Writing about the travails of Europe he past few days one thought kept pooping into my head. Is there anyone left who truly believes the monetary union can succeed? Draghi of course comes to mind but looking at his pronouncements and actions (or no actions) of the past few weeks I feel more and more that the guy has given up the ghost and is merely going through the motions. He looks tired, sounds beaten and by any form of judgement, faces an almost impossible task.
The continent is broken. The gulf between the creditor nations of the north and the debtor nations of the south is widening. In December, Spain fell into recession whilst Germany continue to grow with an unemployment rate falling to 5%. The Euro has fallen to its lowest level in years which only increases Germany's export position and noes nothing for the south whose economies become more and more internalized and who's indebtedness inexorably grows faced with an inflation rate in the negative range. The 10 year Bund yields below 0.50%; the 5 year actually traded to yield in negative ranges today pulling down yields in Italy and Spain to be sure but that is meaningless in a no growth, no inflation envirorment. It is clear, now, that China has massively over invested so no help there and even the stunning decline in energy means little. Sr. Draghi may have reached the end of the road. More importantly, he may now be prepared to accept defeat.
Oddly, German prospects, may also be facing a reversal. Over the past year, German exports to Europe have experienced a little noticed change. The market for German in now the U.K., not the members in the EMU as has mostly been the case. Angie landed in London today which is hardly a coincidence and what comes out of this chin wag may have more importance than people realize.
Cameron needs help. The up-coming election is far from the sure thing that many commentators, including myself, thought it would be a year or so ago. The result is in no man's land, and yet it is not altogether clear what Ms Merkel can do to move the momentum in Mr. Cameron's favor. However, one thing she must understand the one thing Mr. Cameron can do is to make good his threat to take the U.K out of the EU. That would probably result in his victory and write finis to the great experiment.
I have more thoughts on this overall situation but right now my eye sight is giving way. Forgive me, but I need to close and return after a bit of rest. Stick with me.
Showing posts with label ECU. Show all posts
Showing posts with label ECU. Show all posts
Wednesday, January 7, 2015
Wednesday, December 17, 2014
WE'RE BACK!
"Tom, I'm still seeing double." Tom is my surgeon and neighbor.
"Charlie, the operative word is seeing."
We're back, a good way from perfect but lookin' really good...and feeling even better.
Big doings while sidelined on just about everything so the trick is going to be how to weave the past with the present beginning with the election which, as he challenged it would be, was all about Il Duce's policies of the past six years. Yeah, Il Duce. No point of being clever about it anymore, let's just call it as it is and hope he doesn't end up on a lamppost. He, his policies and his party got killed which is going to shape the next two years but of course that hasn't stopped him in his imperial quest the latest being the "normalization" of relations with Cuba about which other than the Castro boys, the Venezulus, the Nics and other assorted vermin and despots in Latin Land, who benefits? Certainly not the Cuban people and the U.S. But, forward he goes, trailed by an increasingly smaller group of sycophants and hangers-on, wandering from one alternative universe to another. The problem is he has chosen a high stakes game in which he holds less than half of the aces. If he loses one of his challenges--just one--be it a real risk in with the Supremes involving Obama Care and Executive authority, or a disaster in foreign affairs, the economy could be brutalized. It is therefore critical that the Republicans, having been wildly successful, prepare for what they have fought and the fall-out from the same. Not to have in place contingency plans to deal with success would be critical. It all begins in two weeks.
On the bright side, the complete collapse in energy prices has been the second most important event in the past month and a half, providing what amounts to a huge tax break to the American consumer and massive upheavals in the geopolitical landscape especially in regard to Russia. Tsar Vlady's imperial ambitions may have been seriously derailed by a world awash in oil and the prospect of burgeoning new supplies of energy arriving in western Europe in a much shorter time frame. The Saudis bless them, have chosen sides in this one and from our standpoint, all the bad guys are getting squeezed. If Il Duce's mob aided in that, good on em'. But times are not good for the Rodina, Belarus--couldn't happen to a nicer bunch--and Venezuela just to name a few. The Zulus could be real close to asset sales and thoughts of default just past the first of the year assuming Duce doesn't do something even stupider and bail them out. Emerging market funds are the other side of this picture, however, with people like Allianze and...ready for it...PIMCO, up to their eyeballs in dodgy paper with the former holding a big number in Russian private sector. Nobody's going in the tank over this but there might well be a cut back or two in bonuses this year. Cry for them.
