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.
Showing posts with label Portugal. Show all posts
Showing posts with label Portugal. Show all posts
Monday, November 9, 2015
Thursday, July 31, 2014
NOT A GOOD DAY
If you were searching for a bit of good news today it was hard to find. Over There, aside from the killing fields of the Ukraine, the news was unsettling and the mood somber. There was no economic growth, none. On top of that came the report from Portuguese officials that, as predicted in this space, the loss at Banco Espirito Sancto was far greater than estimated and arrest warrants are being issued as I write. Quite frankly, with the exception of the United States, I cannot remember any bank calamity anywhere that didn't involve lending to another entity in the financial group. It's the first place one looks, and this is proving to be the case here…as predicted yet again. We have seen this all before, only the names have been changed to protect the guilty. The suspicion is that there is to be more of this seeping out from underneath rocks in other jurisdictions that can no longer be kept hidden or inflated out of harm. I would agree.
Over Here, questions began to be raised as to the quality of the GDP figures as a whole series of economic data was released including a absolutely dismal Chicago purchasing report that questioned the real state of the economic recovery. The stock market fell over 300 points, the 10 year thumped back down to it's range of around 2.55% and like Europe, the mood turned somber. In addition, people are beginning to wake up to the fact that western relations with Russia--even Angies--are in the toilet and what does that foretell may I ask.
And then of course there are the Argie Bargies.
When is a default not a default? It seems that occurs when the judicial system of the United States tells you that you are in breach of contract if you don't pay ALL of your creditors what they are owed and in light of that you don't pay anybody..or so is the Argentine argument. Now just to prove that they are correct, they plan…or so they claim…to sue the United States in the International Court in the Hague in violation of their sovereign right to remain deadbeats and liars which they have been since 1823 or so. Wrapped up in that will be some really progressive arguments which would essentially reverse 500 years of practice relating to bond issues and God knows how many years of Anglo-American law in regard to contracts. There is a meeting tomorrow at the District Court to see where we go from here which could actually turn into good fun as Judge Griesa may ask for an explanation of the Argentine claim that he was in cahoots with the plaintiffs. Probably wont happen, but people have been thrown in jail for contempt for less. I mean, would that be a kick? Some Argie Minister thrown in the clink for about 100 days? Well, one can dream.
I make light of this but what is occurring is that every horse's ass on the left to include no lesser a horse's ass on these matters than Prof. Stieglitz of Columbia University have chimed in as to how this affair, if allowed to continue, will spell doom to international finance as we know it. Rubbish. What it will hopefully do is reestablish the rule of law and contract as should have been understood by all parties and undoubtedly WAS as Argentina, throughout this affair has been represented by Cleary Gottleib Steen & Hamilton and as I have said on a number of occasions, there is none better. I KNOW they were advised as to what could happen if things got ugly and they chose the path they have walked in the face of that advice. They are now choosing to establish their position in the arena of public dialog and finding ample aid in the Stieglitzs of the world who know nothing of this business but a lot of the politics of the left. It's not going to work, but rather than the non-event that many have predicted of this affair, the course they have taken could make it a very big event indeed. Don't get me wrong, there is a settlement out there and I hope it can be reached quickly. But if Argentina chooses to take the course of arrogance and stupidity so familiar to them as a nation I hope for once the proper decision can be imposed and imposed hard. It begins tomorrow.
Over Here, questions began to be raised as to the quality of the GDP figures as a whole series of economic data was released including a absolutely dismal Chicago purchasing report that questioned the real state of the economic recovery. The stock market fell over 300 points, the 10 year thumped back down to it's range of around 2.55% and like Europe, the mood turned somber. In addition, people are beginning to wake up to the fact that western relations with Russia--even Angies--are in the toilet and what does that foretell may I ask.
And then of course there are the Argie Bargies.
When is a default not a default? It seems that occurs when the judicial system of the United States tells you that you are in breach of contract if you don't pay ALL of your creditors what they are owed and in light of that you don't pay anybody..or so is the Argentine argument. Now just to prove that they are correct, they plan…or so they claim…to sue the United States in the International Court in the Hague in violation of their sovereign right to remain deadbeats and liars which they have been since 1823 or so. Wrapped up in that will be some really progressive arguments which would essentially reverse 500 years of practice relating to bond issues and God knows how many years of Anglo-American law in regard to contracts. There is a meeting tomorrow at the District Court to see where we go from here which could actually turn into good fun as Judge Griesa may ask for an explanation of the Argentine claim that he was in cahoots with the plaintiffs. Probably wont happen, but people have been thrown in jail for contempt for less. I mean, would that be a kick? Some Argie Minister thrown in the clink for about 100 days? Well, one can dream.
