Madame, you are the Director of the International Monetary Fund. To say that would be a undignified position would be the understatement of the year. OK, you got it wrong but you know what Les Anglais are like. They never miss an opportunity to "give you the mickey" as they like to say. Ignore it…like Little Paulie Krugman of the NY Times who's been wrong for the past two years so he just stops talking about it. It will go away unless the Irish decide to get in a few shots. Never miss the chance to land a couple, that lot, and then you're in the stew pot. But they wont, so relax. After their dumb-ass move at the start of this thing to guarantee all their banks, they're just happy to be around.
So they and of course the Germans tighten up and get all conservative on everybody (including you) and they're looking at GDPs in the 3-4% range while everybody else is stuck at 1% or less including your mob despite having as good a work force and infrastructure as there is Over There. So answer me this. Do you think that despite the advice of Little Paulie and every out of work economist from the sub-continent that works for you, has it ever crossed your mind that monetary expansion might not be all it's cracked up to be and despite Paulie and the late, great Keynes, there might be something else going on? Did you ever think that Paulie & Co. might, just like the economist he is have sat back and started by saying, "Assume sound fiscal policy, a mobile work force, sound labor policies, government stability, no corruption, sound credit distribution, little or no bureaucracy within government, simplicity and paucity of regulation and an efficient system of taxation. Then, let's create a trillion or so out of thin air and drop it on these guys and wow, will it take off!!!!"
Of course assumptions are not reality, and southern Europe has none of these things. Fact is, we used to have a lot of these things Over Here, but the people who listen to Little Paulie are running the country now and we don't any more. Oh by the by, we were at -1% in the first quarter and it wasn't all weather. So Madame, why don't you get up off the floor, dust off your knees and tell the stupids running things in Brussels and in the southen tier that it might not be a bad idea to take a good, hard look at the way things are being run and perhaps come to the conclusion that the problem is not in our stars or lack of monetary creation but in our administration. Warning. Paulie and the New York Times and the Guardian and your Landsman, Frankie aren't going to be saying nice things about you any more but hey, you're known by the company you keep. And this time you will have gotten it right.
Speaking of Frankie, he of course was the Chef de Field at Normandy last week. It was a solemn ceremony at a solemn place. He spoke. We had a president who spoke at one of these things some years back.
"…The world will little note nor long remember what we say here, but it will never forget what they did here."
Frankie didn't read that speech. He spoke for what seemed like hours. He said not as much.
Showing posts with label Hollande. Show all posts
Showing posts with label Hollande. Show all posts
Monday, June 9, 2014
Thursday, June 5, 2014
MON DIEU!
Frankie is so hacked off that he's going to bring the BNP-Paribas mess up tonight over dinner for God's sakes with Barry and that's because of the size of the fine that Eric Holder, the Head of the Department of Extortion is banding about. Frankie hasn't even heard about New York State's play but the $10 billion about to be charged against BNP-Paribas Visa card might well, it is rumored, put the bank into deep do-do from a capital standpoint. I mean it's the theater of the absurd. The Leader, desperate to get some help from somebody Over There having abandoned all pretense of having a foreign policy gets himself in the middle of a fight over whether a French bank broke U.S. rules regarding dealing with OUR enemy (the French have a different view about these things) half a dozen years ago and how much his idiot acolytes are planning on fining them for the crime…like money is the issue. In the end, the money comes from the Tresoire; the issue is how does a President of the Republic who has a lower approval rating than The Leader explain to his taxpayers that their cash is going to Les Americains? Like there's nothing more important than this, dude? And then he gets up on his hind legs to tell the world it is simply out of the question that he would ever interfere with the prosecution of a case! The guy continually believes that he finds a new kind of stupid in every spot in the world he visits. I give up. It's hopeless.
So, over to our friend Mario Draghi, who today did exactly what everyone thought he would do which was pretty much nothing. Super Mario pulled a Swissy and laid a negative deposit rate on all the banks in Europe in order to get them to keep their money out of the ECB and put it to work out in the economy. Problem is, there are no deposits in the ECB, the banks having pulled those out weeks ago in anticipation of such a move. Where's the money? I haven't a clue but it is not back in the economy. Gee, do you think the collapse in yields on southern European debt might be a result of some of that deposit money flowing into bonds...AND do you think that the zero capital weighting because of the sovereign risk might have something to do with it...AND do you think if someone was to take a look at cross-border flows between home offices and subsidiaries in Spain and Italy someone might find a lot of activity...AND if someone was told that investments by local branches in sovereign debt was tax free, do you think you might find the answer to the missing Euros? You do? Clever child. Oh, Mario just cut the Lombard rate to 0.10 from 0.25. There's stimulus for you.
