JUST WHEN YOU THOUGHT...

...things couldn't get more confusing, along comes today.  Let's review the bidding.  As late as two weeks ago we knew a couple of things for sure:

1.  The Fed was going to have at least three tightening events this year
2.  Manufacturing was on the move
3.  Confidence was way up
4.  There was a ray of sunshine Over There
5.  If you were going to do one thing this year it was stay the hell away from bonds.

Today, the 10 year was at 2.34% from 2.52% and every thing else we knew we found out we didn't. This has been some ride which shows no sign of ending as long as the political parties in this country...and Over There as well stop lobbing absolute bombs at one another.  Yes, the more moderate right came out ahead in Holland which knocked prospects for Mme. LePen down a notch or two but back she comes aided by an apparent infusion of serious cash from a Russian financial institution...SACRE BLU!..a few terrorist inspired murders and a solid showing in the tri-partite debate.  Then of course Greece has been rediscovered and Italy, which has been below the radar has suddenly popped up with recent economic performances which somewhat lag behind those of the aforementioned Greece.  Hozzat happen?  But the big one is next week when, if all goes according to plan, Mrs.May pulls the trigger on BREXIT just as the Euros finally figured out that if (when?) the Brits leave there's going to be hell to pay for those who are left...assuming there is anything left in which one might remain.

The Donald of course didn't help things with what was, honestly, a pretty crass handling of Angie who just wanted a handshake after all.  In a world which for some years now has given itself over to form rather than any substance you would think the guy would be smart enough to play the game at least a little bit.  Nope, not yet but then again he's in the White House with a couple of billion and a wife that makes the former First Lady of France look like the third runner up in the Miss Lug Nut Pageant and I'm going through the fourth  iteration of the new kitchen design.  Maybe that's it: the real world he seeketh not.  Assuming one knows what Beeth the Real World.

I suppose this is a long way of saying we are probably vulnerable to multiple event risks in multiple locations with probably less agreement and coordination among governing parties in the west as we have seen in a long time.  However, I am reminded of the sage wisdom of the great Henry Kissinger who once stated in remarks regarding his former boss that, "zum times it is gut to have people zink the President is a little crazy, ja?"   Funny, a lot of people thought and still think Henry is a bit crazy. Yeah, like a fox, nein?  

JANET TIME .....YAWN

Fed moved 25 b.p. today as everyone knew they would.  Ms. Yellen's statement sounded like nothing had happened since the last meeting...nothing, zero, nada on the election or it's possible aftermath.  She was  a bit bullish in he predictions which called for a probable thrice-hike of 1/4% in 2017 and an eventual top rate of 3.00% by end-2018.  Down went the DOW 114 points; up went the dollar index; the 2, 5 and 10 year shot up with the latter easily passing 2.53% but the Long Bond sat still.  Damnedest thing...the curve actually flattened on the long end.  What does all this mean?  Beats me.  Markets are bullish; rates have been moving up; employment is at full capacity according to the manner by which it is counted which is of course rubbish and sentiment is sky high.  Janet, who loves data followed the data.  Can we all move on now?

Oh, if you are looking for truly nuts, the Greeks are back in the news.  Not to be content with BREXIT, the mess in Italy, the upcoming French and Dutch elections, the Euros have decided to grant the Greeks no further debt relief because it appears the Germans threw a hissy fit over PM Tsaspris' decision to grant Christmas bonuses which was verboten under the standing agreement.  OK, say the Greeks, we're going to call for snap elections early next year so you guys have THAT, too, to deal with and of course a conservative government will win on a campaign of dump the Euro and if it comes to it, the Union as well.  Guys, can't we all just get along?  The Greeks can NEVER pay what they owe so why care.

And of course the Italians are forming a new interim government, the 1,236,202 in the last hundred years and people are actually bidding up the shares of Italian banks like this is a good thing.  UniBank is talking up their capital raising exercise and Monte di Paschi is as well.  Speaking of wells, there has to be something in the water in Italy...the old Roman viaducts broke down or something.  They gotta test that stuff.

And the other Wells...Fargo that is.  Their living will was rejected.  Poor Big Danny Tarullo:  the only saving and loan on his watch list (he likes that kind of business model) has let him down.  Talk about the Grinch who stole Christmas.  Danny is left pontificating while staring out into space wondering how did it all go so terribly wrong so fast.  Worst yet, in 45 days of so he's going to have to deal with that bunch of thugs from Goldman Sachs over at Treasury so here is my first prediction for the new year:  Mr. Tarullo will be the next governor to resign from the Federal Reserve...IT'S BEGINNING TO LOOK A LOT LIKE CHRISTMAS........!

                                                -----------------------------------------------------

Tomorrow will be the last regular entry for a while except for the occasional effort.  We head East to baby sit and then for Christmas and when we return we'll be all-consumed selling our house and moving to another smaller location in the neighborhood.  Very bittersweet.  This place has been great to us and in the almost 16 years we have owned it not very many bad things have happened.  But it's time.   I hope to be up and running by mid-January.  A most Merry and Blessed Christmas to all, you my readers and a Brilliant New Year.

                         

STEADY THE BUFFS

"THE BUFFS" is the nickname of the East Kent Regiment--or the 3rd Regiment of  Foot if you prefer.  Supposedly at Waterloo, Wellington, seeing a bit of nervousness, rode among the squaddies and simply said, "Steady The Buffs."  The Buffs steadied and the rest is history.  Never happened of course, but the phrase has been a standby in England for a while.

Well, The Buffs steadied again today...a bit earlier than I thought they would, but steadied none the less.  Sterling was up. equities were way up, Gilts were better, yields were up all about as (predicted) the markets began to take a closer look at what just occurred.  I don't think it's over yet, but if we get another day or so it might just be.

What of course became even more unsettled is the politics of the thing as the Labor leader Mr. Corbyn was on the losing end of a huge "no confidence" vote by his party which he announced he plans to ignore (unsuccessfully, in the end).   Off went Mr. Cameron to Brussels on a "Sorry, lads" trip while his party was doing a bit of casting about looking for a replacement that wasn't named Boris Johnson and who had been in the REMAIN camp whilst at the same time trying to convince themselves that this would not result in the rest of the country storming Parliament seeking blood of politicians.  Johnson is of course crazy as a loon and absolutely brilliant aside from the fact that he would be an absolute kick to watch negotiating with the Euros...either in English or in French with which he is very comfortable...just to get their goat.  He's been known to lapse into Latin from time to time as well just for the hell of it.  Oh my, the material that could come from that!  I can't wait.

