Tuesday, January 6, 2015


...that faithful to our code we fell.

That's the problem with the Greeks.  For three thousand years 300 guys getting their butts kicked by all the Persians in the world is still a great victory.  Wonderful story but may I suggest that a replay in our time of this attitude gets more than 300 butts kicked, and it would appear that in appreciation of this fact some of the rhetoric on all sides of the issue has been toned down just in a day which is not a bad thing.  Still, it looks as though the result of any election will probably bring Syriza into governance.  I still think this is the week.

Meanwhile, the Dutch answer to the Financial Times published a report today as to the structure of the ECB's QE program.  There could be three scenarios say the Dutchies.  In Scenario 1, the ECB would purchase government bonds for their own account up to the amount of the member's share in the capital of the bank.  Sounds to me like Bund yields are zip for a while but then that's where they are already.

In Scenario 2, the ECB will buy only triple-A bonds...the Frenchies are going to love that.

In Scenario 3, the ECB will allow National central banks to buy their own country's paper up to some level.  I guess the funding is to come from the ECB otherwise this makes no sense at all as opposed to very little sense.

Frankly, I'm not sure as to what maturities are covered but I can't believe that they would consider going out further than 5 years.  Given that there is no yield at this time anyway given the famous Draghi "put" one might ask, "what are we talking about, guys?"  Answer:  "Beats the hell out of me." The only reason for this nonsense must be an absolute fear of Union-wide recession based on all of the macro, geo-political and economic factors that folks like the Economist love to write about.  Mind you, they may be correct but how this is going to fix things is beyond me.  In the mean time if I were a Greek the signal this sends me is why would I want to stay as part of this mess when I can at least go to hell in a hand basket on my own terms.  But they are not there yet and to give it fair do, neither is Syriza.  So there is still time but in the meantime there is a serious psychological play at work: everyone is beginning to realize that if there is a way out of this mess the driver of the growthmobile is going to be the United States...and that is exactly what the EU was designed prevent or at least with which to compete.  Ain't that the damnedest thing.

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