To be fair he held back his "bazooka" which is of course Quantitative Easing…which by the by is still unsettled as to whether he can do that or not, but there was talk of asset purchases to the tune of 400 million Euros which is not small change to a punter out at Longchamp, but a drop in the bucket in a 20 trillion dollar market. Of course, markets loved it and up went the DOW by 100 points. My God, it doesn't get better than this…except, perhaps, to be the back-up translator at Frankie and Barry's little Soiree tonight. Lord, the tickets I could sell!
So, over to our friend Mario Draghi, who today did exactly what everyone thought he would do which was pretty much nothing. Super Mario pulled a Swissy and laid a negative deposit rate on all the banks in Europe in order to get them to keep their money out of the ECB and put it to work out in the economy. Problem is, there are no deposits in the ECB, the banks having pulled those out weeks ago in anticipation of such a move. Where's the money? I haven't a clue but it is not back in the economy. Gee, do you think the collapse in yields on southern European debt might be a result of some of that deposit money flowing into bonds...AND do you think that the zero capital weighting because of the sovereign risk might have something to do with it...AND do you think if someone was to take a look at cross-border flows between home offices and subsidiaries in Spain and Italy someone might find a lot of activity...AND if someone was told that investments by local branches in sovereign debt was tax free, do you think you might find the answer to the missing Euros? You do? Clever child. Oh, Mario just cut the Lombard rate to 0.10 from 0.25. There's stimulus for you.
To be fair he held back his "bazooka" which is of course Quantitative Easing…which by the by is still unsettled as to whether he can do that or not, but there was talk of asset purchases to the tune of 400 million Euros which is not small change to a punter out at Longchamp, but a drop in the bucket in a 20 trillion dollar market. Of course, markets loved it and up went the DOW by 100 points. My God, it doesn't get better than this…except, perhaps, to be the back-up translator at Frankie and Barry's little Soiree tonight. Lord, the tickets I could sell!
Wednesday, May 28, 2014
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.
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.
Tuesday, February 11, 2014
AYE! EINE YIDDISHE MAMA!
Janet Yellen made her first appearance before congress today as the first woman ever to chair the Federal Reserve. Not quite a triumph, but everyone heard exactly what they wanted to hear despite confirmation of the old adage that You Can Take the Girl Out of Brooklyn but You Can't take Brooklyn Out of the Girl. It was wonderful to hear but Claire Bloom she's not. I'm told her chicken soap is better, tho, and it was served in copious amounts.
If anything, the lady is as good if not better that her predecessor once removed, Alan Greenspan. She speaks, says very little and you believe you are in good hands. One would hope so. The two things that everyone seems to have taken away from today's event was that
1. The Fed will remain as accommodating as possible (or as needed), and
2. The Fed will continue to scale back it's purchases of securities.
Of the first no surprise, but of the second I guess I was wrong again…except I didn't hear the real conviction that everyone else did. No matter, it's what's believed that counts. I also heard positive sounds relating to the economy but these were distinctly muted--not to the extent of Mr. Bernanke's last chat but far from any cheerleader mode either. As expected, the equity boys deemed this to be salvation and the DOW powered ahead to an almost 200 point gain at the close. Interestingly enough, the 10 year was all over the place all day finally settling at 2.72%, Go find someone who understands that, I don't.
All of this, of course was in the face of far from strong numbers either on the economy of in corporate earnings, continued bad news in emerging markets and troubling events in Europe. It is really quite amusing how the markets can turn on and off regarding emerging always having the same final idea that we in the U.S. are pretty much insulated from their effects…until we're not. Except for China, and increasing concern is being expressed over the economic/credit situation in terms of "this is really important," whereas I don't have very much concern at all except in a macro sense as to the worldwide response to a slowdown in economic activity. But credit? Nah. That's the wonderful thing about a totalitarian state. Nobody dies unless the bosses say so.
But why should any of us care about any of these thing when we have The Greatest Show on Earth playing right now on the shores of the Potomac and the Rappahanock. Welcome ladies and gentlemen to the Barry and Frankie show, two Presidents with their approval ratings in the tank finding one another amid the complete lack of interest on the part of anybody else in the world! It would be better of course if The Leader could pronounce Frankie's name properly and if he (or, perhaps, she) didn't have an idiot working for him/her that plans a state dinner in a tent in the middle of February in Washington (forecast: 14 F. and windy) but hey, we're friends again. Lafayette, nous Somme ici! Dear God you can't make this up.