I make light of this but what is occurring is that every horse's ass on the left to include no lesser a horse's ass on these matters than Prof. Stieglitz of Columbia University have chimed in as to how this affair, if allowed to continue, will spell doom to international finance as we know it. Rubbish. What it will hopefully do is reestablish the rule of law and contract as should have been understood by all parties and undoubtedly WAS as Argentina, throughout this affair has been represented by Cleary Gottleib Steen & Hamilton and as I have said on a number of occasions, there is none better. I KNOW they were advised as to what could happen if things got ugly and they chose the path they have walked in the face of that advice. They are now choosing to establish their position in the arena of public dialog and finding ample aid in the Stieglitzs of the world who know nothing of this business but a lot of the politics of the left. It's not going to work, but rather than the non-event that many have predicted of this affair, the course they have taken could make it a very big event indeed. Don't get me wrong, there is a settlement out there and I hope it can be reached quickly. But if Argentina chooses to take the course of arrogance and stupidity so familiar to them as a nation I hope for once the proper decision can be imposed and imposed hard. It begins tomorrow.
Monday, July 21, 2014
THE ROAD TO…WHERE?
The Leader spoke on the Ukraine crisis early this afternoon, some say in response to the criticism of what he said…or did not say…over the weekend. It received even harsher criticism as a result. He said nothing which was interpreted only by the American far-left wags as being a brilliant ploy of holding his cards close to his chest. To be honest, he has few cards to play without the Euros who can't stand the guy and worst yet, don't trust him. Nevertheless, there seems to be a growing thought that doing nothing can't be done and therefore one has to ask where this thing is going and what will be the repercussions to the increasingly integrated financial world in which we live.
From the standpoint of what this means Over Here, the announced plans of the Administration to essentially fund its domestic policy program through tax increases and cuts in the military is, I think, dead. Congress simply will not agree to the former or support the latter in an increasingly (or so it seems) more dangerous global environment. The U.S. response to Russia or the lack of the same will probably become a larger election issue which is now but four months away and could help to shape the congress for the next two years. Should the Republicans achieve their goal of recapturing the Senate their will undoubtedly be legislative stalemate on all levels which some view as a good thing on issues such as financial regulation and of course health care--which I shall never mention again--leading to a possible roll-back on some of the legislative mistakes that have been made in the rush to punish that group of pariahs in the society formally know as bankers. Then again, perhaps not. I'm fairly confident of one thing, however. The relationship between the U.S. and the Euros had better come out of this thing intact and hopefully improved or there is going to be some really tough sledding ahead in the near term.
Over there, individual domestic difficulties seem to be preventing a convergence vis-a-vis Russia--an understandable situation given what is going on. The French, par example, announced today that the state of the economy was "un catasthophe" to the extent that Frankie's beloved 75% top tax rate was to be scrapped along with the 35 hour work week (bet that doesn't happen) in order to get the country moving again. Perhaps scrapping Frankie might work even better but that's none of my business.
Over the weekend more information was released concerning the Banco Espirito Sancto. Luxembourg holding companies, multiple and interlocking loans, commercial paper putchases…and proposed payments thereof…and whether anybody in hell can explain what was going on. It's not Portugal you see, but the issue being if here, where else in the continent that is one big Disney Land is this going on? Of course the masters of obfuscation are the Italians…they have been the best at it for 700 years…so it shouldn't be long before questions start getting asked--again--about who owes what to whom and oh my goodness does this mean that the entire system is probably insolvent? Well, yes, but hopefully the Italians will do what they have always done, keep their mouths shut and act like nothing has happened. And you thought Omerta was just a Sicilian thing? My son, you haven't seen a thing until you visit some of the little shops in Milano, Turino and oh, let us not forget Vienna. It's a good thing August is close at hand, otherwise we would have a lot to worry about. But not until September. In 10 days all of Europe will be on the road…to somewhere.
From the standpoint of what this means Over Here, the announced plans of the Administration to essentially fund its domestic policy program through tax increases and cuts in the military is, I think, dead. Congress simply will not agree to the former or support the latter in an increasingly (or so it seems) more dangerous global environment. The U.S. response to Russia or the lack of the same will probably become a larger election issue which is now but four months away and could help to shape the congress for the next two years. Should the Republicans achieve their goal of recapturing the Senate their will undoubtedly be legislative stalemate on all levels which some view as a good thing on issues such as financial regulation and of course health care--which I shall never mention again--leading to a possible roll-back on some of the legislative mistakes that have been made in the rush to punish that group of pariahs in the society formally know as bankers. Then again, perhaps not. I'm fairly confident of one thing, however. The relationship between the U.S. and the Euros had better come out of this thing intact and hopefully improved or there is going to be some really tough sledding ahead in the near term.
