(Melchizedek Communique, MC010510) Ambrose Evans-Pritchard, noted poet of financials, has consulted his muse. He issues these lines:

The elephant is in the global tent.
Bernanke will be caught off guard.
The Dunkirk spirit will rise again.
When the bond yields rise by a yard.

Bernanke will get religion, and ram down the 10-year yields.
We will have lanced the biggest boils.
Exit strategies will go back into the deep freeze.
And it all has to do with the QE.

Hirohisa Fujii will pull the lever on QE.
The yen will fall out of bed.
The Hellenic Socialists will call Europe's bluff.
The Bundesbank will veto proper QE.

The surplus regions have not increased demand.
The funds will try to play the liquidity game.
The EMU divergence play... Japan, our Weimar-in-waiting...
And the European Central Bank will stick to its Wagnerian course.

But the North-South split has gone beyond the point of no return.

("Global bear rally will deflate as Japan leads world in sovereign bond crisis", by Ambrose Evans-Pritchard. Telegraph (U.K.), Jan. 4, 2010)

You may say, this is poetry? It doesn't rhyme and I don't understand it! But imagine what a grad school seminar would find in the latest Evans-Pritchard poem, "The Elephant Is In the Global Tent."

The elephant in the global tent signifies rising interest demanded for bonds. The yield on the U.S. Treasury 10-year note climbed to 3.84 percent from 2.21 percent at the end of 2008. That yield touched 3.91 percent on December 31, 2009. ("U.S. Treasuries Post Worst Performance Among Sovereign Markets", by Daniel Kruger. Bloomberg, Jan. 1, 2010)

"Bernanke will get religion, and ram down the 10-year yields." The 10-year yield will rise to 4.01 percent at the end of 2010, according to the median of 60 economists surveyed by Bloomberg News. (Kruger, op. cit.) But "Nay!" saith Evans-Pritchard. "Bernanke shall ram down the 10-year yields." To ram down the yields, Bernanke would have to pull back on QE (Quantitative Easing).

And also, "Hirohisa Fujii will pull the lever on QE" and "The Bundesbank will veto proper QE." But then the "Hellenic Socialists will call Europe's bluff." But it's all too late! The "North-South split has gone beyond the point of no return." (This signifies the economic split in the European Union.)

There is a brooding presence of Wagnerian gloom hanging just beyond the Stygian mists in the latest Evans-Pritchard offering. The elephant is in the tent. No matter if Bernanke sets the rates at almost zero, real-world rates being demanded have skyrocketed this past year. To ram down the real-world rates, the QE will be evacuated like Dunkirk.

This, anyway, is the pointy-head analysis of the latest Evans-Pritchard poem.