HOW WAS THAT AGAIN?

Got back late from the funeral, turned on the tv and discovered that the DOW had rallied 500 points as a result of all being right with the world called Euroland and in trying to figure out how that could be I called my buddy Jerry.

"Why?"

"Liesman."

"Who?"

"Liseman, Steve Liesman, the almost economist on CNBC.  He had an exclusive on Monday that the Euro were just a change or two away from a 2 billion Euro deal that would solve everything; the banks, Greece, the future, everything."

"You believe it?"

"No."

"Why not?"

"Because that's not what I'm hearing.  You find out and let me know."


So, I got ahold of Massimo today who, surprisingly, was in his office in Rome.  Massimo is never in his office.  I told him what was being said.

"Em beh ( an all-purpose Italian grunt).  Carlo, listen.  I no know this guy on the television but he's a not talking to anyone over here."

"I'm told he said he was."

"Then he talks with a stupido."  There is no deal, just talk.  Same talk as last week and the week before and the week before."

"Then why would he say what he said."

"Because, somebody want to...how you say...tell a tale."

"Ah, come on Massimo, what for?"

"Look my friend, I no understand your politics but if I am you I talk to your friends in Washing-tone (I love the way he pronounces that).  A lot go on starting with the Polakos due semani fa.  Better...you talk to **********  *********** in London. He was there.  I tell you this though.   This, she's no good, no good at all.  Sorry Carlo but I have to go. Ciao"

Very unlike Massimo to be so cryptic but I did what he suggested and called ********** and then I called everybody I could think of which took all day (which is why this is late).  From what I can determine, this is what occured.

You might remember there were a number of very high-powered meeting a couple of weeks back, in Marseille, in Warsaw and in Basel.  The Basel meeting was for central bankers and designed (sucessfully) to put a liquidity facility in place by way of swap lines for the Euro banks for dollar funding.  The other two meetings were not so sucessful although nothing was expected out of the G-7
 official meeting in Marseille.  The Polish meeting was a bit different as the entire Euro mob was present.  Present as well was The Suit, who in invited himself to attend and was, I am told, relutantly received by the Euros.

Now it is important to understand that the Euros, having cocked their situation up to a fare-thee-well, have been looking around for someone to blame and of course the ready target is good ol' Uncle--not that we are as pure as the driven snow you understand.  But while in 2008 our banking system was on the ropes due to the housing mess, the Euros conveniently forget that major players in this scenario were the likes of UBS, Soc Gen, Deutschebank et all.  Since 2008, the Eurobanks have done nada while--just by way of comparison--the American banking system has recapitalized itself to the tune of $300 billion and...remember Citicorp Holdings...once at $900 billion now, in three short years, stands at $300 billion...a hell of a big number to be sure but a hell of a clean-up job by the directors and management of that institution.  Reminded of that, the Euros just might go a bit off-plumb.

Well, it seems as though the invited/uninvited guest, The Suit, reminded them of that in spades.  Of course the Euros don't like each other very much but when a U.S. Treasury Secretary takes a bite out of their collective butts they like that even less, particularly when his parting shot before getting on the plane was to tell the hopeless Jim Cramer on national tv that the Euros had a plan and then tell them that they didn't and this is what it should be (the plan). Fortune intervened in that they couldn't get the tar hot enough (feathers where available as fois gras was on the menu) before they ran him out of town on a rail.  The Suit arrived back in D.C. and caught both barrels from State who had every person at the meeting placing a phone call including the tea lady, to celebrate only the fact that for the first time in about 6 years State had gotten in right but only because he had gotten it so wrong.  This is not good for the rep of The Suit.  What to do?  Well, there is always CNBC and that is part 2 of the story if you join us tomorrow.