GETTING GAMED BY CARTER

Ah, come on, Carter, that's too smart by half. "In Europe are restructuring talks really under way or is it just talk of restructuring?" So wrote our friend yesterday. Carter knows better. Neither is the correct question. It is, of course, "Who's talking?" It bothers the hell out of me because I don't know the answer because I don't know who SHOULD be talking.

We know this is a bank issue (too much Greek debt in too many Euro banks) but other than having a pretty good idea the insttutions are French and German I don't know the individual names. Sorry, I should, and I would certainly appreciate a breakdown from one of you out there if you have access to the information, but I don't. You see, this is pretty important because in the end the question is a very political one. It is not so simple as it is here where the banking system,while hardly immune to politics, is overseen by more or less a non-political governing entity in the day to day operation of the system. In Germany, for example, certain banks are for all intents and purposes extities of state governments and that makes them HIGHLY political. The problem in great measure is, I think, that despite ample warning and time to take action to protect themselves, certain banks, receiving cover from political entities did not do so and now stand in a very exposed position. It is therefore not only bank management that now has to play "cover my bum" but politicians as well and that makes for a very messy situation indeed. Before what needs to be done is done, the pols at the local level have to start talking and that hasn't happened yet...at least I don't think it has. If anybody knows better, please tell me. Carter?

In any case, we once again have witnessed the very strange contradiction between the U.S. banking system and the Euros in the coming to grips with a bad situation and the recognition of losses. Europe always dithers and the Americans are always prepared to, in some cases, throw the baby out with the bath water just to get rid of the problem. Witness Citigroup. You might remember that 3 years ago Citi essentially formed a "good bank, bad bank" structure and loaded into the latter all "non-strategic assets;" that means bum loans for all of you from East Moritches. In 3 years they have disposed of almost $600 Billion out of $900 Billion of assets. That, sportsfans, is a hell of a lot of assets to go away in that short period of time. If the Euros had done that we wouldn't be having this discussion. But they didn't. They never do. There's a psychological disparity here but of course there is also the depth, breadth and diversity in the U.S. capital markets that makes this possible. Which of course is another reason that I get so nervous when the folks in D.C start sceaming about mor regulation. Regulation is fine if put into place by people whose aim it is to improve the workings of free markets. Too often it is not. I bet there would be a number of people that might be buyers of Greece at, say, 50 if there was a market for that over there. There would be...wouldn't there...I mean...CARTER!