Over there, individual domestic difficulties seem to be preventing a convergence vis-a-vis Russia--an understandable situation given what is going on. The French, par example, announced today that the state of the economy was "un catasthophe" to the extent that Frankie's beloved 75% top tax rate was to be scrapped along with the 35 hour work week (bet that doesn't happen) in order to get the country moving again. Perhaps scrapping Frankie might work even better but that's none of my business.
Over the weekend more information was released concerning the Banco Espirito Sancto. Luxembourg holding companies, multiple and interlocking loans, commercial paper putchases…and proposed payments thereof…and whether anybody in hell can explain what was going on. It's not Portugal you see, but the issue being if here, where else in the continent that is one big Disney Land is this going on? Of course the masters of obfuscation are the Italians…they have been the best at it for 700 years…so it shouldn't be long before questions start getting asked--again--about who owes what to whom and oh my goodness does this mean that the entire system is probably insolvent? Well, yes, but hopefully the Italians will do what they have always done, keep their mouths shut and act like nothing has happened. And you thought Omerta was just a Sicilian thing? My son, you haven't seen a thing until you visit some of the little shops in Milano, Turino and oh, let us not forget Vienna. It's a good thing August is close at hand, otherwise we would have a lot to worry about. But not until September. In 10 days all of Europe will be on the road…to somewhere.
Thursday, July 10, 2014
THE SPIRIT IS FLAGGING
The acid test in proving who was a real international banker was to ask the question, "What's the difference between Espirito Sancto and Santo Spirito?" The answer? The former is the oldest, largest bank in Portugal whilst the latter is the Vatican bank. Believe it or not, a lot of folks got that one wrong. Not today. Everybody knows what Espirito Sancto is today.
The markets shuttered at the news that the Espirito Sancto group--not the bank--missed a couple of debt payments. Needless to say, the Euros cocked the entire thing up by not stepping on the idea that it was the bank that was in trouble until the ECB put out a statement that the bank was "ring-fenced" whatever the hell that is supposed to mean. Problem is everyone--including me--is fairly certain that the group, which owns 25% of the bank outright (and God knows how much else behind the curtain) probably owes a bundle to the bank because that is how these things always seem to turn out. Now, most of the know-nothings were quick to reassure all and sundry that Espirito Sancto was simply too small to present a systemic risk: crap. It is THE bank in a member of the EC which brings the whole shooting match into play again. So unless Sr. Draghi gets this one tidied up real quick, there's trouble ahead without any moonlight and music. Memo to Mario: Got you Covered, punto, works real well if spoken quiockly…like tomorrow.
One thing that will not get covered, however, is the mess that is still Europe. Indeed, the only thing looking anywhere decent (and that is a relative term) is Germany and England which is of course a myth because Little Paulie Krugman has told us it's, in effect, a failed state. Italy, doesn't look good; Spain, ditto, France, the most important of them all a political catastrophe and rapidly becoming an economic one. Funny, despite the heroic efforts of the ECB in propping up economies and the Euro with scads of money, the flight to safety is full speed ahead with the 10 year Bund under 1.20% today and the Treasury at 2.55%. Now how the hell the Bund can trade 140b.p. through Treasuries is beyond me but then again perhaps the Euros see what may appear to them to be a non-functioning government Over Here which may count for something. Which brings us to Janet and her band of merry men.
Yesterday I was wondering out loud how the markets could appear so sanguine at the Fed's announcement of the cessation of the bond buying program in October. If one takes a quick look it doesn't take long to figure it out. There is no change in the free money policy: reverse repos replace bond buying. Artificiality reigns and central control multiplies. We are rapidly coming to the point where everything in the financial world is mispriced--especially credit--and if it isn't, it's by accident. Of course, there appears very little chance of reversal as politicians both Over Here and Over There are locked into political cum economic policies which although having produced no discernible results in 5 years remain unchallenged, funded by central banks that are locked into academic schemes capable only of academics.
Anyway, while all of this is going on, we have over 50,000 children funneled across our borders and The Leader refusing to enforce laws already on the books. Israel has lined up 40,000 troops on the border with Gaza and the Leader is fund raising in Colorado getting offered a hit from one of its leading citizens. His latest beaut was to call Angie today to apologize for the CIA guy who was apparently spying on our ally…and got caught. Claims he knew nothing about it because the dog ate the memo or something. Think she believed him? Look, I don't think the guy has done a very good job but now I'm beginning to wonder if he gives a damn. That's a whole lot different. I keep crying wolf I know, but then again I keep hearing the howling outside my window. Nothing moment us will happen until Monday as the finals are this weekend. Sleep tight.