But, nothing is certain.  My Really Smart Friend, Larry, rang today to say that the odds are building that it will not happen at all.  Disagreeing with him is dangerous and one should never say "never," but I think the odds of that scenario playing out are far too long.  Too much personal interest at stake on both sides for a working compromise to be reached resulting in that achievement.  One thing he did add and with which I fully agree and to which I have alluded, most pundits do not recognize the leverage that the Brits have in this upcoming discussion.  Time is actually on their side as nothing good enough is going to happen in the near term to alter the trajectory of the EU which is clearly  downward; politically, financially and economically.  Things are going to be difficult for a while for the Brits but then again, you know these Eton Old Boys.  I'll bet the first thing out of the mouth of Boris is, "Steady The Buffs."  I have a feeling they will probably steady but only time will tell.  Tomorrow is another day in this adventure.

A MOMENT IN TIME

There wasn't any one thing that occurred today that was shocking, but a year from now I want to look back and see whether this moment had any real, lasting effect.

The Treasury's 10 year auction today went just swimmingly.  It was $20 billion and nothing much changed except that it appears to have attracted the highest percentage of foreign bid in history.  The coverage was fine but the participation rate was 73.6% non-American.  The reason is simple.  The 10 year closed today with a yield of 1.70%.  The Bund was at a point in the day yielding 0.035%.  That's right, three basis points.  No maturity up to ten years has a positive yield.  Middle dated Gilts were at 1.24%; the 50-year under 2.00% Surely the 10-year will have to follow suit.  We are reaching a point where it would be far to say that global wealth is declining.

Of course the equity markets are doing just fine with the DOW closing today over 18,000.  It is the only place to be despite record high valuations.  Oil was well up on the day as well as U.S. stockpiles came in lower than expected and more impediments to production emerged.  There is now even some talk in the West Texas Town of El Paso of redeploying some rigs, but huge damage has been done.  The cycle continues.

It is a situation that almost defies an explanation but I guess the World Bank came as close to providing one today with an even more gloomy outlook on global economic development that is not too far from being dismal.  More worrying is the Bank's belief that any shock could put the entire system into recession, and while what that might be was not clearly spelled out surely the British referendum has to be in the forefront of their thinking.  In my view, the Bank is correct but if looking at Europe the more dangerous spot is France, whether the Brits vote to leave or not.  Quietly, and with little notice Over Here, France is facing a crisis such as not occurred in decades.

Frankie Holland's approval rating is somewhere in the high teens.  Unfortunately, his socialist rhetoric that served him so well in attaining the Presidency has come back to bite him in the derriere.  In practise, it hasn't worked (quelle suprise!) with almost 60% of the GDP of the nation being supplied by the government.  Now that's one thing if you're a tiny country like Denmark, but France isn't a tiny country and whilst Denmark and especially Germany have, throughout the past ten years rewritten their labor laws, it's damn near impossible to fire anyone in France creating almost complete job immobility while at the same time one has the specter of the railway workers demanding a 32 hour  work week!  The 35 hours they presently toil is just too hard.  It's little wonder then that a labor tribunal awards 450,000 Euros to the convicted rogue trader at Soc Gen that literally broke the bank!   That, coupled with the dreadful immigration mess and a goodly number of French Muslim citizens living in a state within the State has created the remarkable rise of Madame Le Pen and the Far Right which until the Austrian elections of a couple of weeks ago were given no chance in 2017.  They are now considered almost even money to get enough votes to form a government.  And we think The Donald is way out there?  He's a bureaucrat compared with this gal.

Another problem.  The French have always looked at the EU as the great equalizer.  It never was but it has taken them this long to figure it out.  There is Germany and everybody else.  If the Brits leave, IMHO The clamor in France for a dissolution will be overwhelming and one will be able to write finis to this noble experiment.  It will not and should not survive.  And that, boys and girls, is going to be something to behold.  Tune in June 2017 to see how right--or wrong--I was.

FINAL THOUGHTS (FOR A WHILE)

Did you know that Germany has the lowest birth rate in Europe and one of the lowest in the World?  Did you know that the projections for 2030 indicate that Europe will have 6% of the world's population, produce 20% of the world's GDP and have 50% of the World's "social expenditures?" Didn't know that huh?  Neither did I until those facts were brought to may attention last week.  I'm told Ms. Merkel is well aware of them.  So when the 900,000 figure was thrown around a couple of days ago I thought, "Well, here's the solution to the population crisis!  Not only do you get 900,000 right away but these people breed!"  Then I thought about the other two projections and, apparently, so did everybody else in Europe because there is now a rush to build fences.  Calling Donald Trump!  Boy, what a pitch for the One World movement!

Kidding aside, without a migration of basically welfare migrants, the future is really bleak if these numbers stand.  Kidding aside, Europe could use immigration...immigration to the United States has sustained this economy for years.  But again, our immigration has for the most part been of people who share our general values; this is not the case in Europe.  It is a brutal and some would say racist thing to say but what we see in too many countries which practice Islam is the wasting of the brain and productive capacity of half of the population, saved only by vast commodity wealth in the lucky few.
Unfortunately it is the unlucky who are heading to Europe and while the sheer numbers may be welcome in the abstract, can Europe do what has to be done to make it work: to wit the forceable integration into western society of a group of people who in some if not many cases have be taught to abhor that very society.  Does Europe have the will?  I leave the thought.

Another troubling aspect.  With a movement of people so vast, is it really possible to actually identify every individual?  I ask this because it seems to me that if a group such as ISIS wished to infiltrate the continent in large numbers, here's the perfect opportunity.  I am also sure that this is not lost on the Europeans who have far less difficulty in approaching a problem such as this without the niceties that we Americans, IMHO unduly place upon ourselves such as the nonsense we call "profiling."  Tell that to the GDSE--a nasty bunch if there ever was one--and you will get a big, Gaelic laugh.  So in the coming months look for a huge uptick in claims of human rights violations from the usual suspect groups.  Gang, we have a real problem on multiple levels as this situation grows and will undoubtedly turn ugly.  I'm glad I'm getting back to finance and banking tomorrow.  Nothing but the saintly walk in that neighborhood.

A NEW DAY IS DAWNING

An apt line from the hauntingly beautiful "Cats" from the musical of the same name might best describe the situation in the UK today.  My friend, Gordon, said it best and I don't think he will mind if I quote him a bit.

