Tuesday, March 6, 2012


Sorry gang, I could wax poetic but to what point.  The date will be Thursday when we learn the fate of the swap and despite all the positive noise out there nobody has a clue of what's going to occur.  I suspect the Greeks will get about 75-80% of the debt tendered, they will enact the Collective Action Clause and the CDSs will trigger--or at least some of them.  After that, who knows what happens and to be honest not too many people care.  This thing was all about the banks and on cue, the biggest holders of the debt in the banking sector have all said that they will tender which means the authorities feel that none of them will go toes up as a result.  Now if the CDSs trigger that could cause the bailout to be posponed but half of Europe could care less because everybody knows that Greece is kaput and one might as well deal with that now as well as later.  Of course, there will be no money for the banks in the future but we'll...oh hell, I don't know what we will do and I could care less as well.  The punters will move on to Portugal but as the Portugese have no maturities until well into 2013 that trade is a bit tricker.  I'm just going to wait until Thursday before I say another word.

In the meantime, one thing to look at are the polls in France. Right now, things look really bad for Sarkozy and French Soccer.  You see, Hollande has proposed a top tax rate of 75% which means any soccer player that doesn't have two left feet will be out of France in a year.  Mme. Sakorzy as well--with or without the old man--which would be a hell of a loss.  The Socialists have also proposed a breakup of the French banking system along the lines of the Volker Rule which is step #1 according to some of my friends to the nationalization of the system.  Au Revoir La Republique from any sort of economic performance in the coming years which makes the future of Euroland even bleaker than it is right now.  Why anybody would keep their money in that place is beyond me (are you listening Matthew?), and yet some commentators are taking it in stride perhaps with the thought that he hasn't happened yet.

Not the markets, however.  Waking up to the understanding that things are not all that well in Euroland and that there's a bit of a muddle on this side as well, the incredible surging stock market took a 200 point hit on the Dow today.  Emerging market slippage added to the slide as the numbers out of Brazil were surprisingly (for some) poor.  It might be a rather good ideal if one of the geniuses on tv wandered on down and asked those folks whatsup.  What they would get is an earful of what this glut of money spewing forth from the Fed and soon-to-come ECB means to growth markets like Brazil: the inflationary pressure it causes makes it very difficult for these guys to cope.  Best so far has been Mexico but it has been a struggle. But spewing along we go with Richard Fisher about the only guy in town who seems to understand what it is we may be causing.

Finally, Wells Fargo today put out a rather interesting report that didn;t get the coverage it should have given the political bent of the popular press.  According to the Stagecoach, the greatly improving employment number has been more of a function of people simply stopping to search for jobs rather than a true economic shift.  Run the numbers in the same manner and the real unemployment rate is 11.8% not 8.3%.  I don't know.  Ther have been earlier comments like this but things around here are looking a bit better, yet the study was pretty convincing.  Problem is, we are not disconnected from the rest of the world; if folks are right about Europe and emerging markets, any positive move here no matter how real is unsustainable.  And as for China?  Good news there.  My Really Smart Friend, Larry is there as we speak.  We'll have the true scoop in a day or tow.  Be patient.

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