I LOVE EUROLAND

I really do.  These guys are a laugh a minute.  Frankie Hollande today created a special prosecutor to track down tax cheats in the wake of the announcement by the investigative journalists that 4000 thousand Euros and a couple of French ministers had off-shore accounts.  Full Disclosure:  Throughout my career I had a number of off-shore accounts; some to facilitate transactions done on behalf of my employer as a principal in corporations created--quel horrors--for the purpose of structured financings, some to make life easier because I traveled a lot and some to facilitate investments.  I complied with all laws, paid all taxes and when I didn't need them any more I closed them.  I suspect that the majority of the accounts uncovered were operated in completely correct manners (although I don't know), but certainly, some were on the far side of the buck.  Keep in mind, however, that if somebody has A LOT of hide chances are you are never going to find it...if he's a European.  Americans, on the other hand are not good at this but the fact of the matter is the U.S. is fortunate in having a populace that while they might grumble, pay their taxes to an extent greater than any other nation in the world.

But here comes Frankie, poll numbers absolutely in the toilet after but one year, the economy in tatters, the nation crying for structural reform, economic commitments to the EU impossible to meet and he's chasing tax cheats as though 100% success would make a difference. On top of all that the first round of numbers is in on Frankie's great idea of taxing financial transactions and they stink, with the financial sector up in arms over the loss of business and Frankie about to be proclaimed "Man of the Year" in places like Singapore, Hong Kong, a half-dozen Caribbean Islands and Wall Street.  But he's chasing those tax cheats...what a guy.

If that wasn't good enough for a chuckle we found out today that not only has Cyprus been forced to steal from depositors in Cypriot banks but that the gang of three has grabbed Cyprius' gold reserves as part of the terms of the bail-out. Better yet, nobody quite knows who was responsible for that on the Cypriot side, but as I have said, screwed or not, Cyprus is not a real country so no one cares but when you start talking Portugal and Slovenia things get dicey.  It is clear the latter needs a bail-out right away and the former will need the same--again--in not too long a time.  Now the deal at the start of Euroland was supposed to be an "all for one and a level playing field for all," but he who thinks that--now the cat is out of the bag--these two are going to pony up their gold reserves ala Cyprus is smoking something that may well be harmful to their health.  Which sort of leaves me looking at this mess and asking is anybody in charge here with the answer being an obvious "NO."
But on a rainy, cold, miserable day in the fly-over zone, these guys are great to have around for a good laugh and material.  What would we do without them?

TOO SOON TO TELL

Well, all 27 of them got to Brussels today for what was thought to be a relatively quiet summit but which almost immediately took on a new feeling of unnerving concern if not crisis.

It started with the bickering between Angie and Frankie about what was to be the agenda, new demonstrations in Greece which produced a death and a rumor that spread like wildfire that the Brits had pretty much decided that they were out which of course was welcomed by Frankie and his gang who immediately started jabbering that it would be a good thing.  That was until a NEW rumor began that Angie was far less concerned about the state of the UK whether in or out, and far more concerned about the state in which France found itself.  The manner in which Frankie reacted I am told indicated that he might be concerned as well.  Funny how the French always react badly at the truth, but then again I did mention last week that things were getting a bit dicey along the Champs Elysee.

I not sure anyone expected big things out of this meeting but unless this mob makes nice-nice to each other by tomorrow afternoon, the markets may restore their view that all is not well in Euroland and begin ignoring the ECB put, or to put it another way (clever, eh?) start taking advantage of it realizing that it is the only game in town.  I'm going to wait and not speculate.  Tomorrow, then.

I THINK I GOT IT RIGHT

Certainly, there was nothing reported today to make me think otherwise.  What I still can't figure out is why the popular press and the talking heads got caught by surprise when about 5 minutes of thought would have identified the scenario.  Despite what others would have you believe, banking is about people...just like most events in the world.  Why would a very wealthy guy (an assumption) agree to the Chairmanship of Citigroup having been called out of retirement without the thought that he was planning to make it into his own image?  To fail in the attempt?  And why did no one investigate his background and past actions and not come to the conclusion that it was altogether likely that the course being steered by the bank's then-present management was about to change?  I am constantly surprised by the lack of acumen demonstrated by those who present themselves as experts in the world of finance.  It's about the people folks; it's always about the people.  Know them first and then look at the numbers.  And in that vein, watch to see if the new management is successful in retaining the key people needed to make this change in direction work.  I'm betting that it will and frankly that will be good for the industry.  Maybe with the success of Citi the rest of the industry will "'stop doing the stupid things" as Mr. O'Neill is fond of saying.

The cops and the Feds in New York today announced the arrest of some guy for Bangladesh who was planning on blowing up the New York Fed in a sting operation undertaken by the NYPD.  Idiot.  All he had to do was watch Ben and his boys do the job for him over the next few months with the enthusiastic support of Billy the Dud on Liberty Street.  CPI was up 0.6% last month, the second consecutive such monthly rise.  That puts consumer costs in the 10%+ annual range which is beginning to look a lot like Argentina.  Ah, you say, but the core rate is only 0.1%, and to that I reply an old guy like me on a fixed income says, "Core, schmore.  I gotta eat."  What the policies of this central bank have done to the elderly in this country is surely a crime.   O'Neill for Fed Chairman?  A "stop doing the stupid things" monetary policy?  Not a bad idea.

Meanwhile, across the pond, the big shot  two day event starts tomorrow, and Frankie H. has already announced that it will ratify all that has been agreed on the bonding of Euroland over the summer and plan the implementation of the same by year end.  Forgive me, but I seemed to have missed part of that and are therefore in no position to comment.  What will probably occur is Greece getting a few more Euros to get them into next year, Spain will jaw-bone on what they will NOT have to do to get a bail-out and Angie will continue to talk nice-nice and say nothing allowing the ECB to set the agenda.  Kinda like "leading from behind?"  In advance of the pow-wow, market commentators have waxed poetic at the decline of bond yields across the southern tier.  Nothing like a put to the ECB to put steel in the spines of investors.  I'm beginning to wonder: is the Citigroup affair the last thing I will ever get right?  I think I'm going to head out and buy a bottle of whiskey on such a scary thought.  By the by, is whiskey part of the CPI or part of the core?  Anyone have the answer?