"You cannot imagine the political earthquake this represents.  People normally completely uninterested in politics are dazed.  It will be a decisive five years.  Labor lost to the right in England, and to the left in Scotland.  By the time they figure out which way they are facing, it may be all but over for them."

Mind you, this is in a nation where two dominant political parties have shared rule for nearly 200 years, far longer than the Dems and the Repubs Over Here.  In speaking with a number of Brits this weekend there is a certain amount to fear of the unknown given the extent of the political slaughter which took place.  The Tories have it all and given the speed in which they have reorganized the entire government they are well aware of what lays before them.  Yes, the SNP will be pests from the git-go, but there now exists no real organized opposition.  UKIP won only one seat but got four million votes...twice the number of the SNP.  Their showing in the north was particularly strong, displacing Labor as the number two party in many districts.  Yes, they are anti-Europe but more than that as well as they are attempting to appeal to the working man as the alternative to Labor.  The next big issue will be whether they can do that to any extent or whether they will simply fade away as a choice for only a moment in time.  If they succeed, the world will once again be turned upside down.

Of course the Tories will have to deal with the "Scottish Question" as it is now being called.  At the end of the day, however, 56 seats doesn't scare anyone especially with Labor in tatters and a considerable increase in home rule will probably be granted but with that will certainly come a reduction of the dole passed up north with which the English had reached the point of disgust.  It was no small point in the Tory victory.  The choice will be made clear; more independence or the cash?  And next comes the issue of Europe.

Cameron has promised a referendum on continued membership in the EU by 2017.  He will keep that pledge, but before so doing he will attempt to renegotiate the UK position within the body from the standpoint of enormous domestic political strength.  Enough has been said lately as to importance of maintaning Greece as a member; the thought of a Brexit would surely raise concern to the state of paranoia for there is considerable agreement that without the Brits the Union would cease to exist.  To be honest, there is probably more support for remaining in Europe--even among the Scots--throughout the UK than to leave but Cameron, who has proven to be not only a cunning politician but a brutal one as well, is certainly capable of keeping the opinion polls on a knife's edge as the moment becomes closer unless he gets the sort of deal from the Euros that he demands.  My bet is he will.

In the end, this election may well be the precursor to the American election of next year.  The differences in political philosophy Over There can be boiled down to the contrast of big government, social spending and higher taxes vs. limited government, fewer regulations, lower taxes and a rejection of the European nanny state...just like Over Here.  Oddly, the players were even the same, with Labor relying on the economics of Paul Krugman and uncle Joe Stieglitz and the political acumen and class warfare of David Axelrod who was paid over $500,000.  They were soundly rejected but the battle will be joined again in a year.  In the meantime, the UK will provide an excellent test tube for the continued experiment of Mr. Cameron's policies which can be equated closely to those of the more centrist wing of the Republican party who will certainly be cheering him on.  A new day begins, the dogs bark and the caravan moves on.  Only this time the destination is not yet known.

Greece paid the IMF today...a day early.  They are lighter by 700 million.  Nothing has changed.

Correction:  The level of employment in the work force dropped below 64% not 70% as had been stated.  My apologies for the error.

MAY DAY

That's when the Russians show off all their new pretty equipment with which to kill people.  It's also a lovely month in the fly-over zone.  It's also a universal distress call meaning immediate assistance required.  Pick a scenario and you're covered.

Janet Yellen laid a big one on the market today.  Channeling Alan Greenspan, she expressed the view that equity prices are quite generous.  A bit short of irrational exuberance, but good enough to scare a bunch of people.  Janet should know.  After all the valuations in the equity markets are a direct result of the world's central banks irrational exuberance in tearing down rain forests to print money, creating single shop shopping for the investor; there is no place else to put it.  Nevertheless, it is extraordinary that so smart a woman can come up with such a dumb statement at a time when it would appear that a healthy dose of reassurance is or will soon be needed.

I've been writing about this for a while but finally it is beginning to catch on.  More and more commentators are looking at the state of the fixed income market and not liking what they see--in particular, U.S. Treasuries.  The 10 year closed at a 2.24% yield today.  Why?  Who knows for sure but it's now trading above it's recent range.  Is it the movement that has produced the liquidity squeeze of which we have spoken or is it the lack of liquidity that has provoked the move?  You may well have noticed that for the first time in a long while Japan has replaced China as the largest holder of U.S. debt.  The Chinese have been sellers.  Who have been the buyers?  Amazingly, there were a couple of tales floated that it was the Belgians.  That's crap.  Certainly not the EU.  Not the Fund.  Not the ECB.  Then who?  Actually, that is not the mystery; that remains with the Chinese.  It's not the buyers it's the sellers and the reason for the sales.

We have also spoken of the need created by Dodd/Frank for the banks to hold a greater percentage of liquid assets in their asset pool and the additional requirement to reduce "market making" in their trading operations.  Now once again, bonds are not like loans; bond valuations change day-to-day based on prices.  Yield goes up, price comes down.  If the yield goes way up...on a daily valuation you can lose your shirt.

Well, then, what does a girl do?  A smart girl says, "I'm getting the hell out of this position...GIVE ME A BID!"  But there are no bids...and today there are no bids.  Of course the harder our gal tries to find a bid the lower goes the price and if the price lowers, the loss increases until...

Well, you have to take your medicine at some point in order to live to fight another day, but suppose instead of a more-or-less orderly market reversal you have an "event" that moves everything  l i k e   r i g h t  n o w.   One of those 10-sigma moves that the quants love to talk about.  A Lehman,...or to make it simpler, the Chinese or the Russians jumping up really ugly with one of their neighbors.  Or a Greek exit from the EU.  Or--God forbid--a terrorist success in the United States.  And suddenly, the every assets mandated to protect the solvency of the system turn into weapons of mass destruction, because if that market collapses, all markets collapse.

But, it's a glorious day here, and I'm not going to worry about it; I'll leave that to Janet--she knows about these things.  I'll also leave her with something else she might be able to use   ...  ---  ...   Any port in a storm.


Addendum:   The Greeks are seriously buggered in so many ways there in no point in writing about it any more.  Let's just see what happens and if they can pull it out.

BACK IN ACTION II

There will be days like yesterday I guess when the eye just says, "Not today," and that is that.  Actually, it picked a good day as things were muddled as opposed to today when things are less muddled Over There.