If anything, the lady is as good if not better that her predecessor once removed, Alan Greenspan. She speaks, says very little and you believe you are in good hands. One would hope so. The two things that everyone seems to have taken away from today's event was that
1. The Fed will remain as accommodating as possible (or as needed), and
2. The Fed will continue to scale back it's purchases of securities.
Of the first no surprise, but of the second I guess I was wrong again…except I didn't hear the real conviction that everyone else did. No matter, it's what's believed that counts. I also heard positive sounds relating to the economy but these were distinctly muted--not to the extent of Mr. Bernanke's last chat but far from any cheerleader mode either. As expected, the equity boys deemed this to be salvation and the DOW powered ahead to an almost 200 point gain at the close. Interestingly enough, the 10 year was all over the place all day finally settling at 2.72%, Go find someone who understands that, I don't.
All of this, of course was in the face of far from strong numbers either on the economy of in corporate earnings, continued bad news in emerging markets and troubling events in Europe. It is really quite amusing how the markets can turn on and off regarding emerging always having the same final idea that we in the U.S. are pretty much insulated from their effects…until we're not. Except for China, and increasing concern is being expressed over the economic/credit situation in terms of "this is really important," whereas I don't have very much concern at all except in a macro sense as to the worldwide response to a slowdown in economic activity. But credit? Nah. That's the wonderful thing about a totalitarian state. Nobody dies unless the bosses say so.
But why should any of us care about any of these thing when we have The Greatest Show on Earth playing right now on the shores of the Potomac and the Rappahanock. Welcome ladies and gentlemen to the Barry and Frankie show, two Presidents with their approval ratings in the tank finding one another amid the complete lack of interest on the part of anybody else in the world! It would be better of course if The Leader could pronounce Frankie's name properly and if he (or, perhaps, she) didn't have an idiot working for him/her that plans a state dinner in a tent in the middle of February in Washington (forecast: 14 F. and windy) but hey, we're friends again. Lafayette, nous Somme ici! Dear God you can't make this up.
Friday, February 8, 2013
OH, WHAT A LOVELY WAR
...and the Brits won it! After an all-nighter, David Cameron emerged victorious having convinced the leaders of Euroland to cut the EU budget for the first time in history. Unlike some famous battles in the past it was the Brits and the Germans alligned on one side against the French which, if memory serves, last occurred in 1815...but then the Germans were on any side that paid them. How much was involved? Not very much to be sure and it is a multi-year budget running until 2022, a "forward looking" budget according to Harry Von Rompuy the EU President (as opposed to a backward looking budget, Harry?) and with that time frame a lot can change. But it was important for two things: it was a huge political victory for Cameron both in Europe and at home and if anyone was in doubt as to who mattered more as between Frankie and Angie, that doubt was put to rest. It just might keep the British in the Union as well...no little thing when compared to the prospects of just a few short weeks ago. Now the European Parliament can veto the entire thing and there are quite dumb enough to do just that, but I suspect that the Cameron view will prevail even there especially with Angie firmly on board. Quite a result indeed.
Overshadowed by all this was the decision by the assembled to move forward with the exploration of trade agreements with both Japan and the United States which IMHO is a good deal more important than the above but which, certainly in our case, is probably going to be a long time in coming if it comes at all. If Von Rompuy though he was, from time to time, having a bit of a bad time with Cameron wait until he starts dealing with The Leader where I suspect he will find a distinct lack of interest and an attention span some what shorter than that of my late, beloved Wheaten Terrier. Then again, she was a very bright dog.
While that was going on we now have a wonderful little currency war shaping up all around the world. In response to Draghi's comments the other day that the strength of the Euro might be a real drag on growth in 2013, Japan took the hint as its finance minister today suggested that the devaluation of the Yen might have gone a bit too far and we really don't want to allow this to get out of hand do we Draghi-san? I would hate to be an FX trader today. Euroland has clearly been hurt by an exchange rate what with all the upset still closed at 1.33+ to the dollar today. Problem is everyone is chasing each others markets including the U.S. whose trade deficit by the way narrowed sharply last month. Checkbooks at 20 paces! Problem for everyone is that Mr. Bernanke has the biggest checkbook in town and a singular mindset to prove himself to be correct. It could get ugly.
Then again, a goodly part of our Balance of Trade is Oil and we are awash in that commodity at this stage opposed to past years which may well mean that despite what people may wish to do on a currency basis, we are seeing a significant and perhaps permanent shift that may not be affected in any scenario. Interesting stuff I think.
Finally, three cheers for the Irish who apparently have convinced the ECB that a restructuring of their obligations owed to the central bank was in the best interest of all parties. It appears that the ECB has agreed to exchange high-yielding short term obligations for debt with far longer maturities with a greatly reduced interest rate...something I might add that they have been loath to do as Ireland is not the only member of Euroland that are in to them for a bob or two. In exchange, Ireland will immediately liquidate Anglo-Irish Bank (what they should have done four years ago) and promise to sin no more. So now the precedent has been set and principal compromised. It will be interesting to see who is first in line to cut other deals with Sr. Draghi who, incidentally, has yet to comment on this one. It will be a lovely little...war?