The markets shuttered at the news that the Espirito Sancto group--not the bank--missed a couple of debt payments. Needless to say, the Euros cocked the entire thing up by not stepping on the idea that it was the bank that was in trouble until the ECB put out a statement that the bank was "ring-fenced" whatever the hell that is supposed to mean. Problem is everyone--including me--is fairly certain that the group, which owns 25% of the bank outright (and God knows how much else behind the curtain) probably owes a bundle to the bank because that is how these things always seem to turn out. Now, most of the know-nothings were quick to reassure all and sundry that Espirito Sancto was simply too small to present a systemic risk: crap. It is THE bank in a member of the EC which brings the whole shooting match into play again. So unless Sr. Draghi gets this one tidied up real quick, there's trouble ahead without any moonlight and music. Memo to Mario: Got you Covered, punto, works real well if spoken quiockly…like tomorrow.
One thing that will not get covered, however, is the mess that is still Europe. Indeed, the only thing looking anywhere decent (and that is a relative term) is Germany and England which is of course a myth because Little Paulie Krugman has told us it's, in effect, a failed state. Italy, doesn't look good; Spain, ditto, France, the most important of them all a political catastrophe and rapidly becoming an economic one. Funny, despite the heroic efforts of the ECB in propping up economies and the Euro with scads of money, the flight to safety is full speed ahead with the 10 year Bund under 1.20% today and the Treasury at 2.55%. Now how the hell the Bund can trade 140b.p. through Treasuries is beyond me but then again perhaps the Euros see what may appear to them to be a non-functioning government Over Here which may count for something. Which brings us to Janet and her band of merry men.
Yesterday I was wondering out loud how the markets could appear so sanguine at the Fed's announcement of the cessation of the bond buying program in October. If one takes a quick look it doesn't take long to figure it out. There is no change in the free money policy: reverse repos replace bond buying. Artificiality reigns and central control multiplies. We are rapidly coming to the point where everything in the financial world is mispriced--especially credit--and if it isn't, it's by accident. Of course, there appears very little chance of reversal as politicians both Over Here and Over There are locked into political cum economic policies which although having produced no discernible results in 5 years remain unchallenged, funded by central banks that are locked into academic schemes capable only of academics.
Anyway, while all of this is going on, we have over 50,000 children funneled across our borders and The Leader refusing to enforce laws already on the books. Israel has lined up 40,000 troops on the border with Gaza and the Leader is fund raising in Colorado getting offered a hit from one of its leading citizens. His latest beaut was to call Angie today to apologize for the CIA guy who was apparently spying on our ally…and got caught. Claims he knew nothing about it because the dog ate the memo or something. Think she believed him? Look, I don't think the guy has done a very good job but now I'm beginning to wonder if he gives a damn. That's a whole lot different. I keep crying wolf I know, but then again I keep hearing the howling outside my window. Nothing moment us will happen until Monday as the finals are this weekend. Sleep tight.
Tuesday, February 4, 2014
THE WEATHER, THE WORRIES
We have had almost 100 inches of snow so far this year: we average 66. Tonight we are expecting another 3-6 inches. It's getting a bit old. No one can explain the crazy weather pattern that has caused this.
No one seems to be able to explain the massive switches in market sentiment that has occurred since the start of the year either. The DOW is down 700 points, the 10 year yield, in the face of a seemingly less-generous Fed has lost nearly 40 B.P.s in yield explained partly by the rush out of emerging markets in into "safe" investments. Of course if you were onto the emerging markets story early-on, lucky you; if you weren't…Last week the drop in equity markets was blamed on the emerging markets; yesterday's major sell-off was caused be bad industrial production numbers. Friday's job report is rumored to be poor and despite today's rally (at least as I write) the overall feeling is there is more gloom to come.
The mumbling and grumbling Over There hasn't helped the situation. First, we have Greece, which, amidst the charges that the books have once again been cooked, it is becoming well-accepted that it will need another bail-out of substantial funds. Right now they aren't available nor is the delivery mechanism nor is the ECB if the German high court has anything to say about it or so it would appear. The same situation is being charged against Portugal much against the denial of the finance minister of the country--the debt/GDP ratio is second-worse in the EU--but gaining on Italy which presently holds first place with it's banking system looking shakier by the day. France is a political mess and as the economy remains in the doldrums, the politics looks worse and worse. And as for the Euro? Well, it strengthened against everything once again today. Go figure.
