Tuesday, November 20, 2012


For what one may ask?  Well, for being us.  This is the quintessent American holiday shared only in concept  by our North American brothers in Canada It is this Thursday so we will be out of action until next Monday as it is off to the Midwest grandkids for the long weekend.

As for today in Euroland the question was an apt one best described by one happening and one--so far--non event.  First, the latter.

The Euro finance ministers met in splendid session today in Brussels primarily in regard to Greece and came up with nothing although at around midnight talks were continuing.  Despite assurance to the contrary, the IMF was still at odds with the concept of sustainability with the Greek financing program whose requirement appear to grow by the day and solvency guidelines seem to retreat at about the same rate.  The withheld Euro 31 billion has managed it seems to be discussed in terms of 44 billion and the 120% ratio of debt to GDP (which nobody REALLY believed in the first place) has now been openly discarded.  The IMF, who puts great faith in these five or seven year forecasts...well, they really don't but having to justify the disbursement of members' capital they really hate it when the basis upon which they garnered approval is trashed in public which makes them look rather...dare we say it...stupid or at least duplicitous.  Bad show, that.  And so they talk and talk and talk.  Problem is this go-round I don't have boots on the ground as the war correspondents are fond of saying so it looks as though I'm going to read about it in the papers tomorrow--assuming there is something to read about.

What did happen was the removal of France's AAA rating by Moody's.  This event, proved to be a non-event as the French surprisingly played it perfectly expressing sorrow over the incompetence of Moody's and phoo-phooing the practical effect.  Yields rose but only slightly meaning, perhaps, that it was priced in.  Certainly no panic which is a good thing.  But in the context of the Euro debt situation, this action taken today might have an effect as of yet unseen or at least unrecognized.

The solution the Euros have come upon is one which essentially allows them to finance their way out of the problem or if you wish, the "Kick the can down the road" solution. Integral to that approach was the authorization of the ESM, the "European Stability Mechanism," which is to be the funding source for future financings on a "pass-through" basis.  The ESM has been authorized to borrow the funds needed but one must now ask oneself whether, with the second largest economy (and guarantor) in the Euro Zone just having it's credit rating cut, what effect will this have in market acceptance?  If I were still in the game, this would give me pause.  In the next few days it will be interesting to watch and see if French yields move to any great extent.  If they do, it's back to the drawing boards to figure out how far the can-can be kicked.  Calling M. Lotrec.  Right now it's a blank canvas.

For those Over Here have a wonderful Thanksgiving.  For those Over There, we'll be thinking of you and a special thanks to the Brits.  We owe you a lot despite a few upsets along the way.

See you Monday the 25th.

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