Yes, Carter, it was the Times...days late as usual
Overshadowed by all this was the decision by the assembled to move forward with the exploration of trade agreements with both Japan and the United States which IMHO is a good deal more important than the above but which, certainly in our case, is probably going to be a long time in coming if it comes at all. If Von Rompuy though he was, from time to time, having a bit of a bad time with Cameron wait until he starts dealing with The Leader where I suspect he will find a distinct lack of interest and an attention span some what shorter than that of my late, beloved Wheaten Terrier. Then again, she was a very bright dog.
While that was going on we now have a wonderful little currency war shaping up all around the world. In response to Draghi's comments the other day that the strength of the Euro might be a real drag on growth in 2013, Japan took the hint as its finance minister today suggested that the devaluation of the Yen might have gone a bit too far and we really don't want to allow this to get out of hand do we Draghi-san? I would hate to be an FX trader today. Euroland has clearly been hurt by an exchange rate what with all the upset still closed at 1.33+ to the dollar today. Problem is everyone is chasing each others markets including the U.S. whose trade deficit by the way narrowed sharply last month. Checkbooks at 20 paces! Problem for everyone is that Mr. Bernanke has the biggest checkbook in town and a singular mindset to prove himself to be correct. It could get ugly.
Then again, a goodly part of our Balance of Trade is Oil and we are awash in that commodity at this stage opposed to past years which may well mean that despite what people may wish to do on a currency basis, we are seeing a significant and perhaps permanent shift that may not be affected in any scenario. Interesting stuff I think.
Finally, three cheers for the Irish who apparently have convinced the ECB that a restructuring of their obligations owed to the central bank was in the best interest of all parties. It appears that the ECB has agreed to exchange high-yielding short term obligations for debt with far longer maturities with a greatly reduced interest rate...something I might add that they have been loath to do as Ireland is not the only member of Euroland that are in to them for a bob or two. In exchange, Ireland will immediately liquidate Anglo-Irish Bank (what they should have done four years ago) and promise to sin no more. So now the precedent has been set and principal compromised. It will be interesting to see who is first in line to cut other deals with Sr. Draghi who, incidentally, has yet to comment on this one. It will be a lovely little...war?
Yes, Carter, it was the Times...days late as usual
Wednesday, January 23, 2013
THAT TIME OF THE YEAR AGAIN.
Mid January means it's Davos time, that ego-serving, outrageously expensive, complete waste of time to which every CEO of a public company who attends should be immediately fired by his/her board of directors if they have any regard for the well-being of the share holders. You could put a serious dent in world poverty if you applied the waste of this week in an effort to distribute some food. But every once in a while something quite out of the ordinary occurs which gives, for a fleeting moment, legitimacy to the whole, sordid affair.
Yesterday, British PM David Cameron delivered perhaps one of the most important speeches heard in Europe in the last 50 years. It was entirely political and aimed not only at his fellow leaders in Euroland but especially at the voters back home. The PM is facing some tough battles: A referendum later this year as to whether Scotland remains part of the UK or fulfills the dream of Robert the Bruce and becomes an independent nation. He sits at the the head of a divided conservative party with the very real chance of having to call an election if things go just a bit out of kilter, and finally, the direction in which the EU appears to be going is not one that he can support on behalf of his electorate.
Cameron indicated that he had the willingness to stick with the EU but under far less restrictive membership that has been proposed. But most strikingly...and some would say shockingly...he made it quite clear that unless accommodation is reached he was prepared to put the question of continued membership to the British people in the form of a straight up or down referendum later in the year. Phrased in that manner, there are few who doubt that the result would be for the UK to withdraw. Few suspected that he would announce such a bold plan, brilliantly delivered, or so I am told by an old friend, a British diplomat who was present. Undoubtedly, this has solidified his position within the Conservative Party and has put a very large cat among the pigeons of the EU leadership to the point that Angie wasted no time in announcing that she was more than willing to discuss the UK's concerns at an early date. No word on Frankie but I doubt he received this well. Unfortunately, the poor guy's got himself in the middle of a war in Africa and is probably screaming mad that Cameron pulled this off whilst he was otherwise pre-occupied. Pure speculation on my part by the way. In any case, this is a very important event and now that he has let his intentions known in regard to a referendum, Dave's next act is going to be keeping the back-benchers in place for surely the cry will be, "Bugger the rest, referendum now!" A high risk strategy indeed.