All of this is a background for the Olympics which start this week-end in Sochi, Russia, which just canceled a major bond offering due to "adverse market conditions"--no kidding Tovarich--and where a lot of really bad things could happen. If they do, the overall effect will be far more significant that could be justified by pure logic. Therefore, on top of everything else we are looking at event risk for the next few weeks which has all the traders sitting out there with their fingers crossed and not in a hurry to be long anywhere. At least I wouldn't be but this generation has always been far more long testosterone than ever I was.
Finally, to add to the list of worries, we are looking at the perfect storm…no not in finance but in the convergence of our 3-6 incher with a n'or-easter heading up the coast on the weekend. We in the Fly-Over Zone just love to see our detractors hammered every once in a while. Good for their hubris. Good for our sense of being. Good for the world. No worries, mate.
No one seems to be able to explain the massive switches in market sentiment that has occurred since the start of the year either. The DOW is down 700 points, the 10 year yield, in the face of a seemingly less-generous Fed has lost nearly 40 B.P.s in yield explained partly by the rush out of emerging markets in into "safe" investments. Of course if you were onto the emerging markets story early-on, lucky you; if you weren't…Last week the drop in equity markets was blamed on the emerging markets; yesterday's major sell-off was caused be bad industrial production numbers. Friday's job report is rumored to be poor and despite today's rally (at least as I write) the overall feeling is there is more gloom to come.
The mumbling and grumbling Over There hasn't helped the situation. First, we have Greece, which, amidst the charges that the books have once again been cooked, it is becoming well-accepted that it will need another bail-out of substantial funds. Right now they aren't available nor is the delivery mechanism nor is the ECB if the German high court has anything to say about it or so it would appear. The same situation is being charged against Portugal much against the denial of the finance minister of the country--the debt/GDP ratio is second-worse in the EU--but gaining on Italy which presently holds first place with it's banking system looking shakier by the day. France is a political mess and as the economy remains in the doldrums, the politics looks worse and worse. And as for the Euro? Well, it strengthened against everything once again today. Go figure.
All of this is a background for the Olympics which start this week-end in Sochi, Russia, which just canceled a major bond offering due to "adverse market conditions"--no kidding Tovarich--and where a lot of really bad things could happen. If they do, the overall effect will be far more significant that could be justified by pure logic. Therefore, on top of everything else we are looking at event risk for the next few weeks which has all the traders sitting out there with their fingers crossed and not in a hurry to be long anywhere. At least I wouldn't be but this generation has always been far more long testosterone than ever I was.
Finally, to add to the list of worries, we are looking at the perfect storm…no not in finance but in the convergence of our 3-6 incher with a n'or-easter heading up the coast on the weekend. We in the Fly-Over Zone just love to see our detractors hammered every once in a while. Good for their hubris. Good for our sense of being. Good for the world. No worries, mate.
Friday, July 12, 2013
ALL ABOUT THE BANKS
Such was today. Wells Fargo and J.P. Morgan opened trading with news of far better results than expected with Wells up over 20% per cent on it's net and the Morg a whopping 31% primarily because of investment banking and trading results. Morg appears to have gotten it just right and suffered little in the last month in the whip-saw environment caused by the babbling from the Fed whilst the success at Wells--after a cursory review--appears to be the result of a dramatic improvement in credit quality resulting in a 50% drop in additions to the loan loss reserve. As I've often said, I love banking...it's so subjective. I like Morgan's numbers better; trading results are not subjective, loan loss reserves can be. But good for the industry all around.
Meanwhile, on another planet, Lizzy Warren was explaining her Back to the Future idea of reestablishing Glass Steagall for the 21st Century. Enormous brain in this lady's head; no room for any common sense or auditory function. Keeps saying separate all investment banking type activities from commercial banking and especially from FDIC guaranteed deposits so if the investment banking functions goes toes up taxpayer funds will not be at risk.
Memo to Lizzy:
1. They are separated as we speak. Investment banking activities are conducted out of what is known in the trade as Sec. 20 corporations, located in the same holding company but separate from the deposit taking function.
2. FDIC funds are contributions from banks not the Treasury. TARP was a political decision.
3. Investment banking might have been said to have caused the crisis. Remember Bear, Lehman?
4. Lizzy you claimed on CNBC today that we had no bank failures between 1933 and 1999 because of Glass Steagall. Hum. How 'bout 1974 when half the system was down and out because of REITs. Bankers Trust stayed alive because of the "subjectivity" of its senior loan guys allowed by the Fed and NY State. I suspect there were others. How 'bout 1983 when the world was done because of the Latin American debt crisis? Subjectivity saved the day there too. 1987? Ditto. LTCM? Hardly a Glass Steagall candidate. 2008...well, if you would listen we could talk. Fact is Liz ol' girl, banks fail because of the riskiest line of business which they practice: the lending of money...and of course the loss of liquidity which happens when their depositors figure out they stink at pricing credit.