A third important and truly encouraging piece of news was the roll-back of a small part of Dodd-Frank which sent crazy Lizzy into an apoplectic state which was certainly fun to watch. Poor Lizzy, the minute her back was turned, WHAMMO, right in the neck from my old bud Chuck Schumer whose motto has always been, "Gather ye campaign contributions while ye may..." and the easiest gathering spot is Wall Street. But this is not going to go away and blood is going to be spilt. More on this in coming episodes and on the Federal Reserve which today said it ain't doing nuttin'. The market, which had been awful for ever it seemed immediately went up 300 points. And a Merry Early Christmas to all! Who says it's not about interest rates?
Finally, it became more and more apparent...as we have been suggesting...that the next year is going to be all about Europe, the Union and the Euro. Baring external political events, this is the game to be played and the one to watch which we shall be doing carefully and with great regularity. So, I am really looking forward to the coming months and trying to tie all this together. I hope you're still with me and thanks for all the good wishes I received. Believe me, they were very heart warming.
"Charlie, the operative word is seeing."
We're back, a good way from perfect but lookin' really good...and feeling even better.
Big doings while sidelined on just about everything so the trick is going to be how to weave the past with the present beginning with the election which, as he challenged it would be, was all about Il Duce's policies of the past six years. Yeah, Il Duce. No point of being clever about it anymore, let's just call it as it is and hope he doesn't end up on a lamppost. He, his policies and his party got killed which is going to shape the next two years but of course that hasn't stopped him in his imperial quest the latest being the "normalization" of relations with Cuba about which other than the Castro boys, the Venezulus, the Nics and other assorted vermin and despots in Latin Land, who benefits? Certainly not the Cuban people and the U.S. But, forward he goes, trailed by an increasingly smaller group of sycophants and hangers-on, wandering from one alternative universe to another. The problem is he has chosen a high stakes game in which he holds less than half of the aces. If he loses one of his challenges--just one--be it a real risk in with the Supremes involving Obama Care and Executive authority, or a disaster in foreign affairs, the economy could be brutalized. It is therefore critical that the Republicans, having been wildly successful, prepare for what they have fought and the fall-out from the same. Not to have in place contingency plans to deal with success would be critical. It all begins in two weeks.
On the bright side, the complete collapse in energy prices has been the second most important event in the past month and a half, providing what amounts to a huge tax break to the American consumer and massive upheavals in the geopolitical landscape especially in regard to Russia. Tsar Vlady's imperial ambitions may have been seriously derailed by a world awash in oil and the prospect of burgeoning new supplies of energy arriving in western Europe in a much shorter time frame. The Saudis bless them, have chosen sides in this one and from our standpoint, all the bad guys are getting squeezed. If Il Duce's mob aided in that, good on em'. But times are not good for the Rodina, Belarus--couldn't happen to a nicer bunch--and Venezuela just to name a few. The Zulus could be real close to asset sales and thoughts of default just past the first of the year assuming Duce doesn't do something even stupider and bail them out. Emerging market funds are the other side of this picture, however, with people like Allianze and...ready for it...PIMCO, up to their eyeballs in dodgy paper with the former holding a big number in Russian private sector. Nobody's going in the tank over this but there might well be a cut back or two in bonuses this year. Cry for them.
A third important and truly encouraging piece of news was the roll-back of a small part of Dodd-Frank which sent crazy Lizzy into an apoplectic state which was certainly fun to watch. Poor Lizzy, the minute her back was turned, WHAMMO, right in the neck from my old bud Chuck Schumer whose motto has always been, "Gather ye campaign contributions while ye may..." and the easiest gathering spot is Wall Street. But this is not going to go away and blood is going to be spilt. More on this in coming episodes and on the Federal Reserve which today said it ain't doing nuttin'. The market, which had been awful for ever it seemed immediately went up 300 points. And a Merry Early Christmas to all! Who says it's not about interest rates?
Finally, it became more and more apparent...as we have been suggesting...that the next year is going to be all about Europe, the Union and the Euro. Baring external political events, this is the game to be played and the one to watch which we shall be doing carefully and with great regularity. So, I am really looking forward to the coming months and trying to tie all this together. I hope you're still with me and thanks for all the good wishes I received. Believe me, they were very heart warming.
Monday, March 14, 2011
EUROTHROAT CALLS
My main man called over the weekend. He resides in Brussels for his sins but gets paid a bundle from the Commission. It's a nice life and he's on the inside. I've Americanized the content to protect the guilty.
"Well, I've been calling you for two days. Where the hell have you been?"
"Charlie, Charlie, relax. This has been a tough week."
"I'm in tears. What happened?"