Among the common man group, Jamie Dimon waxed poetic about bank regulation today and we'll talk about that a bit tomorrow. But under the caption of "You Can't Make This Stuff Up," came the announcement today the the chief actuary for Greece had been arrested for producing budget deficit numbers that were too high thereby, "thereby doing damage to the Greek State." The reason? Simple really. It was to insure that the size of the bailout from the EU could be justified. Greece, which got itself into trouble by submitting deficit numbers that were too low has just done a 180 and probably gotten half of Europe enraged at them again. Really, You Can't Make This Stuff Up.
Yesterday, British PM David Cameron delivered perhaps one of the most important speeches heard in Europe in the last 50 years. It was entirely political and aimed not only at his fellow leaders in Euroland but especially at the voters back home. The PM is facing some tough battles: A referendum later this year as to whether Scotland remains part of the UK or fulfills the dream of Robert the Bruce and becomes an independent nation. He sits at the the head of a divided conservative party with the very real chance of having to call an election if things go just a bit out of kilter, and finally, the direction in which the EU appears to be going is not one that he can support on behalf of his electorate.
Cameron indicated that he had the willingness to stick with the EU but under far less restrictive membership that has been proposed. But most strikingly...and some would say shockingly...he made it quite clear that unless accommodation is reached he was prepared to put the question of continued membership to the British people in the form of a straight up or down referendum later in the year. Phrased in that manner, there are few who doubt that the result would be for the UK to withdraw. Few suspected that he would announce such a bold plan, brilliantly delivered, or so I am told by an old friend, a British diplomat who was present. Undoubtedly, this has solidified his position within the Conservative Party and has put a very large cat among the pigeons of the EU leadership to the point that Angie wasted no time in announcing that she was more than willing to discuss the UK's concerns at an early date. No word on Frankie but I doubt he received this well. Unfortunately, the poor guy's got himself in the middle of a war in Africa and is probably screaming mad that Cameron pulled this off whilst he was otherwise pre-occupied. Pure speculation on my part by the way. In any case, this is a very important event and now that he has let his intentions known in regard to a referendum, Dave's next act is going to be keeping the back-benchers in place for surely the cry will be, "Bugger the rest, referendum now!" A high risk strategy indeed.
Among the common man group, Jamie Dimon waxed poetic about bank regulation today and we'll talk about that a bit tomorrow. But under the caption of "You Can't Make This Stuff Up," came the announcement today the the chief actuary for Greece had been arrested for producing budget deficit numbers that were too high thereby, "thereby doing damage to the Greek State." The reason? Simple really. It was to insure that the size of the bailout from the EU could be justified. Greece, which got itself into trouble by submitting deficit numbers that were too low has just done a 180 and probably gotten half of Europe enraged at them again. Really, You Can't Make This Stuff Up.
Monday, August 27, 2012
ONE MORE WEEK
To August that is. Today is really slow as it is a bank holiday weekend over there and next week will be the Labor day weekend over here. Of course Those that Count have gotten a head start by showing up in Jackson Hole over the weekend to make sure they have a good seat for Ben's speech I guess. It is a beautiful spot: if you have never been there you should take a trip, especially our non-U.S. readers; we need the tourist revenue.
On the other side of the country the assemblage is about complete for the Republican convention in Tampa Florida which is being somewhat overshadowed by Hurricane Ike which is now heading straight for New Orleans and giving Democratic politicians visions of sugarplums along with their media allies who plan to turn the clock back this week in the biggest "Blame Bush" orgy in years. On the whims of the weather are elections decided.
Across the pond, kudos for the touring side from Greece. The Prime Minister made an excellent impression by all accounts. Proper contrite tone, grasp of the situation, proud but deferential but unfortunately not having a bean. From the creditors all the proper murmurs. Want to help, believe Greece is serious, working as hard as they can, must stick to plan...but not another bean ol' boy, sorry. We can talk about extensions, tho.
And talk they will whilst conjuring up some fiction of performance to hang on to the poor buggers until the end of the year at least wasting just enough time, effort and frayed psyches to keep from focusing on the bigger problem which faced another interesting twist over the weekend.
Sr. Draghi seems bound and determined to follow through with his plan to target yields for sovereign risk through the controlled purchase of bonds at issuance believing that he can target yields by the amount of bonds the ECB purchases. As you know, count me as skeptical, but I will say this: unlike Mr. Bernanke and the mobs of economists surrounding him, Sr. Draghi knows markets and therefore, rather than my usual "that's the stupidest thing I ever heard of" response I shall limit my self to, "I don't think it's going to work." Then again, the beauty of it is who's going to know? They can fudge this thing at the offerings seven ways to Sunday (Yes, Virginia, those things are done) but there are these lesser breeds called traders and they tend to take a less than benign view at the angelic efforts of central bankers and bid things at what they believe to be "appropriate levels." If Sr. Draghi's Spanish 10 year which he believes should yield 5% begins to trade at 91-92, a strategic re-thing may be in order.
