SAME QUESTION

Or, instead of now what maybe it should be "where do we go from here? I have the same answer; who knows?  The G-7, other than another embarrassment for Il Duce who, despite a clearly rigged press conference where he couldn't even get a good swing at the beach balls that were being lobbed over in lieu of questions, gave no one any clue.  Despite supposedly good economic reports, the dollar got hammered today causing the 10 Year to retreat to 2.38% as opposed to the Bund which rallied a bit in the face of dismal news about Greece.  The somewhat surprising results of the Turkish elections did nothing to help the mood as the new best place to lose money was to be long emerging markets.  I just haven't figured this out at all.  Time to call somebody smarter than me--which gives me a broad perspective.

The other thing I don't get is the joint resignation of the two guys that jointly ran DeutscheBank.  I mean, OK, the numbers stink and they really haven't gotten over the death of  my friend, Blessing who was the chosen one damn near 30 years ago, but this is getting silly.  Then off they go and hire the CFO of UBS, who while not part of that Swiss mob and by all reports a good guy, comes from an institution so ill-managed and of so...ah...questionable morality...as to be nearly the poster boy of what a bank should not have been over the past 10 years.  As Peggy Lee would have sung, "Is that all there is?"  There are a couple of guys I can ask about this one.  I'm beginning to feel stranded.

Finally, come the Greeks.  I am really beginning to feel sorry for them as they are so over their heads to the point of now beginning to wash their dirty linen in public.  It is a sad sight but unless the Euros decide to simply keep them alive for another year or so as that being the least bad of solutions, it looks as though the game ends in a week or so.  They really don't deserve much but they are a proud people.  Bummer.

The only good thing in the past few days was the wonderful European Cup final played at a incredibly high level by two teams--not equal in "quality" as has become the new word--but in spirit and grit.  We need to see a bit more of that in those around us.

WELL, WHAT DID YOU EXPECT?

It was as one would have imagined.  The G7 amounted to a bit less than nothing by all reports unless there is a "plan" which cannot be revealed by these geniuses.  The next Big Deal is the ECB meeting tomorrow and the Spanish Bond auction on Thursday about which the Spanish have warned as to it's success.  As for the ECB, there seems to be a pretty good tug of was going on between Sig. Draghi and the Brussels' politicians as to where the next substantive step is going to be taken not that it makes much difference.  The scariest thing, may be that George Soros agreed with me over the weekend which has caused a rethink of what I've been saying and the chills and shakes for the last few days.  Where have I gone wrong and where does George have his money?

Anyway, over here the assault on J.P. Morgan continues.  There is something I don't understand about this either.  I was under the impression that it wasn't written anywhere that a bank is not supposed to lose money?  So Morgan lost money, so what?  They lost it fair and square through a lack of proper oversight and some dumb trades.  People got fired as they should have been, management was raked over the coals, Jamie's halo disappeared and the shareholders got hammered.  So why the fuss?

It seems to me that what the furor is all about is that derivatives were involved...quelle horrible!   They have not been regulated or banned?!  Why not!  Where are the authorities!  It's the same old nonsense and a great opportunity to call for more regulation by the great unknowing and to hammer the chief spokesman for the opposing view (which is quite funny actually) whilst accomplishing nothing of value.
Anyway, you might contemplate this: no bank has gone bust because of derivative exposure. EVERY banking failure has been the result of credit exposure or the pricing of credit risk.  Every one, except those involving outright fraud and ever in those cases the favored method is to extend credit to friends, political cronies, family enterprises or simply phantom borrowers.  Bad lending practices kills banks...every time.

The other thing I don't understand is this sudden, coordinated call by the Little Paulie Krugman wing of the Democratic party to back the truck up and load up on 10-year money simply because the 10-year hit 1.44% the other day.  It goes like this:  The country needs fiscal stimulus and because of the world-wide financial mess we are in a period of negative real interest rates so lets take advantage of this and borrow heaps of free money and build a...a...a...a BRIDGE! Or a road, or a school, or a rail system or...something.  Because of inflation we'll pay it all back way into the future with cheaper dollars.

The problem governments are never very good at allocating resources; in fact they are pretty bad at so doing.  Government has no focus unlike a corporation which builds widgets and focuses on financing widgets which they sell to repay debts.  Governments don't sell things, they refinance and it is a pretty good bet that a market, aware that there is a BIG BID out there will increase the price of the offer.  1.50% today?  Betcha it's higher when you need to refinance 10 years from now...and you have to refinance an increasingly largeer amount.  You see, Little Paulie doesn't understand how markets work.  For him it is, "Assume access to all markets..."  Next time you see him ask him if he knows anyone from Spain...or from Illinois for that matter...or maybe I just don't understand