THE WEEKEND COMETH

...and it will be one of total politics except for one glorious interlude.  The jobs report today was awful, and while the unemployment rate ticked down to 8.1% that was only because of the fact that over half a million either left the job market or stopped looking for work.  The administration tried to hype the headline number but nobody was buying it and every market crashed including oil futures which fell four bucks to under $100.  Every talking head with an access to a microphone will be fighting for air time to tell us what this really means for the economy and for The Leader's re-election plans.  The consus  will be a grudging "not good" but rays of sunshine admid the clouds will be found.  In short, why listen.

Not so in Euroland, however, as the French will undoubtably choose a new president and the Greeks...well...the Greeks will choose someone or many ones leading to outbreaks of street demonstrations signifying...absolutely nothing as far as Euroland is concerned.  Everyone realizes Greece is gone and the only thing at stake is whether ther is a majority that pulls the country out right now or do we have to wait for another round of elections later in the year; I'm in the latter camp on this one.  Greeks are very good at theater and tragedies.  Ever hear the one about the Greek who offs his old man, marries his mother...you did, eh.  Sorry.

France is another matter. There's a bet going about as to how Hollande will approach the country in his victory speech:  fire and brimstone Euro leftist or the conciliator, "Let us together build a New France..." I'm in the minority but I think he will take the latter approach and well he might because markets are spooked enough as is.  For better or worse Frace is the keystone; oh Germany is the most powerful and important but if France chooses the hard socialist road it will be almost impossible to reach consensus within the union on just about anything and Fin as we always saw in the old black and whites.  The openings on Monday bear watching.  The results are already priced in but how the winner reacts is a game-changer.

Fortunately, amidst all this is a beacon of sanity shining from northwest London.  The FA Cup, Liverpool vs. Chelsea two storied clubs of English football.  It was an easy walk to Stanford Bridge from where I lived years ago but White Hart Lane was my Ground.  So, no dog in this fight but one can't help but wish that Liverpool, with all the tradition and support base not to mention the wonderful Dalglish, pacing the touch line on the pitch where he used to roam in front of the Kop, finds the route to victory.  Alas, I'm afraid it is not to be.  Chelsea, 3-1.  You'll never walk alone old sons.

MUCH ADO ABOUT....

Well, I didn't get any help at all yesterday which is why nothing appeared. That was bad, then the day turned awful as Barcelona drew with Chelsea 1-1 at Stanford Bridge to win the semi-final on a well-earned goal 2:45 into extra time. Bummer. The ground was an hour walk from our old digs in London or a 15 minute ride down the King's Road on the #12. This was personal. On top of all that the match was refereed by Mr. Ovrebo, a Norwegian, who, among other things managed to miss a hand ball in the box by Gerard Pique of Barca that was witnessed by 65,000 in the ground and 200,000,000 across Europe, two other probable penalties in the box and then, just to show he was impartial, issued a red card to Barca's last starting defender for very little which means they face the dreaded Manchester United in two weeks at Il Stadio Olympio nella Roma with a back line of four guys named Schwartz. Not good. Now for those who don't follow this sport too closely, Norway does not have professional referees. Mr Ovrebo has a day job which means these two sides had the most important match of the year and in the case of many of the players, their lifetimes, refereed by an amateur. Mr. Ovrebo receives a fee for the evening and expenses. You pay peanuts, you get monkeys. Got the picture.

Anyway, this morning we awakened to the results of the stress test and an explanation of the same by Our Hero on the Op Ed page of the New York Times. Neither the results nor the explanation told us anything. It would appear that Bank of America was designated as the institution that led the hit parade of those in need of more capital and on the other end of the list was Citigroup who was long expected to be in the most dire straits. Not so. Bank of America's need was listed at $35 billion but C came in at only $5 billion. Equity markets yawned and promptly bid up bank stocks as they had been doing all week. Mr. Geitner proclaimed that this exercise replaced uncertainty with transparency and would bring more private capital to the financial system. Well, I guess I, like St Paul have to get knocked off my ass on my ass, but I am still seeing through a glass darkly. I don't know any more about the true state of the banks any more than I did 6 months ago other than for Our Hero telling me all will be fine now that he and The Leader are on the case. One might keep in mind that most of this went down the gurgle tube when he ran the NY Fed and while I don't for one moment wish to blame him, there remains a suspicion that he provides little to the solution. He sure can play to the markets, however. I don't wish to be misunderstood. I am not for a moment suggesting the this exercise was a white wash. The Fed ran it and the Fed does not play games. I'm sure what was done was fully professional.

One thing that was revealed, almost by accident, is that all of the banks have rather high capital ratios; certainly higher than the regulatory ratios of the Basel Accord. The shortfalls discussed are all related to primary capital or common equity which we have discussed earlier in the week. The yawn of the markets was probably a result of all the equity geniuses realizing that, 'Hey, these guys need but convert some of what they already have and everybody is home and dry." It also has probably provoked some thought that there may be something else involved here than just the designation and then recategorizing capital that was there in the first place. Now some of that preferred is Uncle's money and given what has already transpired, banks will probably be loath to provide any more direct ownership to the government. But the problem, if there was one, appears to be quite manageable. Now, provided Our Hero and his mob get the hell out of the way, stop this ridiculous asset swap/sale idea and keep positive, confidence and the liquidity which always follows will return. And that, boys and girls was what it was all about in the first place.

Mother's day this weekend, bless them all. We are off to see one of them and one pack of grandchildren. See you next week.