Anyway, Angie was saying kind of nice things about this idea and in the background Frankie could be heard mumbling approval when Angie's own Bundesbank head popped up with a rather resounding, "Nein," calling the whole thing not only not a good idea but liking it to the printing of counterfeit money! Ach du Lieber! One would think that by now everyone is on the same page of the missal but I guess not. Now maybe this is designed to help the Greeks because while the elephants fight it out in the jungle another day goes by and every day helps a little (not really). But it sure as hell does no one else any good.
Meanwhile, in Spain, the finance guys have come up with a number of 65 billion Euros to fix the Spanish banks. Problem is the folks they hired at great expense to tell them how much they needed came up with 85 billion. Huummmm, I wonder what that means? And so it goes. Onward to Jackson Hole, gang. Problem is it's still August and it's still the silly season. God knows what will come out of that place.
On the other side of the country the assemblage is about complete for the Republican convention in Tampa Florida which is being somewhat overshadowed by Hurricane Ike which is now heading straight for New Orleans and giving Democratic politicians visions of sugarplums along with their media allies who plan to turn the clock back this week in the biggest "Blame Bush" orgy in years. On the whims of the weather are elections decided.
Across the pond, kudos for the touring side from Greece. The Prime Minister made an excellent impression by all accounts. Proper contrite tone, grasp of the situation, proud but deferential but unfortunately not having a bean. From the creditors all the proper murmurs. Want to help, believe Greece is serious, working as hard as they can, must stick to plan...but not another bean ol' boy, sorry. We can talk about extensions, tho.
And talk they will whilst conjuring up some fiction of performance to hang on to the poor buggers until the end of the year at least wasting just enough time, effort and frayed psyches to keep from focusing on the bigger problem which faced another interesting twist over the weekend.
Sr. Draghi seems bound and determined to follow through with his plan to target yields for sovereign risk through the controlled purchase of bonds at issuance believing that he can target yields by the amount of bonds the ECB purchases. As you know, count me as skeptical, but I will say this: unlike Mr. Bernanke and the mobs of economists surrounding him, Sr. Draghi knows markets and therefore, rather than my usual "that's the stupidest thing I ever heard of" response I shall limit my self to, "I don't think it's going to work." Then again, the beauty of it is who's going to know? They can fudge this thing at the offerings seven ways to Sunday (Yes, Virginia, those things are done) but there are these lesser breeds called traders and they tend to take a less than benign view at the angelic efforts of central bankers and bid things at what they believe to be "appropriate levels." If Sr. Draghi's Spanish 10 year which he believes should yield 5% begins to trade at 91-92, a strategic re-thing may be in order.
Anyway, Angie was saying kind of nice things about this idea and in the background Frankie could be heard mumbling approval when Angie's own Bundesbank head popped up with a rather resounding, "Nein," calling the whole thing not only not a good idea but liking it to the printing of counterfeit money! Ach du Lieber! One would think that by now everyone is on the same page of the missal but I guess not. Now maybe this is designed to help the Greeks because while the elephants fight it out in the jungle another day goes by and every day helps a little (not really). But it sure as hell does no one else any good.
Meanwhile, in Spain, the finance guys have come up with a number of 65 billion Euros to fix the Spanish banks. Problem is the folks they hired at great expense to tell them how much they needed came up with 85 billion. Huummmm, I wonder what that means? And so it goes. Onward to Jackson Hole, gang. Problem is it's still August and it's still the silly season. God knows what will come out of that place.
Tuesday, June 26, 2012
"NOT WHILE I'M STILL ALIVE..."
...which is German for "over my dead body" or "drop dead." I'm not sure; German is a difficult language. Anyway, rhar was Angie's response to the question as to whether she would agree with Frankie at chin wag tomorrow in Paris over the question of Euro bonds/joint guarantees/burden sharing/added growth policies and whatever else on which Frankie was trying to raise the Tri-Color. Told you he was quite full of himself.
What I didn't mention because I just found out was that The Leader and the Suit were trying to muscle Angie and her northern Europe pals into Frankie's box last week in Los Cabos. Now you have to undestand the bloom is very much off the Leader's rose and The Suit carries little weight in Europe (or anywhere else for that matter) so putting in their two cents unasked is a sure fire way to insure that Angie's gang does what they damn well please and thank you very much, go away now. Then again, Paris is lovely this time of year but don't expect much if anything coming out of this meeting. Frankie should keep the golden rule in mind: he who has the gold makes the rules. Oh, one other thing. Keep an eye on French banks. I don't like what I am hearing which is absolutely nothing and unless they have suddenly gotten smart, that's a bad thing.
