed, far better than the consensus projection of 100,000. That snapped 3 straight months of task gains being well under 100,000.

Nevertheless, each month I advise you of the history of the month-to-month jobs report. It generally is available in with a surprise in one direction or the other, which in turn produces a one to three-day triple-digit move by the Dow in one instructions or the other. (The last 3 reports were surprises on the downside).

The opposite of the pattern is that the preliminary move is then usually reversed over subsequent days as the market goes back to whatever was its focus prior to the report.

A month ago the initial downside response to the negative surprise in the tasks report was reversed to hope that reserve banks will come to the rescue.

This time a turnaround of the upside response to the positive jobs report will probably be a return to focusing on the euro-zone crisis, slowing worldwide economies, and the now evident hesitation of central banks to action in."