Wednesday, August 10, 2011


Les Banques Francais, or at least that's what the Wall Street Geniuses have finally figured out.  As loyal readers know, Europe has always been about the banks and, indeed, there could be real blood in the water with Greece kaput and Italy and Spain very shaky.  The bad one was reported to be Soc Gen (they say they're fine) and suddenly, all the talking heads on tv started yapping about the exposure of American banks to their Euro counterparts and, "Oh my God, what if..." I don't know what ifs but I do know that the Fed and the ECB and the central banks of half a dozen different countries are all over this one.  Remember, it is about  liquidity and I am 99.9% certain that this will not be like 2008 when liquidity dried up.  In any case, the DOW was down 525 at the close led by the financial sector with the two year note at 90bps.  Amazing.

Look, I'm not saying this is good but it has always been about Europe and the lack of leadership which is beginning to make The Leader look like George Washington in that catagory.  Nor do I know what is going to happen but as I said yesterday the odds of Greece simply giving up the ghost are getting shorter and shorter as it appears almost certain that Frau Merkel can't deliver.  The thing I worry about is that the paralysis that has gripped the Euros for the past year may well have affected their ability to plot the end game and have a plan if in fact they do lose Greece.  I'm very much afraid that in the next couple of days we might find out.  I haven't got much else to say so I'm just to wait it out another day and see what the 'morrow brings.  Oh, by the by, France is still AAA at S & P.  Vive La France!

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