And now Massimo; a very dour Massimo I might add. Things according to him have not gone well. The Italians have missed in his estimation an opportunity of a lifetime simply because they are...well, Italian. Monti was sure his plan to liberalize the entire Italian state was a winner; oh sure, compromises would occur but he was sure he had it. He got very little and occording to Massimo not because of any overwhelming disagreement on the policy or the necessity but simply because the politicians were more uncomfortable with adopting the changes proposed than with the status quo despite recognizing that in the long run was not sustainable. I am reminded of a wonderful Sophia Loren movie in which for reasons I have forgotten ahe must become pregnant as quickly as possible. The parental candidate is a young man in the town who has been madly in love with her and fills his days with fantasies. She explains the situation:
"...es tu."
"Io?"
"Si."
"Ora?"
"Si."
"Qui?"
"Si, SI!"
She is forced to chase him around the room for the result pre-ordained and desired but in his mind it should not be him, not then and not there. Bienvenuto a Italia.
So, continues Massimo, what Monti is going to do is agree with Frankie which is a non-starter but also make it clear that in exchange he is prepared to allow Angie to run the show in Euroland. That he believes will be even a worse solution for the pols than his reforms and believing as he does that with his reforms Italy can become the Germany of the South he is willing to play a monumental three-way game of chiken to get them done. If Massimo is correct, the guy has stones as they say on Mulberry Street. In the meantime, Italy sold two year notes at a stinking yield of 4.7%. Italian banks are making a lot of money buying these things and even getting the cash back as Monte di Peschi di Sienna, probably the oldest bank in the world, received 2 billion Euros from the Bank of Italy today. Time is getting short throughout Euroland. Massimo is going to Brussels. He says the food is wonderful.
What I didn't mention because I just found out was that The Leader and the Suit were trying to muscle Angie and her northern Europe pals into Frankie's box last week in Los Cabos. Now you have to undestand the bloom is very much off the Leader's rose and The Suit carries little weight in Europe (or anywhere else for that matter) so putting in their two cents unasked is a sure fire way to insure that Angie's gang does what they damn well please and thank you very much, go away now. Then again, Paris is lovely this time of year but don't expect much if anything coming out of this meeting. Frankie should keep the golden rule in mind: he who has the gold makes the rules. Oh, one other thing. Keep an eye on French banks. I don't like what I am hearing which is absolutely nothing and unless they have suddenly gotten smart, that's a bad thing.
And now Massimo; a very dour Massimo I might add. Things according to him have not gone well. The Italians have missed in his estimation an opportunity of a lifetime simply because they are...well, Italian. Monti was sure his plan to liberalize the entire Italian state was a winner; oh sure, compromises would occur but he was sure he had it. He got very little and occording to Massimo not because of any overwhelming disagreement on the policy or the necessity but simply because the politicians were more uncomfortable with adopting the changes proposed than with the status quo despite recognizing that in the long run was not sustainable. I am reminded of a wonderful Sophia Loren movie in which for reasons I have forgotten ahe must become pregnant as quickly as possible. The parental candidate is a young man in the town who has been madly in love with her and fills his days with fantasies. She explains the situation:
"...es tu."
"Io?"
"Si."
"Ora?"
"Si."
"Qui?"
"Si, SI!"
She is forced to chase him around the room for the result pre-ordained and desired but in his mind it should not be him, not then and not there. Bienvenuto a Italia.
So, continues Massimo, what Monti is going to do is agree with Frankie which is a non-starter but also make it clear that in exchange he is prepared to allow Angie to run the show in Euroland. That he believes will be even a worse solution for the pols than his reforms and believing as he does that with his reforms Italy can become the Germany of the South he is willing to play a monumental three-way game of chiken to get them done. If Massimo is correct, the guy has stones as they say on Mulberry Street. In the meantime, Italy sold two year notes at a stinking yield of 4.7%. Italian banks are making a lot of money buying these things and even getting the cash back as Monte di Peschi di Sienna, probably the oldest bank in the world, received 2 billion Euros from the Bank of Italy today. Time is getting short throughout Euroland. Massimo is going to Brussels. He says the food is wonderful.
