My Really Smart-Ass Friend, Larry rang the other day to remind me it was Slovakia not Slovenia that still had a spanner in the works as to the approval of the enhanced EuU bailout facility. Slovenia, Slovakia...like who cares. , whatever. No, he was right of course to point out the error and I apologize as it is important. Slovakia is voting as this is being written and the motion will be approved either at this vote or at the next one...or at the one after that or the one after that. Greece will get their money which will keep them going for a month or so while great plans will be made. More importantly, the hold-up by a small, impoverished country like Slovakia highlights one of the great problems that has always faced the Union; it's all-in or nobody's in. Uninamity is hard to achieve especially when it involves money and taxes and this will be the ongoing issue moving foward.
Meanwhile, over the weekend, M.Sarkozy and Frau Merkel agreed that they will agree sometime in the future at a date to be determined as to how to recapitalize Euro banking. Marking this as the solution to Europe, our DOW moved up 330 points yesterday and all fears of a fouth quarter recession ended. Great minds truly at work. But while this nonsense was going on some important early steps in the process were being taken as predicted and more will come.
France, Belgium and Luxembourg agreed to the break-up of Dexia about which we spoke last week. I do not have the details of the terms but surely the depositors will be protected whilst the equity and debt holders will no doubt take a bath. While all of this was going on the Greek authorities announced the intervention of Proton Bank and in Spain the proposed merger of Banco Pastor into Banco Popular Espanol was announced as well. This marks the first merger of the so-called listed banks in some 10 years and follows the merger of a number of savings institutions or "cajas" which had occured earlier in the year. Whilst the cajas' problems were more as a result in exposure to the blown up Spanaish real estate market, the listed banks, while exposed there as well, also have exposure to Spanish and European soverign debt. Pastor had been rumored to have been in trouble for some time so this comes a no surprise but this activity is in reality on the periphery of European banking at the present time. Nevertheless, the process of the consolidation of Euro banking has begun as predicted and will continue apace. The Euros can pull it off and in the past week or so they are showing signs of having worked though some of the political problems of the Union which is good. But, for this process to be successful, there cannot be a continued assult upon the other prominent soverigns. The expected approval of Slovakia (thank you Larry) is he first step in that process. Arranging for Greece's eventual default remains a work in progress.
Across the Ponf, politicians are all atwitter about the release of the first draft of the so-called "Volker Rule" which in initial form has raised more questions than answers. Tall Paul must love it. What he envisioned was a simple redraft of Glass Steagal and what he got was an absolute dog's breakfast that amost seems to be designed to be made up as people go along. It's too soon to really comment on the thing but it seems to me that Tall Paul is once again proven to be smarter than most of the mutts charged with the responsibility for this thing. It's either two sentences or no sentences. Lets see who's right in the end
We have to go out of town to help out #2 son and family for a couple of days as one of the grandkids needs some surgery. Baby sitiing duties call. Nothing serious but help is required. Don't know how long we'll be gone but I'm beting not much new isgoing to happen for the next couple of days. If I'm wrong I'll grab a machine and comment. See you in a bit
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