Wednesday, February 29, 2012


Funny question to ask about 529 billion, isn't it?  That's the number Helicopter Mario dropped into the Euro banks today.  Direct deposits.  Same day funds.  Spend it as you will.   Problem solved or merely an expression of how bad the problem really is?  That's a trillion Euros in 3 months right out of thin air. I must say, the sheer audacity of it gives one pause.  I guess that's what central banks are there for but when I said the Euros are going to bail out their banks I never conceived of such a series of steps.  Breathtaking.

And yet, without growth in Euroland what has been accomplished?  Despite brave talk, Greece is conceeded to be dying, Portugal sees no light ant the end of the tunnel, and as Carter points out in his note today, Spain missed all of it's targets and is warning of more misses in the future.  Will the Finns, he askes, turn a light on the entire mess?  I doubt it.  They will follow their brother states recognizing perhaps that there is no reason for them to play the heavy when their view of the future is probably the future itself.  The next few days will determine whether the Euro banks will begin to engage in the normal funding of the system or will the paralysis continue.  If the decision is the latter the conclusion will be that the can continues to be kicked with the invariable result unchanged.  I think, however, that we have finally reached the end game which has been so long predicted.  Draghi indicated today that he is done.  Whether that is his final word or that he is merely trying to scare the banks and governments remains to be seen.  I think though that he must realize that if this doesn't work then there is little more he can do.

Meanwhile on the political front,  the mutterings between nations continue.  The Suit has once again jumped into the fray calling for trillions in Euros for a higher, stronger "ring fence" to the delight, I am sure, of Frau Merkel whose voters' money will make up the majority of any increase in the bail-out fund, and who has no intention of committing political suicide.  A penny more and that's where the Finns will go tilt not to mention the Dutch and all the rest of that virtuous northern mob.  Mr. Bernanke, in his mandated talk to the Congress today did little to improve upon the mood.  Whilst he held that things were looking better they weren't looking that much better an he expected them to remain lousy through 2013.  The job situation had improved but he reiterated what some observers have been saying for weeks now that the improvement in the job numbers reflects the fact that a whole bunch of people have permanently dropped out of the job search.  Frankly, I don't know who to believe anymore but the mood down at the coffee shop seems slightly up beat.   BUT, petrol hit $3.89 today which I know sounds awfully low to our European friends but is ugly to us Yanks especially in the fly-over zone which is a low price region.  It's a big country and people think nothing of driving 60 miles round trip to work every day  The distances are vast compaired, say, to Europe.  Buses and trains don't work out here.  I know we use a lot but understand, please, the differences.

In that vein, there is a very importand get-together this weekend in D.C. between The Leader and the Prime Minister of Israel.  They hate each other.  Subject: Iran.  This overlay has yet to be factored in regard to the global economic climate to the extent I think it should be.  We should watch this carefully for all the good it will do. And Monday's openings.  As I write the temperature is 16C.  We expect snow by midnight.  Don't tell me things aren't troubled out there.

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