The lines have been drawn with the Greeks asking for debt relief and the Euros saying no...or something close to no.  Markets were shocked, SHOCKED, when the ECB announced that they would no longer accept Greek sovereign debt as collateral for the direct borrowings of Greek banks.  Why shocked?  You tell me.  One applies pressure where pressure can be applied and it was always in the cards that this would be the first move in the big chess match that has now begun.  My thoughts?  There is one problem hinging over all of this:  The new Greek government is composed entirely of rookies; the Euros are led by a bunch of hard cases in Berlin and the advisor is Lazard and one individual within the firm who is more disliked than the firm itself.  There are also huge egos all over the place.  This package isn't dynamite; it's more like Nitro..unstable to a fault.  A misstep here, a slip up there, the egos take over and one finds one's self on a very slippery slope indeed.

Now if everyone keeps their heads here's what I think is going to happen not because it should but because it is the only real way out of this thing unless the decision is made to say the hell with Greece and carry on from there.  And that could happen...it's just that I don't think it will.  I just don't think the Euros have the nerve.  But here's where rookie mistakes come in.  The ECB decision will force the Greek central bank to support it's banking sector directly and for that they are going to have to, at this point at least, reach some kind of accommodation with the ECB.  Demands will be made; the bargaining position of the central bank is not good.  There has been a huge loss of liquidity in the past month that must be stopped and you really run out of options very quickly.  Either the central bank--and the government--eats some humble pie, or the government does something VERY stupid like imposing controls on capital.  It is not beyond the realm of thought that an angry, young, inexperienced government would do just that.  I discussed this with He Who Knows All Things and his view is that finishes the Euro.  I disagree.  It finishes Greece but not the Euro although it would not make for a fun time.  Indeed, it might in the end be the easier way out.  Here's why.

Little Paulie Krugman's solution to the problem would be simply to throw more money at the Greeks.  Little Paulie is on to something but unfortunately, he doesn't know what.  Deficits to him spell growth.  What he fails to recognize or admit for that matter, is without RELIEF from this level of debt, there can be no growth.  Nick Brady (with a little nudge from other people) figured that out 25 years ago.  So what has to be crafted here is some accommodation where a "restructuring" is constructed in a manner where the result is debt relief and that is kept hidden from the great unwashed for as long as possible.  That must be done because in this situation, the creditors of Greece are not financial institutions who were the main holders of sovereign debt when Nick was roaming the range and to whom you could put the screws at the drop of a hat...and he did to the tune of 35% plus in one swell foop.  Oh no.  Today the creditors are other sovereigns and that means, as I have stated, Das Volk.  Governments have fallen for less.

How does one do this?  I have no idea having no detailed knowledge of the composition of Greece's debt (don't believe everything you read in the papers).  But there is always a way PROVIDED everyone works together and keeps their mouths shut.  This is not easy to do with a bunch of precocious politicians and investments bankers running around loose.  Start shouting victory from the rooftops and you can be sure that down below there will be a chorus singing along called Italy, Spain and a some of their friends.  It is going to require a very delicate touch.

There is one further observation I would like to make at this point which one might choose to keep in mind.  Does anyone really believe that the Greek banking system is solvent?  No?  Well then, how does it keep functioning?  This is the perfect proof of what I have said over and over:  Banks get sick on the asset side but die on the liability side.  It's liquidity that counts, boys and girls.  You can keep a nation's entire banking system running forever as long as you are dumb enough to lend it money.  Go tell that to Crazy Lizzy Warren.  If she doesn't believe it, tell her to call Charlie.  You see, I did it once.

BACK IN ACTION

...although I'm really not sure why.  We returned to 16 inches of new snow on the ground.  I should be someplace else.  Maybe there is something to this climate change thing, 'cause I ain't never seen nuttin' like this

Well, today the Greeks made everybody happy in saying that it was their intention to honor their obligations.  Markets soared.  Of course they didn't say just how they intended to accomplish that feat as they are pretty much broke and their banks just got a bit from the central bank to keep going; a bit being defined as around 2 billion Euros, but they said it.  Now remember, my prediction was that the EU would find any way possible to kick this can as far down the road as they could but it seems to me that the problem isn't Greece but the economy of the entire union, not to mention the shooting war going on in the Ukraine.  And they will to the point that the mere statement of good intentions is taken as a near-term turning point in this entire mess.  Oh, did I forget to mention that the Danes just joined in the "bugger your neighbor's currency" game now in full swing around the world?  Yep, and just four days after they stated that it was not their intention.  Can't blame them really.

Getting back to the Greeks, it appears that they went out and hired Lazard to represent them yet again.   Not my choice but I guess they were happy as to how the last round turned out or else why would...but I digress.  After the tumult and the shouting that surrounded the election and the most unlikely alliance with the far right in order to form a government, if the strategy is to be one of smile sweetly and say nice things resulting in no real change from the status quo, one must ask how long can an alliance like this last and what happens when one party decides that it's a bad deal and walks?  So I'm trying to figure out for just what it is this government is waiting to happen because the macro short term outlook for the region is negative probably resulting in continued dreadful economic results; (I know, there have been advances but nothing like what is needed).  By the way in case you missed it, Germany's numbers were woeful in the fourth quarter.  And to make matters worse, S & P just lowered their ratings on a handful of major Euro Banks insuring that their seat on the side-lines throughout all this has just become firmer.

I kind of hate these reflections from 60,000 feet, but there's really nothing of substance on which one can comment.  It's so bad that even the professional journalists are calling Il Duce's $4 trillion budget delivered to Congress yesterday as "a basis for negotiation."  When the hell has this guy ever negotiated anything in good faith...or in any faith for that matter"  But you start making things up in order to get copy.  Not me.  I look at it as an extention of the cocktail hour.  Inn Keeper!

THE LAST BELIEVER?

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.

GO UNTO ATHENS AND TO THE SPARTANS TELL...

...that faithful to our code we fell.

That's the problem with the Greeks.  For three thousand years 300 guys getting their butts kicked by all the Persians in the world is still a great victory.  Wonderful story but may I suggest that a replay in our time of this attitude gets more than 300 butts kicked, and it would appear that in appreciation of this fact some of the rhetoric on all sides of the issue has been toned down just in a day which is not a bad thing.  Still, it looks as though the result of any election will probably bring Syriza into governance.  I still think this is the week.

Meanwhile, the Dutch answer to the Financial Times published a report today as to the structure of the ECB's QE program.  There could be three scenarios say the Dutchies.  In Scenario 1, the ECB would purchase government bonds for their own account up to the amount of the member's share in the capital of the bank.  Sounds to me like Bund yields are zip for a while but then that's where they are already.

