That's me by the way. I thought we would find a more receptive voice in Sig. Draghi who is waiting in the wings of the ECB but yesterday he toed the party line and expressed his opposition to any form of Greek rescheduling. Could I have been wrong? I have been in the past but for the life of me I can't remember when. Not only did Sig. Draghi raise all of the old issues but for the first time he brought up a new set of concerns, namely the amount of credit default swaps hanging around out there as a potential destabilizing factor for all of Europe.
A number of years ago I was speaking to a very bright young man who at the time was a rather senior bloke at MBIA which as you know was in the credit default business.
"Mikey," says I, "could you perhaps explain to me why you would want to be in the business of guaranting some company whose business it is to rent their balance sheet in extending credit to another party? I mean, after all, doesn't that raise some red flags if these guys are looking for cover?"
He smiled and launched into a detailed explaination of the business which to this day doesn't really make sense to me except as an exercise for someone who has too much time on their hands. This was early in 2007 when things were just beginning to look a bit dodgey but when I raised that issue he merely smiled and said that was great because the spreads would widen. So you know where I'm coming from when I say that I have a singular lack of concern for the writers of this sort of stuff although I freely admit I have no idea as to the extent of cover on Greek debt outstanding but then again I doubt whether Sig. Draghi has either. The one thing I do know is that unless a restructuring is done, everybody is going to lose because there is no one above the ground who, at this stage, belives that anything else can work and politically the Greek government cannot survive a solution which places the entire burden on the backs of the Greek taxpayers (ok, they don't pay their taxes)--witness the goings-on in Athens today.
Once unthinkable, there is now a chance that we may be witnessing the break-up of a portion of the EU over what is in my mind a foolish adherence to a so-called principal that has been overturned time and again in the past by some of the very same players involved today. From where I sit it's mindless. Once again by delaying the inevitable the Euros are going to exacerbate the situation leading perhaps to a true disaster which is made all the more unforgiveable by the hypocricy being shown in arguing on one hand for a no-loss scenario through the expenditure of public money in the case of Greece and on the other that no bank should be "too big to fail." There is a paralysis setting in across the pond affecting the continental economy overall with the added effect of a loss of confidence in institutions both over there and over here as well. Uncertainty is the killer. My man Willie S. had it right one more time: "If tis done what must be done then were well it were done quickly." Get on with it gang. This show's about to close.
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As predicted, Stan Fisher, the most qualified person alive to run the IMF was given short shrift by the powers that be and in a most unsavory manner. The vote now comes down between Mdm. Lagarde of France and Sr. Carstens of Mexico. I do not know the latter but I am told that between the two he is by far, the most qualified. It is therefore guaranteed that he will not be elected.
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