Bounce Chat Mort

That's French for "dead cat bounce" kids.  Yesterday's 400 point gain in the Dow and 3-4% gains in European markets are already looking like they're going to completely fall apart as the European Trader has finally figured out what this weekend really means:  unlimited moral hazard!

That's right folks.  You know that the EU is going to now throw hundreds of billions of euros at any EU member that faces problems.  The EU has to create those euros out of thin air, the way we're doing here with the Fed and the dollar.  That means the value of the euro compared to other currencies is going to drop, guaranteed.  And that's as close to a sure bet as you're going to get.  Europe is now betting against the euro itself!  Tyler Durden explains as Eurobanks are pulling a Goldman Sachs.

Zero Hedge has received confirmation that several of the largest French banks are now actively shorting the euro to take advantage of globalized moral hazard, which with every ensuing bailout does nothing but make the bonuses of French FX traders surge. In other words, the very banks that Europe is bailing out are betting more and more aggressively with each passing day against Europe's own survival! Even George Soros has shed a tear of pride in how beautifully his initial plan to take on the BOE has mutated for the Bailout Generation.

And overnight, the traders from the imaginary CMC, and other all too real French banks (and now US hedge funds), are succeeding, as the last traces of this weekend's $1 trillion bailout are long forgotten: futures are plunging, Asia is collapsing, the EURUSD is probing a 1.26 handle and we see it easily going back down to 1.25, even as gold surges.

We anticipate another record bailout to be announced by Europe within the month as Europe now has no other choice. And each subsequent bailout will only lead European banks to bet even more aggressively against the survival of Europe, which destroys more and more European taxpayer capital. Welcome to Global Moral Hazard. 

It really is that simple.  Everyone's betting that the value of the euro is going to continue to crash.  So...the value of the euro continues to crash!  And everyone who's along for the ride is making money hand over fist doing it.  It's a self-fufilling prophecy with good old self-interest generated greed thrown in.  Win-win for the trading houses, lose-lose for everybody else.

Dow Futures are down 100+ right now and falling.  Asian stocks are down 1-2%, Euro stocks are down 2%, and things are going to get fugly from here on out.

The near trillion dollar bailout lasted one day, folks.  Buckle up.