In Scenario 2, the ECB will buy only triple-A bonds...the Frenchies are going to love that.

In Scenario 3, the ECB will allow National central banks to buy their own country's paper up to some level.  I guess the funding is to come from the ECB otherwise this makes no sense at all as opposed to very little sense.

Frankly, I'm not sure as to what maturities are covered but I can't believe that they would consider going out further than 5 years.  Given that there is no yield at this time anyway given the famous Draghi "put" one might ask, "what are we talking about, guys?"  Answer:  "Beats the hell out of me." The only reason for this nonsense must be an absolute fear of Union-wide recession based on all of the macro, geo-political and economic factors that folks like the Economist love to write about.  Mind you, they may be correct but how this is going to fix things is beyond me.  In the mean time if I were a Greek the signal this sends me is why would I want to stay as part of this mess when I can at least go to hell in a hand basket on my own terms.  But they are not there yet and to give it fair do, neither is Syriza.  So there is still time but in the meantime there is a serious psychological play at work: everyone is beginning to realize that if there is a way out of this mess the driver of the growthmobile is going to be the United States...and that is exactly what the EU was designed prevent or at least with which to compete.  Ain't that the damnedest thing.

THE GRANDCHILD ARMY RETREATS

They attacked in waves, pouring out of their armored vehicles in droves, armed to the teeth with crayons, tiny toys and that most fearsome of weapons, the loaded diaper, whilst constantly screaming their battle cry, the theme from "Frozen."  It was non-stop; no quarter asked, none given, but in the end me and Trouble and Strife carried the day and the litter-strewn field that was once our home remained in our hands.  Yet as the taillights signaled their defeat, there was the horrible thought that they would most certainly return when, as threatened, their strength would contain one more...in May no less.  We have barely time to rearm and recover.

Anyway, as bad as it is in the fly-over zone, Europe is in worse shape.  Whilst we were recovering the Greeks held an election...well, it really wasn't an election...rather some kind of vote in parliament for a new President.  Now they have a Prime Minister which I would of thought was enough to run the place but I suppose they are as unsure as to what form of government they have as they are about anything else, but that means that they now have to hold national elections later this month and the odd-on favorite to win is the mob that makes up the Syriza party which has no idea what it wants either but is certainly to the left of everybody and nobody thinks that's a good thing.

If I didn't know better I would think that time has stood still because the scenario being suggested is that Syriza wins, immediately declares that austerity is out, pump-priming is in and as for the debts owed by the country to the IMF and everybody else...well, let's forget about that for a while until we decide how much more the creditors have to write off and until that happens we don't  pay no mo.'

The EU has already announced  that's  not on and Germany at first stated that what the hell, we don't need the Greeks anyway until someone mentioned that as goes Greece, maybe so go Italy and Spain which as we have oft-stated are real countries and somewhat integral to the whole shootin' match.  In short, we have the same mess on our hands that we had a year ago and no one has, or has had any new ideas.

It is almost stunning to contemplate that the only real plan on the table at this stage is for the implementation of Quantitative Easing by the ECB, stunning because of the vast body of evidence that points to the conclusion that QE undertaken by the Federal Reserve had practically no positive effect after four years of effort.  None.  What is going to happen if Draghi announces his plan and two days later the Greeks return to the Drachma?  Chaos.  While in the United States corporates and especially financial institutions have undergone vast restructurings, new industries have emerged, governments--at the state level at least--have streamlined and become far more business friendly and we have undergone the most enormous tax cut in history in the form of the decline in energy prices, not one of these events has occurred in Europe; not one.  In fact the Europeans have taken steps to repel the structural changes that are desperately needed.  The only thing that has grown in Europe is the vast, bloated, treasure-devouring, spirit-sucking colossus that is the European Parliament in Brussels.  Higher taxes, bigger government and more regulation seem to be the answers to solve this mess.  It is though all of Europe is one enormous monument to the supposed theories of Keynes whereas we must merely endure the rantings of the increasingly ridiculous Little Paulie Krugman.

The major difference today from a year or so ago is the timing or perhaps, the lack of time.  The Euros really have only a few short weeks to frame a position and that is going to be very hard to do.  Actually, I think this week may tell the tale and yet not all the decision makers are back in place from the Christmas break.  It is though nothing need be done and that of course is the problem.

FED WEDNESDAY

Might as well wait for it although it's a pretty much foregone conclusion that QE III will end but the gang will announce continued vigilance and an acccomodative policy until the recovery and solid job performance really kick in whenever that may be.  After the terror of a few weeks ago, the Street has an almost ho-hum attitude as to the state of things with not even any concern expressed over the upcoming election in a week's time.  Lessez les bon temps roulet as they say in the Big Easy.  OK, suits me.

Over There, the Union decided not to make any comment or take any action in regard to France and Italy's flouting of the rules regarding deficits.  Dare I say told you so?  The explanation was that a whole new mob takes their half-million Euro seats in Brussels on Saturday so why not leave it to them to earn their money.  After all, they only work on average of 11 days a year...OK, OK, that's a bit of an overstatement.  But one must understanding, this isn't like mandating the size of a label on a sales item for 350 million people; this is HARD!  Full consensus, exhaustive debate, multi-faceted consideration, etc., etc., etc.  Why anyone puts up with this is beyond me.  It's truly worse than our Congress.  Then again, when the Frenchies announced that it was the inverted V to the rest in regard to finances, what came out in the wash was the figure of 58% of the French GDP is the government!  Now that's a hell of a number; more than half of a nation's economy taken up by politicians and bureaucrats.  And one wonders why there's a bit of stagnation in EU economies.  As a matter of fact, I marvel how France could be doing as well as it is given the amount of non-productive work.  These guys have made it an art form.  And the Italians...well, there has to be a reason for the greatest artists the world has ever seen coming from one country.  Practice, practice, practice to this day, in all things, Mona Lisas and not working.  Still make neat cars, though, although no money selling them.  God, I would love to live there!

WHAT IS THERE TO SAY?

Look, this is getting impossible.  I am totally out of material unless i become dumb enough to jump in with a comment about the AIG trial in New York which is understood by practically no one…and that might be an overstatement.  So, I'm forced to write about the only financial newsworthy event of the day which is the IMF and world growth.  With the possible exception of the United States, it stinks.

