Sunday, June 10, 2012


...which is probably a good thing.   The Euros coughed up 100 billion Euros for the "recapiltaization" of Spanish banks.  Boys and girls, we are about to see a replay of that old accounting rule, "last in, first out,"  assuming this is real money and not play cash--which is probably what they should have done.

Now, nobody knows the real state of the banks' balance sheets so 100 billion is nothing more than S.W.A.G....which for those of you outside of the business is a Sophisticated Wild-Ass Guess...but it's a nice big number which even led some moron to suggest that it's more than is needed.  For capital, perhaps but not for cash which will probably continue to flow outwards until these guys do something to stop, as suggested...cut off recipient institutions.  And it may not even be enough capital because, as stated, the true condition of the Spanish institutions.  News flash to the pundits: it's getting worse as we speak.  So is it worthless?  No, because the real purpose is to send a message to the Greek voter next weekend that we got your back and don't do anything that will immediately cause the bad guys to get their way.  It doesn't really solve anything but we are now at the stage of "short term solutions" which, unfortunately, are not defined in terms of months or even weeks, but in terms of the next news cycle.

Forgive me for reverting to form, but I find it hard to believe that after rioting in the streets, firebombing, fist-fights in parliment and a 25% unemployment rate, any Greek government will be prepared to say, "Right, great thing this austerity, good for the Germans and the Austrians, we'll stick to the terms and stay buggered for the next 5 years or so.  The Euro forever!"  But hope springs eternal I guess and maybe The Leader, in one of his many conversations can point out the road to success to his Euro counterparts.

So, what to expect in the coming week?  Nothing except a concerted effort to pay even more attention to the European Cup at least until the Greek Elections next Sunday.  And is there cause for hope:  the Greeks drew with the Poles in the opener much to the distress of the bookmakers along the Caladonian Road.  An Omen?  Homer was big on those sorts of things.  Sing oh Muse!

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