GOBSMACKED

I can't quite get over what occurred yesterday.  The biggy for us on this side of the pond was the affirmation by the Supreme Court of the constitutionality of Obamacare.  That didn't really surprise me but the manner in which it came about certainly did and for us the consequences will, I am afraid, be grave.  No one really knows for sure, but rumor has it that the position taken by Chief Justice Roberts came about at the last minute.  I shall not comment on the outcome other than to say the majority opinion is tortured both in law and in logic.  The dissent is brutal and direct: rarely if ever has a Chief Justice be subjuected to such withering language.  The astounding part of the the entire process is that the case was decided on an argument not made; the Chief essentially re-wrote the government's brief to decide the case in the manner which he did.  And it is here that danger lurks.

The Chief obviously had two things on his mind, the case before him and the political result that would have occurred if Obamacare were to be struck down.  The Leader and his minions, fully expecting a defeat or so it appeared,  had already been gearing up attacks on the Court and personally attacking individual Justices claiming that the Court had become "purely political" in it's scope.  As The Leader is the darling of the press the strategy was certain to be widly distributed.

The Chief Justice seems to have been faced with a choice; decide the case in a conventional fashion and almost certainly insert the Court into the Presidential campaign or decide the case in a manner which would insulate the Court, at least in this instance, from ongoing political attacks.  He chose the latter but in so doing, IMHO, has confirmed precisely the result he wished to avoid; the Court is a political institution subject to the pressures faced by all politicians.  The result will be that the question of Obamcare will be decided in November as it should be, but I am greatly afraid no good will come of this.  All of us need icons and one of them was this Court.  No longer.  Unfortunately, we have lost another; the Federal Reserve, whose independence can no longer be taken for granted in the face of its desperate attempt to solve structural and political issues even when it has been proven over and over that monetary responses to structuraal--and political--absurdities.  The November election, as I have said oft before, is one of the most important in the history of this nation and will no doubt determine not only the state of this Republic (if we can keep it as Ben Franklin warned) but our position in the world order.  We are rapidly running out of options and wisdom seems to have been spent.  Best we keep a close eye on Euroland as a window to the future...

...and segueing right along, Angie got wacked by Frankie and the boys down south and boy, did I miss that one...or did I?  After a marathon session, Germany agreed to allow the European Stability Fund to lend directly to Eurozone banks (Spain) initially through the sovereign, but when (if?) a Eurozone wide governing body for all banks implemented under the ECB is put in place the obligation will transfe immediately to the banks frreing up sovereign balance sheets to receive additional credit support from the private sector.  Yhose assembled also agreed that private lenders would stand pari passu with the official sector.  Huzzars all around as the Hun was humbled on the pitch in Poland by the Italians and in Brussels by the same with a bit of help from their friends.

On July 7, Spain will request a 100 billion Euros for their banks (gee, I though all they needed was 65) and work will begin immediately on a new Europe where all banks are governed centrally, economic standards are set and collective debt issuance will be discussed.  Clang, clang goes the can down the road.

And as for Frau Merkel.  Well, she gave up money already committed that was going to wind up in the banks anyway and good luck getting it back from Spain if things go haywire which they will.  As soon as the funds go in the front door on July 7 they will begin exiting out the back door on July 8 and we will find ourselves right back where we started from.  I expect to see some stabilizing of the interbank market but do not expect the sovereign debt market to return anytime soon; there is no bid save from central banks.  She's back in Germany now under a good deal of fire for "loosing" the argument.  Actually, she gave away little and bought a bit of time.  Now if there is any honesty among thieves I would expect to see talk among the rating agencies of a downgrade for Germany and if that occurs the Volk will not stand for it.  Oh, anybody following Greece?

Anyway, the stock market has convinced itself that the end is just around the corner and stayed was up all day with the DOW closing 277 points to the good.  Spain vs. Italy on Sunday.  They may agree to draw just to present a united front.  Now THAT would be newsworthy