Moving right along, the result was equity markets crashing all over the place and bond yields heading south.  The ten year wound up at 2.34%   while the Bund dropped below .90%--I don't know where it closed.  The real fear is Europe and it is on two levels; political and economic.  The latter is lousy with no real growth anywhere except for England and how much of that is fueled by the housing bubble is anybody's guess.  The political situation might even be shaping up to be worse.  There is a clear and growing divide between the Germans and damn near everyone else, especially in the southern tier, with the gauntlet being thrown down by the French who have made it crystal clear that deficit rules be damned and have opened begun an open recruiting period to enlist the support of a coalition of the willing. Things got worse today as Angie's guys stated that any thoughts of Quantitative Easing by the ECB were not on and the purchase of corporate debt was definitely verboten.  Over to you Fritz.  What gets this thing moving?

Now this had been hinted before but today's statement was definitive…until the next statement…which certainly puts a whole, new shine on things.  Whether the last thought on the subject or not,  either way we have a pretty good game of financial and political chicken going on with, again, the overhang of British elections and the threat that with the continued conflict among member states, Cameron will pledge, as a campaign ploy, to take the Brits out of the EU…full stop.  It would be a winner and as I have suggested, a killer for the Union.  So much for what was a pretty lousy day.

VIDI NAPOLI ET…NIENTE

In Naples today, the head of the European Central Bank announced no change in interest rate policy and nothing else.  Oh yeah, there were some mutterings about larger balance sheets, covered bond purchases and even a bit of speculation as to the purchase of non-pristine sovereign debt--Greece, Cyprus and alike--but that was it.  Nothing, Niente.  European markets promptly went into the tank and the overall funk in Europe grew deeper.

Sr. Draghi is clearly unhappy with the course taken but I am not at all sure why the hoped-for aggression did not materialize.  He has talked the Euro down rather successfully and that, coupled with what many people refer to a "stealth tightening " on the part of the Fed has succeeded only in making huge amounts of money for the big FX guys…I mean, one way traffic like this hasn't been seen in a long, long time.  Perversely I suppose, I will really be anxious to see what the results at places like J.P. Morgan and Citigroup which are covered by Dodd/Frank are like when compared with non-regulated hedge funds.  I would have thought that the ability to coin money on the part of banks might be a good thing as opposed to entities that provide nothing to the economy other than the price of real estate in Greenwich or Bronxville.  Silly me, but I digress.

Whether Draghi is genuinely concerned that he's about reaching the bottom of his bag of tricks and this is a not so subtle way of a "over to you, Frankie" approach or he would like to move more in the direction of Federal reserve activism but those pesky Germans keep telling him that's just not on, is an issue to be pondered.  Inasmuch as markets all over the place roiled all day, it appears that nobody else had much of a clue as to what was going on either.

One market, however, was working pretty much with certainty.  If you're in energy, you lose.  WTI traded below $90 at the open this morning and Brent fell sharply on the news that the Saudis indicated that they would not cut production but compete on price in order to maintain market share.  Whilst there is no doubt that the new supplies in the U.S. are having an effect, world-wide demand is down reflecting the status of global economic activity which is far from robust and except for the U.S. is heading south.  You know that old definition of insanity.  Doing the same thing over and over and expecting a different result.  What is then defined when everybody is doing the same thing and the results don't change?  To make it even more curious, what is it that we see in the headlines?  The EU beating up on Ireland again for alleged illegal tax breaks for corporations and Jacob/Jack babbling on some more about the Ebola-like effects of inversions.  Maybe I'm nuts but I don't get it.  Not in these times at least.

Big weekend coming up with a BIG football game.  We expect almost 100 at the class tailgate, in lousy weather with Trouble and Strife not being a happy camper at all.  We have a full house.  She doesn't like that.  Oh, He Who Knows All Things will be here as well.  Maybe I'll be able to figure this out.  See you Monday if I make it through the weekend unharmed.

YES!

It was a long time in coming, more than a couple of hundred years, but in the end it finally turned right.  I was actually surprised that there had not been more talk about it given the earth-shattering consequences that the vote entailed, but I must admit I was not surprised by the result.  It is a bit much to claim that the world will never be the same but in a place like Scotland things move slowly but they move with certainty and now with the results in and the "Yes" side victorious, it remains to be seen what changes will be wrought.

Obviously, there will have to be new locker and bathroom facilities…then again, it is Scotland and spending money on duplicate items does not exactly fit the Scottish penchant for thrift.  But overall, I suspect the grand old place will not change much.  The first woman member?  Ach Jim, I nae know.  Hope she's bonnie and can play a wee bit.  After all, it is the Royal and Ancient.

Funny enough, Scotland had another vote yesterday that resulted in a surprisingly easy win for the "NOs" as they were called on the issue of Scottish sovereignty, 55%-45%.  That deep sign of relief you might have heard this morning came from the rest of Europe which dodged a Big One.  But, it's not over.  Every self-government movement in every country Over There is going to have a go after the Scots proved it could be done albeit not successfully.  Had the vote gone the other way, the issues might have slipped below the radar as the existence of the EU itself would have been put to the test.  It would have failed.  But now we just have the same old stuck in the mud mob trying to make sense out of a union that makes less and less sense amidst governments that make no sense at all…which means that wee Charlie is lookin' grand.

Good to be back.

ENGLAND AND ST. GEORGE! WE AR THE PEEPOL!

 Are we going to do this thing all over again?  I mean, like dude, 1702 is a while back.  It's worked out pretty well given the parties involved.  So why now? My bud, Gordon, has this wonderful descriptive tale that he calls the People of Great Britain that might shed some light on things.

"First, there's the Irish who'll fight first for anything."
"Then there's the Welsh who keep the Sabbath and anything else they can get their hands on."
"Then there's the Scots, who pray upon their knees and on their neighbors."
"And finally the English, whose belief that they are a self-made race gives great comfort to their Creator."

What most of us Over Here don't understand is that there are in fact four separate "races" that inhabit that place we tend upon occasion to call--lacking all form of knowledge--England.  We swoon at the sound of an "English" accent, having not the slightest clue where it originated.  And finally, we have not a clue that these guys really, on multi-levels, dislike and distrust one another, often for good and substantial reasons rooted in the bloody history of that land.  One thing is certain, however.  Put the four in a room and ask them to choose sides, England would stand alone.

