Wednesday, May 23, 2012


1.2587-89 to you my son.  That close represents a nearly 2-cent move in 24 hours. an unheard of sort of move in currency trading.  One can say that there is an immense short that is simply begging to be squeezed but then one may ask who has the nerve to be a buyer?  All other news pales today in the face of what some traders are now calling the destruction of the market for Euros.

In the face of this, equity markets crashed but more importantly, commodity fell through the floor.  The implications are stunning: the price of gasoline is certain to fall which may be good for the economy in the U.S. except that the massively strong dollar will undoubtably hurt U.S. exports...except that the largest import cost, oil, will concurrently fall.  Germany's export maching will receive the fallen Euro as manna from heaven and every European exporter will benefit, but not to the extent of Germany where the rich will certainly get richer.  Or, as Pooh said, "I'm confused."

All of this occurred amidst the--apparent--confirmation that the Greeks were indeed formulating contingency plans as to how to exit the zone, politicians all over Euroland were expressing their views as to whether such an event would be good, bad or indifferent as to the future and the Germans making it more than clear that any consideration of a Eurobond ist kaput.  And have a nice day, too, Fritz.

There's an old joke about a guy standing on a street corner hitting himself on the head with a small bat.  A bystander walks up to him and asks, "Why are you doing that?" and the reply is, "It feels good when I stop."  Is there any end to this Euro stupidity?  Haven't they learned that trying to kick the can down the road doesn't work any more?  They have a shot at this stage at holding it together without Greece but no shot at all if they try to keep Greece in?  Say goodby to Greece and forget about ring-fencing the countries themselves with proposals that will be argued forever.  Ring-fence the banks by publicly guaranting liquidity which will give yourselves the time to begin the more than difficult task of restructuring your entire economies.  And do it NOW.  A day or two like today and time will have won.

Nothing in the Chinese tale of yesterday apart from another I-don't-know-what-the-hell-is-going-on journalist.  Sovereigns have been direct purchasers for generations, except he didn't know it.  Spike!

1 comment:

  1. Guess the key question is whether the contingency planning for GREXIT is real or political posturing. Almost seems to uncoordinated to be posturing.