BIRTHDAY PRESENTS

Great stuff from my friends in Portugal and Greece guaranteed to make this old man's life a lot easier!

The Portuguese decided to throw their present government out and the Communists and the Socialists got together to form a new one later this week.  The thought of the copy that could spring out from this lame-brain decision boggles the mind.  On top of watching a Communist government operating within the EU just think of the nonsense that spew forth from Little Paulie Krugman's future columns in the Times, no doubt beginning with how austerity is now dead, the people have spoken and the future is with us.  Let's dig up Keynes and in celebration float him down the Tagus on a golden barge!

Of course the real question is whether anyone is going to care.  Probably not as on the big Peninsular more important things are going on such as plans being drawn up for the secession of Catalonia from Spain which IS a big deal in more ways that the issue of whether Barca will be allowed to stay in La Liga or not.  This, as we have said before is a real country; unfortunately in the great scheme of things Portugal is not--to an even greater extent than Greece which is in hot water again.

The Greeks have been anxious to receive a second tranche of their bail-out money totalling some 2 Billion Euros to shore up their domestic institutions but according to the Euros they have not fulfilled their obligations as to a solution for those in arrears on their home mortgages.  What! say you.  Euros concerned with the well-being of individual Greeks?  Well, of course not, sillies.  The Euros are concerned with the well-being of the Greek banks to whom the mortgages are owed and who owe the Euros.  Therefore, let's figure out how we are going to get paid before we pay them the money that will in part be used to pay us.  Got it?  It really isn't so hard to understand if you simply keep in mind the simple rule; institutions count, people don't.  Will it be resolved?  Sure.  There will be some harsh language and some tooing and froing, but no big deal.  Most importantly, I'll get a few stories out of this...I hope.

The third thing that is beginning to bubble up is the renewed concern that the Brits are serious about canning the Euro thing altogether.  Early days, but shots are being fired across bows with some serious folks laying some very big guns in anticipation of this show-down.  I mean, with all of this coming into play on my birthday what could possibly be in my Christmas stocking?  This could really be a year to remember.  We start exploring the prospects tomorrow.


The ten year closed at 2.34% today.  All questions have been answered as to whether the Fed "tightens" in December from the market's standpoint.  I guess all's right with the world except in the mind of the OECD who just cut it's economic forecast today.  Then again a 1/4 point as we have said means nothing but I would sure like to see something out there as supposedly encouraging as last month's job report and a bit more believable.  Let's hope we get it.

WHERE ANGELS FEAR TO TRED.

But not this one.  Jose Angel Gurria Trevino has been around for a long time.  From humble beginnings in the office of public credit in Mexico's Treasury department, he rose steadily in the ranks in the last third of the 20th century in important positions culminating with his appointment to the office of Minister of Finance.  During that period he managed to get paid three pensions at once but that unfortunate accounting oversight is a tale for a different time.

El Jeffe Intergalticos del Credico Publico as his colleagues used to call him (behind his back), is known to and by anyone who ever had anything to do with sovereign debt for the past 40 years.  He is very smart, a brilliant linguist (Spanish, English, French, Italian and God knows what else), charming as can be and an all-around fun guy to be with...or at least he used to be.  It's been awhile since those days for me.

Angel is probably at his last post as the head of the Organization for Economic Co-operation and Development (although he would LOVE to be the head of the IMF but that's not going to happen) which provides him with an enormous budget to spend and a podium at which to speak for all occasions, at which disciplines Angel is superb. He's was always good for an interview and if you happened to be an attractive lady reporter, you could get a really good interview.  I'm told in this he hasn't changed a bit.

Anyway, the Angel gave a beaut of an interview to the Daily Telegraph the other day in Lima, Peru, the site of this year's fall IMF get-together (By the by, did you know it never rains in Lima?  Never).  I'm going to quote from the Telegraph a couple of Angel's comments from that interview.

Countries that say: I'll spend my way out of this third slump.  I say: no you won't because you've already done that and you ran out of space.  Now countries are trying to reduce the deficit and debt because that's a sign of vulnerability and the rating agencies are breathing down their neck...

We don't have room to inflate ourselves out of this one.  So we go back to the same issue: it's structural, structural, structural.

Germany modified it's labor laws 12 years ago, and it's reaping the benefits brilliantly and gallantly because of much better performance during the crisis.  Spain did it three years ago and they are reaping the benefits now.  Italy did it last month, and it will take a couple of years.

There was a lot more on various topics all quite interesting,  Angel in this case was speaking to the emerging markets and using the EU as an example but he was also expounding upon a learned belief that the old ways ain't gonna work no more and the very hard choices in fiscal, governmental and societal changes are going to have to be faced if there is to be any way out of this mess. Heard that any place else before?

Now before one thinks I'm getting a bit gushy over my old friend, the OECD is in the business of providing sovereigns with economic advice and structural adjustment and is working with Greece at this very moment.  Angel, who always had a firm grasp of who and what was important, would love to do more of this, ensuring his place among the financial leaders of out time.  Altruism may be the one English word he never learned.  But good on him.  It got it right this time, and I hope people were listening.  Better yet, I hope people start doing if that means hiring the old bugger, well, why not.