Lizzy is going to be a problem.
Meanwhile, Over There, in a very much bank-related scenario, Portugal's government is about to fall which means the banks will probably run out of cash, which means the Big Guys in Europe will probably lose a bundle as a result of the bail out fund in which they participated, which means Angela is going to have big time problems with the Volk, which means the odds for a default just got very short. Bye, bye Euroland...maybe. But are the Brits concerned? Not about that. The impending birth of HRH whatever is center fold but also occupying everyone's time was the refusal to walk by Stuart Broad after a very thick edge to first slip inexplicable missed by a first class referee in the first test for The Ashes. All of Oz was furious.
Have a great weekend.
Meanwhile, on another planet, Lizzy Warren was explaining her Back to the Future idea of reestablishing Glass Steagall for the 21st Century. Enormous brain in this lady's head; no room for any common sense or auditory function. Keeps saying separate all investment banking type activities from commercial banking and especially from FDIC guaranteed deposits so if the investment banking functions goes toes up taxpayer funds will not be at risk.
Memo to Lizzy:
1. They are separated as we speak. Investment banking activities are conducted out of what is known in the trade as Sec. 20 corporations, located in the same holding company but separate from the deposit taking function.
2. FDIC funds are contributions from banks not the Treasury. TARP was a political decision.
3. Investment banking might have been said to have caused the crisis. Remember Bear, Lehman?
4. Lizzy you claimed on CNBC today that we had no bank failures between 1933 and 1999 because of Glass Steagall. Hum. How 'bout 1974 when half the system was down and out because of REITs. Bankers Trust stayed alive because of the "subjectivity" of its senior loan guys allowed by the Fed and NY State. I suspect there were others. How 'bout 1983 when the world was done because of the Latin American debt crisis? Subjectivity saved the day there too. 1987? Ditto. LTCM? Hardly a Glass Steagall candidate. 2008...well, if you would listen we could talk. Fact is Liz ol' girl, banks fail because of the riskiest line of business which they practice: the lending of money...and of course the loss of liquidity which happens when their depositors figure out they stink at pricing credit.
Lizzy is going to be a problem.
Meanwhile, Over There, in a very much bank-related scenario, Portugal's government is about to fall which means the banks will probably run out of cash, which means the Big Guys in Europe will probably lose a bundle as a result of the bail out fund in which they participated, which means Angela is going to have big time problems with the Volk, which means the odds for a default just got very short. Bye, bye Euroland...maybe. But are the Brits concerned? Not about that. The impending birth of HRH whatever is center fold but also occupying everyone's time was the refusal to walk by Stuart Broad after a very thick edge to first slip inexplicable missed by a first class referee in the first test for The Ashes. All of Oz was furious.
Have a great weekend.
Friday, April 12, 2013
A WEEKEND IN THE COUNTRY
PM David Cameron und Frau flew off to Germany this afternoon for a weekend with Angie und Herr Merkel just to show how close are not only the two families but the UK and Germany as well. Yeah, right. Fact of the matter is the meeting highlights just what the desperate state of play within Euroland demands at this moment and whilst time, effort and attention are being spent on the Cypruses and Portugals of this world, the real drama is probably having it's opening act just outside of Berlin this weekend. More and more it seems to me that the future of the Union, if there is to be a future, will rest upon whether the very real disagreements and differences between these two major participants can be resolved in the face of a British public which is less supportive as each day passes and the German Volk who are increasingly vocal as to whether Germany would be better off out rather than in.
A colleague of mine once said a while back that the Brits have lost all of the superiority they once had except for the complex. Still apt today I think but Mr. Cameron does have at this stage a much stronger political hand to play than does Frau Merkel, although heaven knows that the situation could change in the bat of an eye. Problem is (at least to me), I've never much trusted Mr. Cameron and I have no idea--and I suspect neither does Ms. Merkel--what sort of a game is going to be played. Has Mr. Cameron made within his own mind a committment to Euroland? Has he decided to work for a clean break? Or is his decision to be simply a political one: hold up the wetted finger and see which way the wind is blowing? Perhaps we will have some better idea after this weekend but I think, unlike the Majority of Euro pundits, the course of action will occur within a year and if Mr. Cameron decides to in fact put the vote to the British people, they will write finis to this bold and if I may say so, mad experiment.
Anyway, while this is going on the truly terrible state of affairs surrounding Cyprus, Portugal and surly to come, Slovenia is becomming more and more apparent even with an extention of terms being granted to Portugal and Iceland (remember them?) in their restructuring transactions insofar as to repayment which will change nothing as it never has unless the economy of Euroland picks up rather dramatically...which it will not. On top of all of this Monday is the 15th. and I have to pay taxes. I hate paying taxes to this particular bunch of numbskulls that run our government. I have a feeling that this is going to be a miserable weekend all over the place. Then again, perhaps I'll be proven wrong. It's happened before...no kidding it really has.
