Tuesday, January 27, 2015


Somehow, I think we have all seen this movie.  My Really Smart Friend, Larry tells me it reminds him of 1987 before Brady when a few folks realized that without growth there was trouble ahead all over.  Problem is, he adds, today's  politicians are dumber than yesterday's bankers which shows you just how bad this problem is.  Of course the Greekies didn't help things by leading off with what is needed are reparations from Germany.  Das Volk will love that.

Anyway, a new government has been formed and the new bureaucracy has been put in place.  The guy actually cut the number of departments of government in half which on the face of it is a good start but as far as I can tell not many of the new bunch are known to anyone except in left-wing circles which means there is little experience in dealing with those who require dealing, which means it's going to be a bumpy ride for a while, which means...well, you get it.  The IMF made it very clear that they expect to receive their March payment so the learning curve is going to be pretty steep.

The funny part about this thing is the almost lack of reaction in the global markets.  "Oh well, here go the Greeks again," seems to be the overwhelming reaction.  But it's not just the Greeks again, but finally a concrete manifestation of what is a rapidly growing view that austerity is not the way to go or as a Euro friend of mine put it, "We're not all Germans...Thank God!"  Nor is it entirely a left-wing issue as witnessed by the first congratulatory letter on the party's victory which came from Mdm. Le Pen in France.  There are a lot of sharp angles to this thing not the least of which is the anti-immigrant views which have sprung up across Europe in light of domestic terrorism to be sure but mainly to the growing realization that there are not enough jobs to go around.  Europe has the capacity to get a lot more ugly than the U.S. which is facing some of the same problems but remains the far most flexible and adaptive society in the world.

Anyway, the Euro strengthened against the dollar today for God knows why except perhaps profit taking while the DOW careened down by almost 300 points on fear of the strong dollar affecting profits which was claimed by a couple of corporates who today reported earnings.  Then again, after the close, Apple blew the socks off the estimates and did not mention currencies once in their report.  Uh, Apple's earnings are 65% international, which makes me once again, hark back to the great American football coach, Vincenzo Lombardi who, in a famous film clip was heard to inquire, "What the hell is goin' on out there?"  Beats me.  But let me throw out a few thoughts.

The economy Over Here is no where as good as has been touted.  250,000 new jobs in moderately paying sectors will not cut it; underemployment is still far too high; consumer confidence is entirely due to the price of gasoline and the great oil gusher may end very abruptly due to the Saudis and what some of the good ol' boys down in Texas gave been tellin' me for some time: there ain't 'nuff recoverable reserves, hoss, in this fracking business.  Economically, that's one thing, but financially, there's more.  If the boys are correct, there is going to be one hell of a mess in the high yield and asset backed markets just around the time that a whole bunch of Russian debt comes due; not to mention our little Greek friends.  Ol' Charlie here is seeing nothing but tall grass for the blogging business.  If ol' Charlie keeps seeing, that is.

1 comment:

  1. Glad the eye is getting better.

    What's Larry think of kicking the Ruskies out of SWIFT? Nobody seems to be worrying about that. Hopefully the girls at Maiden Lane have a handle on things.