So, ever since Robert the Bruce in the 14th century to Mary, Queen of Scots who had her head lopped off by her first cousin (once removed) Lizzy I in 15..something or other, and even after the treaty signed in 1707 between Scotland, Ireland and England making one kingdom out of the three countries, there has always been a substantial body of belief that Scotland should be a free and separate country.  In two weeks they are going to get a shot at it again.

If I were still a betting man I would say it is not going to happen, but in the past few days the polls on the referendum (it is a simple "yes" or "no") have become too close to call and that has set off a monumental financial terror Over There.  What we don't get is what might…and probably will happen if the "yes" votes prevail.

--Scotland will become a sovereign country…one with but 8 million people.
--All of Britain's oil will be controlled by Scotland setting off the most God-awful squabble as to how it is to be divided.
--Will the EU allow Scotland to join?
--Will the EU allow England and what's left to stay?
--Will Scotland retain the Pound Sterling as its currency? (England has said "no way")
--What happens with the great Scottish-based Insurance companies mostly traded and owned elsewhere?
--What happens to the Scottish Banks whose main locus of operations are in London?
England has a navy…based in Scotland.  Does England shift its submarine fleet to…where?  Eastbourne is a lousy spot for Nukes.
--Where does the pound trade?  (hint:  way lower)

And the bigee...  If England leaves the EU is there an EU?  This observer says no.  It's over, finis, tot.  And as Joe Biden would say, "that's a big, (^%#$' deal."

The entire issue has immense ramifications for all of Europe and for the U.S. as well, far many more than I have enumerated above.  From the standpoint of the effect a "yes" vote could have on Europe it is probably the most critical and important issue facing the continent since the end of the Cold War.  Oddly, it's like the fog; it's creeping up on little cat's feet with little urgency attached to determining the outcome.  Perhaps that is the way to go because God knows the Scots really don't like to be told what to do.  So we will wait, I guess, like everyone else and hope the right decision is made.  What the heck.  After a thousand years what's a couple of weeks.


On another point of interest, Daniel Tarullo gave a speech today and the world is a bit dumber for it. Our Daniel is now setting his sights on the insurance industry, claiming it too needs a health dose of recapitalization legislation citing AIG and the events of 2008.  The fact that AIG's insurance business had nothing whatsoever to do with what occurred, seems to be lost on this egotistical jerk as well as the fact that it was the regulators/politicians in the person of Client #9 who, in his vendetta against the then Chairman, Mr. Greenberg which caused him to be removed from the chairmanship and allowed his successor, a gentleman with a reportedly rather serious case of the Irish Disease to take over, miss everything around him, which resulted in the debacle which was London.

Now if you think about it, moving an insurance company to a place like, say, Switzerland, is a hell of a lot easier than moving a bank and if  people like like Tarullo and his Rabbi Crazy Lizzy keep it up, bye, bye insurance biz in the U.S. of A.  Think about it; insurance companies syndicate risk; all you need is a phone--well, maybe a bit more.  Now ask yourself:  "Self, do I really want to have major losses in this country depend upon a foreign company to decide whether there is coverage under the laws of…pick a country?"  Danny has proven to be not too bright, but this…


Off to a wedding in Cn. tomorrow.  Will try to post from time to time.

THE FAT IS IN THE FIRE

What began as a civil but important discussion as to the governorship of the EU between David Cameron and Angela Merkel has gotten a bit ugly in recent days and today has emerged with dissenting positions fully expressed and battle lines drawn.

This all started over who would be the new President of the European Commission and came to a head when Cameron flat out rejected Jean-Claude Juncker, the former PM of Luxembourg said to be the choice of Ms. Merkel.

Frankly, I don't believe that Mr. Cameron has any real objection to Mr. Juncker other than perhaps what the hell sense does it make having a guy from Luxembourg guide the show, nor is it personal with Ms. Merkel, but when the most recent elections across Europe have indicated a far more nationalist fervor having what is a faceless bureaucrat as is Mr. Juncker  the face of European Unity is probably not the greatest idea anyone has ever had.  Further, the natural suspicion on the part of all that Mr. Juncker is German in name and in all other things that count further inflames the north/south division and raises new suspicions along the lines of he being merely a front for German interests.  Suspicion and distrust are at an all time high Over There.  And so, Mr. Cameron has a point but what really got things going was his not-so-veiled-threat that give us Juncker and we walk which Angie took personally and let THAT be known to all and sundry.  Angie's List of candidates is to be taken seriously.

Well just hours ago, David came up with his own pick, none other that the PM of Denmark, Helle Thorning-Schmidt, she of selfie fame with The Leader at the funeral that was reported to have put Michelle ma Bell's knickers in a twist.  Why?  Haven't a clue except for the fact that she is apparently well-liked and is…oh hell, she's really good looking and that still counts for something, especially Over There--and here too except we will not admit it.  When I heard that news I said, "Hang on, is there some other connection," and called a bud in London to check on it.

Turns out that Madame PM is married to none other than the son of Neil Kinnock (now Lord Kinnock), the former head of the Labor Party, union head-knocker, rabble rouser and all-around jerk...IMHO.  My pal is as mystified as am I as to whether there is some deep, dark collusion going on but the place is beginning to more and more resemble the Europe of 200 years ago when every ruler's half-wit son was married off to some non-descript daughter of a possible enemy to prevent a war or to the daughter of the ally to reinforce the peace.  Europe over the years had so much in-breeding that webbed feet began to pop up.  Anyway, we shall see how Angie deals with this one but David is playing what has suddenly, because of the surprising strength of the British economy, a rather strong hand--especially that if there were to be a referendum, everyone recognizes that the Brits would be gone.  As I have said before, I don't believe the EU could survive that event.

Overhanging all this are two events of importance.  The first is the downgrade of the world's economy by the World Bank which is taken far more seriously Over There than Over Here.  The second are the recent events in Iraq which seems to have raised a few issues in The Leader's contention that Al Qaida is "on the run."  Suddenly, all bets are off as to this part of the world and it's energy supplies that, if affected either in availability or price will clearly have a negative effect on the world economy.  If there is any humor--dark or otherwise--to be found in all of this it has to be the State Department spokes-person, a blond possessing the arrogance of only the truly stupid responding to the question is the fall of Mosul a major even with, "I don't think so, there's not a lot of land involved."  Of course to reporter never thought to follow up with, "Would your response be the same if Chicago were to be overrun?"  We may be doomed.

IT COULD HAVE BEEN WORSE…COULDN'T IT?