"Well, as you Americans like to say, it was a food-fight at dinner. The Germans were being German, the French were being superior, the English above the fray, the Spanish somewhat irate, the Greeks contrite and the Irish very Irish, spoiling for a fight."
"Yet reports have an agreement being reached."
"Oh Charlie, you know better than that. It was midnight, everyone was most tired and what was put out was a series of unconnected dots, left to be connected in two weeks time. The Greeks got a bit but not enough. Frau Merkel made encouraging noises as to what she was prepared to do IF...and it is a bigger if than one would think...all affected parties do would she wants."
"...And will they?"
"Well, that remains to be seen, but I must say the new Irish on the block simply dug in their heels."
"On the tax question?"
"Indeed, as you predicted, and of course we are now in the game...what do you call it...chicken? We want them to raise the corporate tax rate and they keep reminding us about their banks all of whom owe the continent a lot of money so why should they continue to bail the continental banks out? Is an interesting question, no?" We like our banks just as they are.
"Yes, and shall remain such. And the rest..."
"Ha! The Greeks get a little break but the Portugese yield is now 12% which of course cannot last but about that, no one is talking. But Trichet seems to be saying if you issue, we will buy. Sounds like your man although Trichet even said he may buy direct..."
"I can get it for you wholesale."
"What?"
"Never mind, an old American joke. So what happens in 10 days?"
"I don't know, but funny is it not. They are speaking, not with one voice but they actually said some things I did not expect so maybe they can find one voice in the time up to the next meeting."
"Prediction?"
"I think not. More talk, that's all. We speak as the European Union but we are seperate countries still. How you say, old habits die hard? We still don't really trust each other. It is not like a political disagreement, it is the national psyche syndrome. But the one thing they agree about is that you are no help. I tell you, you say Bernanke and people just shake their heads. No one can understand his positions and why he seems not to listen. This is bad, Charlie, it really is. It should not be so."
"I'm told a lot of people involved here feel the same way. Just don't blame us for your home grown problems. Listen, thanks for the update, I appreciate it."
"I know, Charlie, on this you are right. Spring is coming, Charlie, come visit. Brussels is good in the spring."
"Almost everywhere is good in the spring my friend, but Brussels is too expensive."
"Which is why they pay us so much, Charlie. Life is good."
"Well, I've been calling you for two days. Where the hell have you been?"
"Charlie, Charlie, relax. This has been a tough week."
"I'm in tears. What happened?"
"Well, as you Americans like to say, it was a food-fight at dinner. The Germans were being German, the French were being superior, the English above the fray, the Spanish somewhat irate, the Greeks contrite and the Irish very Irish, spoiling for a fight."
"Yet reports have an agreement being reached."
"Oh Charlie, you know better than that. It was midnight, everyone was most tired and what was put out was a series of unconnected dots, left to be connected in two weeks time. The Greeks got a bit but not enough. Frau Merkel made encouraging noises as to what she was prepared to do IF...and it is a bigger if than one would think...all affected parties do would she wants."
"...And will they?"
"Well, that remains to be seen, but I must say the new Irish on the block simply dug in their heels."
"On the tax question?"
"Indeed, as you predicted, and of course we are now in the game...what do you call it...chicken? We want them to raise the corporate tax rate and they keep reminding us about their banks all of whom owe the continent a lot of money so why should they continue to bail the continental banks out? Is an interesting question, no?" We like our banks just as they are.
"Yes, and shall remain such. And the rest..."
"Ha! The Greeks get a little break but the Portugese yield is now 12% which of course cannot last but about that, no one is talking. But Trichet seems to be saying if you issue, we will buy. Sounds like your man although Trichet even said he may buy direct..."
"I can get it for you wholesale."
"What?"
"Never mind, an old American joke. So what happens in 10 days?"
"I don't know, but funny is it not. They are speaking, not with one voice but they actually said some things I did not expect so maybe they can find one voice in the time up to the next meeting."
"Prediction?"
"I think not. More talk, that's all. We speak as the European Union but we are seperate countries still. How you say, old habits die hard? We still don't really trust each other. It is not like a political disagreement, it is the national psyche syndrome. But the one thing they agree about is that you are no help. I tell you, you say Bernanke and people just shake their heads. No one can understand his positions and why he seems not to listen. This is bad, Charlie, it really is. It should not be so."
"I'm told a lot of people involved here feel the same way. Just don't blame us for your home grown problems. Listen, thanks for the update, I appreciate it."
"I know, Charlie, on this you are right. Spring is coming, Charlie, come visit. Brussels is good in the spring."
"Almost everywhere is good in the spring my friend, but Brussels is too expensive."
"Which is why they pay us so much, Charlie. Life is good."
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