Friday, April 26, 2013


Remember the Movie?  Who was it Charlton Heston as the dead hero strapped to his white horse and driving out the Muslim hoards from Spain thereby saving the nation and the Church?  OK, OK, a bit melow-dramatic, although it actually happened, but co-starring was Sophia Loren and for me that was enough to see the damn thing twice.

Today was enough to ask where is El Cid when you need him?  Spain announced that the nation's unemployment rate had risen above 27%--and that's with God knows how many of it's young people somewhere else in Euroland  looking to make a living.  Banco Santander released it's first quarter numbers showing a profit drop of 24% (blame was  placed on Brazilian operations which was widely disbelieved) and both Barca and Real were hammered by German clubs (how fitting...even in soccer) in the Champion's League semis.  Camp Nou might not sell out next week.

Not to make light of it all, the decline has been stunning, and for the life of me I do not see a solution.  Monetary policy is unavailable because of the Euro, fiscal stimulus has reached its limit,  borrowing costs are low only because of the ECB put and Santander is symbolic of a system that on its outer fringes is bankrupt due to the on-going real estate disaster with no chance of closure or rationalization.  As a result credit is unheard of and economic growth has collapsed.  To be frank, I'm not even sure this desperate state is limited to the cajas.  The "walking dead" is too mild a term to describe it all.  As a result credit is unheard of and economic growth has collapsed.

As I have said all along, Spain is a real country unlike Cyprus and Greece.  But we now find ourselves at a point when a real country is in danger of knocking down the entire house of cards simply because there is no other way out.  In the face of all of this, Euroland has become like the Brits in the war; "button up and carry on."  But Winston had America in the wings didn't he, and Merkel's mob on the other side.  Bit different when they are running things supposedly on YOUR side.  There was talk today of a march on Parliament and once things like that start it hard for them to be stopped.  Someone had best move quickly indeed.


Another thing that has been bothering me for a while is the goings-on in Japan.  In case anybody missed it the Yen is trading around 100 to the buck.  That's a hell of a move in a really short time and it appears what has been happening is that there are a whole bunch of Japanese investors taking profits overseas in financial instruments and pulling the money back to Japan; although I don't have access to all the numbers I would like to figure out just how much.  Question is what happens now and what does this mean for continued Japanese purchases of Treasuries?  Or, as Massimo might ask, "does anyone care? "  Probably not so I ask myself, "Self, why should you?"  Know what?  I don't have a real good answer.

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