A colleague of mine once said a while back that the Brits have lost all of the superiority they once had except for the complex. Still apt today I think but Mr. Cameron does have at this stage a much stronger political hand to play than does Frau Merkel, although heaven knows that the situation could change in the bat of an eye. Problem is (at least to me), I've never much trusted Mr. Cameron and I have no idea--and I suspect neither does Ms. Merkel--what sort of a game is going to be played. Has Mr. Cameron made within his own mind a committment to Euroland? Has he decided to work for a clean break? Or is his decision to be simply a political one: hold up the wetted finger and see which way the wind is blowing? Perhaps we will have some better idea after this weekend but I think, unlike the Majority of Euro pundits, the course of action will occur within a year and if Mr. Cameron decides to in fact put the vote to the British people, they will write finis to this bold and if I may say so, mad experiment.
Anyway, while this is going on the truly terrible state of affairs surrounding Cyprus, Portugal and surly to come, Slovenia is becomming more and more apparent even with an extention of terms being granted to Portugal and Iceland (remember them?) in their restructuring transactions insofar as to repayment which will change nothing as it never has unless the economy of Euroland picks up rather dramatically...which it will not. On top of all of this Monday is the 15th. and I have to pay taxes. I hate paying taxes to this particular bunch of numbskulls that run our government. I have a feeling that this is going to be a miserable weekend all over the place. Then again, perhaps I'll be proven wrong. It's happened before...no kidding it really has.
Thursday, April 11, 2013
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?
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?
Tuesday, April 9, 2013
REFLECTIONS
It was 1978 I think and I was standing on the Sloane Street eastbound platform having watched, by actual count, eleven District Line trains headed to Daganham East pass. At long last the Circle Line arrived and having been forced to wedge my way inside we sat motionless for about 12 minutes; seems it was, by union rules, time for the train driver to have his "cuppa," so we all waited for his return. A conversation relating to the evens ensued.
"American are you?"
"Yes I am."
"Tell me, do these sort of things happen in America?"
"No they don't."
"Really? Why is that you think?"
"Because we would shoot the SOB, take the keys and drive the train ourselves."
Of course anyone within hearing distance had confirmed their belief as to the state of civilization in the colonies but it did afford me a bit more of standing room for the trip to the City. Not long after, things changed.
Margaret Thatcher died today at 87. She was a remarkable woman and easily the p It was 1978 I think and I was standing on the Sloane Street eastbound platform having watched, by actual count, eleven District Line trains headed to Daganham East pass. At long last the Circle Line arrived and having been forced to wedge my way inside we sat motionless for about 12 minutes; seems it was, by union rules, time for the train driver to have his "cuppa," so we all waited for his return. A conversation relating to the evens ensued.
"American are you?"
"Yes I am."
"Tell me, do these sort of things happen in America?"
"No they don't."
"Really? Why is that you think?"
"Because we would shoot the SOB, take the keys and drive the train ourselves."
Of course anyone within hearing distance had confirmed their belief as to the state of civilization in the colonies but it did afford me a bit more of standing room for the trip to the City. Not long after, things changed.
My friend, Gordon, one of the great users of the English language wrote this today:
Farewell then, to Maggie. A woman, it occurs to me, of your time in London. It took a while, but it is a fact that more than 70 per cent of my countrymen now clearly see what a poisonous affair the EU truly is. We will leave it, in the end. Along, therefore, with her comprehensive destruction of the Trades Unions, her legacy was the the fight she put up to protect us from it, when virtually every British politician either lied to us about it, or were simply to stupid to see the malign intent that underlies it.
I print this without comment, agreement, or anything else but merely to highlight what I think will now become the beginning of the end as the memory of Mrs. Thatcher will spur the movement now afoot and, aided by the absolute on-going stupidity of the Northern Masters as witnessed by in their dealing with Greece, Cyprus and now Portugal, the movement will soon to reach the goal. Will the UK be the first? Perhaps not, as for once I tend to agree with Little Paulie Krugman who advised the Portuguese to get out NOW! Maggie will win that battle as well although I suspect she always knew she would.
