ODE TO JOY

"Read you friend Buchheit's comments yesterday?"  Gerry called today bright and early.

"Yep.  Quite something."  For the few of you not in the know, Buchheit refers to Lee Buchheit, Partner of Cleary, Gottleib, rescheduling guru and he who has terrorized financial institutions on behalf of sovereign clients (all deadbeats) for over 30 years.  When Buchheit speaks, if you have a brain in your head you should listen.

"What the hell is he getting at, Charlie?  You know him as well as anyone.  Issuing warnings now about hidden risk in emerging markets."  Did he switch sides or something?"

"I am sure not, but you have to understand Lee.  There is a wonderful line from Shakespeare...I forget where...but it is '...and do as adversaries in the law; strive mightily but eat and drink as friends.'
That's the way he practices law and there are damn few like him...more's the pity.  The representation of the client is one thing at which he is singular in purpose but that doesn't mean he will divorce himself from friends or reality outside of the client relationship.  And frankly, when he warns that there are hidden risks particularly in the banking sector where so much debt has been guaranteed by sovereigns, that is a statement that hopefully cause both sides to think about before doing something stupid believing this credit thing is in the barn and dry."

"You think he is right?"

"Of course he's right.  Look, this is about silly people having made really dumb decisions when all of the evidence they needed to avoid making those decisions was staring them right in the face.  Now I've heard Lee say, 'He that sues my client is my friend,' but believe me, part of his job as he sees it is avoiding more debacles such as those in the past five years.  Nevertheless, I think he is pretty sure that there is a lot more business coming his way given recent history.  I also think he is not disturbed by the prospect.  Got it?"

"Got it."

As I have said before, I've been on both sides with Brother Buchheit and for him I have nothing but the greatest respect.  And in Euroland it is still about the banks in ways that we Over Here cannot imagine.  The interconnections between the political forces and the financial institutions remain unrelenting.  A prime example of this is Monte di Paschi de Sienna, much in the news these past weeks.

I have absolutely no knowledge as to the rumors surrounding the bank and Mario Draghi and what did happen or what may have happened during Draghi's involvement.  Suffice to say Draghi has been hurt by some very vague allegations and the last guy you want hurt at this time is Draghi.  Further, I am willing to bet a good deal of money (my idea of a "good deal" is probably a good deal less than yours) that not all the governmental involvement warned of by Mr. Buchheit is there in plain sight.  If the growth enhancer ever hits the fan again, after the past couple of years some ugly stuff is going to burst into light. Keep watching this space.

Another large cloud on the horizon which might come under close scrutiny very shortly is the continued complete disagreement between Frankie and David on the European budget which the Brits consider dead on arrival unless modified ("reduced").  The financial risk to the region is enhanced by the political atmosphere which right now is not good.  Finally, the Same Sr. Draghi warned today that economic conditions are nor looking up with a not-so-veiled threat that the strength of the Euro will probably reduce economic prospects in the coming year.  Over Here, the reaction was. "What!  You mean all is not well Over There?"  Stocks fell as a result.  Frankly, I would have thought that the markets would have collapsed upon learning how dumb are the people in charge, but that's just me.  Anyway, the cat is out of the bag and at the same time here comes the sequester which is no big thing if one stops and thinks about it, but then again, there aint much thinkin' going on these days.  This could be a rocky ride beginning in a few weeks but if you had the idea that Over There was about to end on a happy note, you might want to think again.  It may have just started.