Tuesday, August 5, 2014


You try to be witty, informative and current, but after you've been forced to say, "Everything stinks all over the place" where do you go from there?  Well, everything does stink all over the place with the Ukraine situation regaining top billing after a report out of Poland claimed the Russians were about to invade.  Stocks crashed as did bond yields.  There's a joke going around D.C these days.  Someone runs into the Russian Ambassador and asks him when will Russia invade?  "When Obama is on vacation or fund raising," he replies.  I didn't think it was funny but then that's just me...  Of course, the shooting has stopped for a bit in Gaza, but ISIS seems to being well on its way to expanding its power in the Tigris and Euphrates hood.

On the home front, there is louder talk about when the Fed is going to move on interest rates--before year-end--and finally…finally…we seem to be reaching consensus that if rates do move, for example 100 b.p. on the 10 years this thing--whatever thing is--is over.  Having been saying that for years I fully agree but what a lot of people are overlooking is not the effect that a rate rise will have on the economy but what effect it will have on the national debt and the obligations of the states.  Of course the problem is that when the cost of financing rises because of Fed actions there is a concurrent uptick in the cost of borrowing over and above what would normally be simply a reaction to monetary policy.  Rate rises beget rate rises which sports fans is not a good thing especially when The Leader keeps believing that it's not his policies that depress American growth but the greed of CEOs.  It's been a hell of a ride on this highway but I have the feeling that around the next curve there stands a toll booth.  Nothing is for free.

I was trying to write something yesterday of Espirito Sancto but what is there to say?  If there were something different about this situation from that which we have seen year after year it might be interesting but alas, la meme chose.  And getting French into it, the Credit Agricole who just wrote off about a billion dollars as a result of dealings stemming from a 17% interest in the bank (they wrote that off as well), declared today that they were "defrauded" by the management.  Now how the hell you can have two representatives on the Board of Directors with the full knowledge that the books were being audited by something called Eurofin which also structured investments for the bank and claim to have been defrauded is beyond me, but there you go.  I mean, who cares anyway as the government of Portugal announced over the weekend that they are going to pump about 5 billion Euros of tax payer money into this pig and all will work out.   In case anyone is interested, Eurofin hangs its shingle in Lausanne with an office in  St. Jim's in London and has as its head guys two fellow who apparently received a degree in hotel management from some joint in France.  Bloody good lunches I bet.  Never hold that against anyone I say.  But FIVE BILLION!?  Haven't these guys ever heard of Dodd/Frank?    More if there is more.

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