A LOSS FOR WORDS

There isn't a whole lot going on either here or over there. The G-20 met over the weekend in Mexico and came up with zilch.  By the by, did you even notice that in February this mob always seems to get together some place where it's nice and warm on taxpayer dollars?  And nothing ever seems to happen?  Might it not be better to meet in, say, Moscow?  Can't go out, bloody filthy.  Nothing to do but stay inside and perhaps crank out a few agreements.  Is that too much to ask?  Don't answer.

One thing we did figure out, however, is that Germany has absolutely no interest in bigger bail out funds, IMF contributions or any such approach that would get the good Burgers back home madder than they already are.  That means that all eyes will be on Super Mario and the ECB later in the week when word will emerge as to how much is going to be made available to the European banks in phase 2 of the Free Money program.  Bet it's a bundle.  Then the focus will shift as to just what the banks are going to do with it.  Betcha that a bunch of it gets hoarded away rather than dangled in front of the credit starved European corporations.  The rest will get arbed in governments with a positive yield--an exercise known as the "carry trade."  In the mean time, the Euro is up (again), Italian yields are down, the Spanish held a couple of excellent auctions and love is in the air.  It must be close to spring and I remain somewhat baffled by it all...

And while all of that is going on we shall find out who is going to play ball with the Greeks and who among those with bonds governed by English law isn't.  More important is the decision regarding the CDSs out there: will whatever occurs be considered a "credit event" by whomsoever decides these things and if it is what will be effect upon the markets.  The last estimate of CDS exposure that I saw was in the range of 3.5 billion Euros; not chopped liver but not all the money in the world either.  Things will probably work out ok but if there is a concentration in one or two institutions...well, it could be fun time.  Perversely, I hope there is.  I know, I'm a rotter.

See you tomorrow.