MIDWEST WINDS

Not my fault this time.  A front came through last week with 80 MPH winds and we've been without power for 3 days.  Scary.  Trees down all over the place, houses wrecked and plans wiped out.  I was pretty well out of touch with the world which from time to time is not a bad thing and woke up this morning to finally read and witness the latest "let's play them for suckers" game the Chinese have invented.

Now let me be clear, as The Leader likes to say, I don't really believe that anyone in this administration believes that the revaluation of the Yuan amounts to anything more than a bucket of warm spit as HST was so fond of saying, but this mob is so into self-delusion and kissing The Leader's bum (to prevent theirs from being kicked) That one can never be too sure.  We have discussed this issue many times in the past so there's really no need to rehash it all over again, but it is probably makes some sense to repeat the fact that no amount of simple resetting of the peg is going to make a bit of difference given the lack of transferability  of the currency or to put it another way it will be meaningless without free capital markets and Yuan transferability in China and overseas.  And THAT, Pilgrim, aint gonna happen real soon.  That is not to say that there are not those in the Chinese leadership who would favor such moves: it is to say that they do not have the guns to make it happen and yes, I do mean GUNS.  But all is not lost; because of this we have the joy of watching my old buddy Chuck Schumer continue to act like the pompous fool he has become and the Administration, especially our whiz bang Sec. Treas. make like getting kicked in the crotch for the Nth. time really doesn't hurt.  At this stage maybe it doesn't. You gotta admit, watching this is more fun than rooting for the Cubbies in the summer.

The Leader didn't have the best of weeks either.  Looked like a jerk from the Oval Office to the extent that even his guys are beginning to look for bolt holes, but missed by the main stream media (because they were too dumb or too scared to figure it out) was the dissin' our boy got from J.C. Trichet of the Euro Central Bank who the first time around shot down The Leader's stimulus talk for us and Europe and then when challenged, drove a stake in its heart.  Time for plan B, 'cept there isn't any Plan B.  These guys are bound and determined to tax and spend to create their model of a just society and the remarkable thing is what with the mess in the Euro zone they just might pull it off.  We continue to benefit at this point in time by a flight to perceived safety which has driven yields on Treasuries down to unheard of levels and making it easy to fund what perhaps should not be funded.  Now if I knew that I would be in hock to somebody for the foreseeable future I might try to take advantage of this unique situation and lock in some really long-dated maturities before the party ends but not these guys.  Short, short, short is their theme song, with spend, spend, spend the refrain.  Then again, maybe the deal is they're afraid to lengthen out the maturity profile as there may be no buyers out there?  Could be.  We shall see.  Another look at Euroland tomorrow.  Nice to be back.