Tuesday, March 6, 2012
WRITER'S CRAMP
Sorry gang, I could wax poetic but to what point. The date will be Thursday when we learn the fate of the swap and despite all the positive noise out there nobody has a clue of what's going to occur. I suspect the Greeks will get about 75-80% of the debt tendered, they will enact the Collective Action Clause and the CDSs will trigger--or at least some of them. After that, who knows what happens and to be honest not too many people care. This thing was all about the banks and on cue, the biggest holders of the debt in the banking sector have all said that they will tender which means the authorities feel that none of them will go toes up as a result. Now if the CDSs trigger that could cause the bailout to be posponed but half of Europe could care less because everybody knows that Greece is kaput and one might as well deal with that now as well as later. Of course, there will be no money for the banks in the future but we'll...oh hell, I don't know what we will do and I could care less as well. The punters will move on to Portugal but as the Portugese have no maturities until well into 2013 that trade is a bit tricker. I'm just going to wait until Thursday before I say another word.
In the meantime, one thing to look at are the polls in France. Right now, things look really bad for Sarkozy and French Soccer. You see, Hollande has proposed a top tax rate of 75% which means any soccer player that doesn't have two left feet will be out of France in a year. Mme. Sakorzy as well--with or without the old man--which would be a hell of a loss. The Socialists have also proposed a breakup of the French banking system along the lines of the Volker Rule which is step #1 according to some of my friends to the nationalization of the system. Au Revoir La Republique from any sort of economic performance in the coming years which makes the future of Euroland even bleaker than it is right now. Why anybody would keep their money in that place is beyond me (are you listening Matthew?), and yet some commentators are taking it in stride perhaps with the thought that he hasn't happened yet.
Not the markets, however. Waking up to the understanding that things are not all that well in Euroland and that there's a bit of a muddle on this side as well, the incredible surging stock market took a 200 point hit on the Dow today. Emerging market slippage added to the slide as the numbers out of Brazil were surprisingly (for some) poor. It might be a rather good ideal if one of the geniuses on tv wandered on down and asked those folks whatsup. What they would get is an earful of what this glut of money spewing forth from the Fed and soon-to-come ECB means to growth markets like Brazil: the inflationary pressure it causes makes it very difficult for these guys to cope. Best so far has been Mexico but it has been a struggle. But spewing along we go with Richard Fisher about the only guy in town who seems to understand what it is we may be causing.
Finally, Wells Fargo today put out a rather interesting report that didn;t get the coverage it should have given the political bent of the popular press. According to the Stagecoach, the greatly improving employment number has been more of a function of people simply stopping to search for jobs rather than a true economic shift. Run the numbers in the same manner and the real unemployment rate is 11.8% not 8.3%. I don't know. Ther have been earlier comments like this but things around here are looking a bit better, yet the study was pretty convincing. Problem is, we are not disconnected from the rest of the world; if folks are right about Europe and emerging markets, any positive move here no matter how real is unsustainable. And as for China? Good news there. My Really Smart Friend, Larry is there as we speak. We'll have the true scoop in a day or tow. Be patient.
In the meantime, one thing to look at are the polls in France. Right now, things look really bad for Sarkozy and French Soccer. You see, Hollande has proposed a top tax rate of 75% which means any soccer player that doesn't have two left feet will be out of France in a year. Mme. Sakorzy as well--with or without the old man--which would be a hell of a loss. The Socialists have also proposed a breakup of the French banking system along the lines of the Volker Rule which is step #1 according to some of my friends to the nationalization of the system. Au Revoir La Republique from any sort of economic performance in the coming years which makes the future of Euroland even bleaker than it is right now. Why anybody would keep their money in that place is beyond me (are you listening Matthew?), and yet some commentators are taking it in stride perhaps with the thought that he hasn't happened yet.
Not the markets, however. Waking up to the understanding that things are not all that well in Euroland and that there's a bit of a muddle on this side as well, the incredible surging stock market took a 200 point hit on the Dow today. Emerging market slippage added to the slide as the numbers out of Brazil were surprisingly (for some) poor. It might be a rather good ideal if one of the geniuses on tv wandered on down and asked those folks whatsup. What they would get is an earful of what this glut of money spewing forth from the Fed and soon-to-come ECB means to growth markets like Brazil: the inflationary pressure it causes makes it very difficult for these guys to cope. Best so far has been Mexico but it has been a struggle. But spewing along we go with Richard Fisher about the only guy in town who seems to understand what it is we may be causing.
Finally, Wells Fargo today put out a rather interesting report that didn;t get the coverage it should have given the political bent of the popular press. According to the Stagecoach, the greatly improving employment number has been more of a function of people simply stopping to search for jobs rather than a true economic shift. Run the numbers in the same manner and the real unemployment rate is 11.8% not 8.3%. I don't know. Ther have been earlier comments like this but things around here are looking a bit better, yet the study was pretty convincing. Problem is, we are not disconnected from the rest of the world; if folks are right about Europe and emerging markets, any positive move here no matter how real is unsustainable. And as for China? Good news there. My Really Smart Friend, Larry is there as we speak. We'll have the true scoop in a day or tow. Be patient.
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