The more I read of the goings-on of the weekend, the less I was sure. The EU, it appears, is very much at a cross-roads and there is no clear answer as to the route to be taken.  What struck me in the result of these local and parliamentary elections across the continent was the sheer lack of conclusiveness in any result.  Nowhere was there a vote for anything; everywhere the results were cast as a vote against something and despite local variances, that something was certainly the Union.

I asked my pal Gordon about Farage and his response was that he probably represents the views of 75% of the people in the UK which is always the sort of number that Gordon comes up with when agreeing with a position but this time the truism in the statement lies in the fact that when push comes to shove, no sane man can stand and say the UK stands with Europe.  And if that cannot be said, then the Union is effectively finished with just the mopping up to be done and the face-saving to be continued.  I suppose the Brits would hand in there is Brussels were to, in effect, disappear, tariffs lifted, etc.  Amazingly, in the face all all that had just occurred the geniuses on the Commission just asked for another 3.5 billion Euros to run themselves with 500 million supposedly coming from the Brits.  Stupidity such as this should be savored like a memorable meal or a fine wine but alas, it is just another step in a pattern of governing stupidity that rises no higher than an undercooked trotter.  There is probably no room for another nail in that coffin an the left of the Channel.

And then there is France.  Mme. Le Pen won nary a thing except about 22% of the popular vote and a bunch of seats in Brussels where her mob will be a complete pest, but what she did do was to shatter the socialist psyche to the point that it may not recover.  Yes, Frankie will serve out, but he is an empty suit politically, leaving Germany and his gal Angie, in the position they so desperately wish to avoid; being out front with no different colored uniforms marching with them.  Germany, for reasons that can be well-understood and magnified by the undeniably dominant position, does not like the images it creates.  Worse yet, the first thing Mrs. Pen let drop was that if she were President, the Franc would be back!  Oops.  Now of course what everybody is babbling about over here is that her party is anti-Semitic and what an awful thing that it (it is), completely forgetting that France has probably been the most anti-Semitic country in the history of Europe and with an 8.5% Muslim population things probably aren't going to get much better, but it is not that that could sound the death knell for Europe.  She wants out of the monetary union and recognizes that is France AND England leave, Finis, as they used to say at the end of the "art" movies into which we used to sneak.

Within the strictures of the Euro, it is nearly impossible for any country to spend its way out of the depression which continues to linger over western Europe and while it pains me to say it, Little Paulie Krugman who's Over There as we write and babbling on about this  is correct.  Of course Paulie, mesmerized by Europe's soft socialism can't think of anything else nor can Mme. Le Pen who has lived under it for too long.  Not good.

With the exception of the Netherlands, it was a right to center right philosophy that swept across norther Europe but not so as we move south.  And yet, many of the complaints were the same, as were many of the shouted proposed solutions.  Curiously, there was no one wave of ideology but a concerted belief that what was in place didn't work.  I'd like to take tomorrow to explore the Southern Tier as to the ideologies seemingly in place in that region and then try to tie everything up in a nice bow atop a box of bold predictions.  Why not?  Everybody else is.

THE SOUND…PART II

The numbers from China yesterday were grim and the talk depressingly about hard times ahead.  According to the punsters and the talking heads, that's why the equity markets were down.  By grim, they mean not what they wanted to see because there are very few things left to keep this equity and goods bubble up in the air and everyone was hoping that China was one of them  So, after a half-hearted attempt to grin and bear it, down went stocks again as only the weekend posed a halt to this discouraging trend.

As we stated weeks ago, this is all about control, and the Chinese leadership (Xi) is going to get control.  He has the discipline and the time.  He also doesn't have by-elections and all of those other silly thing with which democratic societies must put up.  But it's really hard to blame the political systems for the seemingly world wide drift in strategic policy actions, particularly Over Here and Over There, culminating in practically no agreement on how to approach anything in a joint manner, the latest (and most dangerous)  being the ridiculous response to the Thug Putin until--it remains to be seen--this weekend.

What is also surprising is the manner in which the Central Banks have been acting in the past few weeks.  Mr. Carney, Governor of the Bank of England, was immediately upon accepting the job proclaimed as the world's greatest Central Banker for the job he did at the Bank of Canada during the financial crisis.  Indeed Canada did come out relatively unscathed.  Of course Canada has more Moose than people and mispricing credit to Moose is hard in the best of circumstances.  Mr. Carney did well but there was a substantial element of luck and the absence of the opportunity to screw up which is high on the scale of a banker's capabilities.

Well, Mr. Carney is now running the Old Lady and that is a very different thing indeed, especially when one's policies are governed by one's forward outlook on things economic, and the Bank's outlook has been God-awful insofar as accuracy is concerned.  Somehow, the Brits got a lot right and the economy has taken off as money continues to be minted in the bowels of Threadneedle Street.  While the new guy can certainly absorb a few credibility cracks, he does himself no good at all in reminding everybody that he's merely a hired hand and being Canadian, has no real roots in the U.K. other than a million pound or so a year and a car for what is ever left on his five year gig.
Not only does this tend to make the natives restless but I suspect his colleagues in the EU not to mention those Over Here are saying, "Hang on, what's this we got to work with?"

Meanwhile, across the Channel, all focus is on Putin and his mob and rightly so, but on the financial front, the results of another round of stress tests are trickling in.  Unicredito, the BIG Italian announced that as a result of a relook at their portfolio, they would lose a gazillion euros:  believe it or not, this was taken as a positive in showing that the EU was finally "getting real."  Of course, a close reading of the numbers (even a cursory one because that's all the time I had) leads one to the inescapable conclusion that they are crap.  It is not to say that things haven't changed, they have, but no where nearly enough.  The banks are still sacrosanct, the economies are stagnant and reform measures where most needed are stalled.  Little is heard from Italy and that is because little is happening, and little happening is just what the Italians like.  When the Ukrainian mess is settled, the Euro are prepared--given there is a Ukraine--to turn the whole thing over to the IMF which will be a catastrophe in the making and The Leader is all for that because he doesn't have to lead and  the call to arms to aid the Ukraine will be used to increase U.S. funding to the IMF which brings with it change in governance giving, among others, Russia more sway over the institution.  You see, The Leader continues to believe that "emerging nations" should have more authority.

Anyway, it was 50 F. today and except for the 10 foot high piles, a lot of the snow has melted.  It will be below freezing for the next two days, however, with a slight chance of snow.  I don't know what's a harder job; writing a financial blog or being a weatherman.  At least the latter knows which way the wind is blowing.