Friday, March 14, 2014


The numbers from China yesterday were grim and the talk depressingly about hard times ahead.  According to the punsters and the talking heads, that's why the equity markets were down.  By grim, they mean not what they wanted to see because there are very few things left to keep this equity and goods bubble up in the air and everyone was hoping that China was one of them  So, after a half-hearted attempt to grin and bear it, down went stocks again as only the weekend posed a halt to this discouraging trend.

As we stated weeks ago, this is all about control, and the Chinese leadership (Xi) is going to get control.  He has the discipline and the time.  He also doesn't have by-elections and all of those other silly thing with which democratic societies must put up.  But it's really hard to blame the political systems for the seemingly world wide drift in strategic policy actions, particularly Over Here and Over There, culminating in practically no agreement on how to approach anything in a joint manner, the latest (and most dangerous)  being the ridiculous response to the Thug Putin until--it remains to be seen--this weekend.

What is also surprising is the manner in which the Central Banks have been acting in the past few weeks.  Mr. Carney, Governor of the Bank of England, was immediately upon accepting the job proclaimed as the world's greatest Central Banker for the job he did at the Bank of Canada during the financial crisis.  Indeed Canada did come out relatively unscathed.  Of course Canada has more Moose than people and mispricing credit to Moose is hard in the best of circumstances.  Mr. Carney did well but there was a substantial element of luck and the absence of the opportunity to screw up which is high on the scale of a banker's capabilities.

Well, Mr. Carney is now running the Old Lady and that is a very different thing indeed, especially when one's policies are governed by one's forward outlook on things economic, and the Bank's outlook has been God-awful insofar as accuracy is concerned.  Somehow, the Brits got a lot right and the economy has taken off as money continues to be minted in the bowels of Threadneedle Street.  While the new guy can certainly absorb a few credibility cracks, he does himself no good at all in reminding everybody that he's merely a hired hand and being Canadian, has no real roots in the U.K. other than a million pound or so a year and a car for what is ever left on his five year gig.
Not only does this tend to make the natives restless but I suspect his colleagues in the EU not to mention those Over Here are saying, "Hang on, what's this we got to work with?"

Meanwhile, across the Channel, all focus is on Putin and his mob and rightly so, but on the financial front, the results of another round of stress tests are trickling in.  Unicredito, the BIG Italian announced that as a result of a relook at their portfolio, they would lose a gazillion euros:  believe it or not, this was taken as a positive in showing that the EU was finally "getting real."  Of course, a close reading of the numbers (even a cursory one because that's all the time I had) leads one to the inescapable conclusion that they are crap.  It is not to say that things haven't changed, they have, but no where nearly enough.  The banks are still sacrosanct, the economies are stagnant and reform measures where most needed are stalled.  Little is heard from Italy and that is because little is happening, and little happening is just what the Italians like.  When the Ukrainian mess is settled, the Euro are prepared--given there is a Ukraine--to turn the whole thing over to the IMF which will be a catastrophe in the making and The Leader is all for that because he doesn't have to lead and  the call to arms to aid the Ukraine will be used to increase U.S. funding to the IMF which brings with it change in governance giving, among others, Russia more sway over the institution.  You see, The Leader continues to believe that "emerging nations" should have more authority.

Anyway, it was 50 F. today and except for the 10 foot high piles, a lot of the snow has melted.  It will be below freezing for the next two days, however, with a slight chance of snow.  I don't know what's a harder job; writing a financial blog or being a weatherman.  At least the latter knows which way the wind is blowing.

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