Our Treasury Secretary is in Euroland as we speak. Is name is Jacob Lew and it appears he's there to tell the Euros that we--the U.S. of A--are getting tired of this austerity policy in Euroland and that they should shift to a growth policy and read more Paulie Krugman. His predecessor, The Suit, said the same thing more or less but Jacob--or Jack as he likes to be called--couldn't do it at a private dinner but did it in a public speech thereby convincing everyone that he is far more stupid than the past, unlamented Secretary ever could have conceived of being although he tried like hell. Oddly, his meeting with the French Secretary of the Treasury got cancelled. I wouldn't worry if I were him because it was a straight-up meeting with no lunch involved and trust me, you don't want to deal with any French Treasury Secretary without food and wine being involved. He's promised a chin-wag in a week or two in Washington which I'm sure will happen if he keeps his mouth shut but to what end I have no clue.
So, it was a hell of a day. Maggie passed, it was proven to be impossible to merge two Greek Banks, Cyprus needs more money than thought (Surprise!!), Portugal is really in the crapper having been told by it's supreme court that it's austerity measures are unconstitutional, Jacob/Jack make a fool out of himself and Massimo remains no where to be found--yet again! But Herself's Peonies are showing; she's happy which means that I have a shot at getting through the rest of the week. One small step at a time which is what I always say.
"American are you?"
"Yes I am."
"Tell me, do these sort of things happen in America?"
"No they don't."
"Really? Why is that you think?"
"Because we would shoot the SOB, take the keys and drive the train ourselves."
Of course anyone within hearing distance had confirmed their belief as to the state of civilization in the colonies but it did afford me a bit more of standing room for the trip to the City. Not long after, things changed.
Margaret Thatcher died today at 87. She was a remarkable woman and easily the p It was 1978 I think and I was standing on the Sloane Street eastbound platform having watched, by actual count, eleven District Line trains headed to Daganham East pass. At long last the Circle Line arrived and having been forced to wedge my way inside we sat motionless for about 12 minutes; seems it was, by union rules, time for the train driver to have his "cuppa," so we all waited for his return. A conversation relating to the evens ensued.
"American are you?"
"Yes I am."
"Tell me, do these sort of things happen in America?"
"No they don't."
"Really? Why is that you think?"
"Because we would shoot the SOB, take the keys and drive the train ourselves."
Of course anyone within hearing distance had confirmed their belief as to the state of civilization in the colonies but it did afford me a bit more of standing room for the trip to the City. Not long after, things changed.
My friend, Gordon, one of the great users of the English language wrote this today:
Farewell then, to Maggie. A woman, it occurs to me, of your time in London. It took a while, but it is a fact that more than 70 per cent of my countrymen now clearly see what a poisonous affair the EU truly is. We will leave it, in the end. Along, therefore, with her comprehensive destruction of the Trades Unions, her legacy was the the fight she put up to protect us from it, when virtually every British politician either lied to us about it, or were simply to stupid to see the malign intent that underlies it.
I print this without comment, agreement, or anything else but merely to highlight what I think will now become the beginning of the end as the memory of Mrs. Thatcher will spur the movement now afoot and, aided by the absolute on-going stupidity of the Northern Masters as witnessed by in their dealing with Greece, Cyprus and now Portugal, the movement will soon to reach the goal. Will the UK be the first? Perhaps not, as for once I tend to agree with Little Paulie Krugman who advised the Portuguese to get out NOW! Maggie will win that battle as well although I suspect she always knew she would.
Our Treasury Secretary is in Euroland as we speak. Is name is Jacob Lew and it appears he's there to tell the Euros that we--the U.S. of A--are getting tired of this austerity policy in Euroland and that they should shift to a growth policy and read more Paulie Krugman. His predecessor, The Suit, said the same thing more or less but Jacob--or Jack as he likes to be called--couldn't do it at a private dinner but did it in a public speech thereby convincing everyone that he is far more stupid than the past, unlamented Secretary ever could have conceived of being although he tried like hell. Oddly, his meeting with the French Secretary of the Treasury got cancelled. I wouldn't worry if I were him because it was a straight-up meeting with no lunch involved and trust me, you don't want to deal with any French Treasury Secretary without food and wine being involved. He's promised a chin-wag in a week or two in Washington which I'm sure will happen if he keeps his mouth shut but to what end I have no clue.
So, it was a hell of a day. Maggie passed, it was proven to be impossible to merge two Greek Banks, Cyprus needs more money than thought (Surprise!!), Portugal is really in the crapper having been told by it's supreme court that it's austerity measures are unconstitutional, Jacob/Jack make a fool out of himself and Massimo remains no where to be found--yet again! But Herself's Peonies are showing; she's happy which means that I have a shot at getting through the rest of the week. One small step at a time which is what I always say.
Friday, February 22, 2013
A TALE OF TWO EUROPES...
...or maybe three. Things were looking pretty bad for equities the past few days and when someone asked if it was about Europe the predictable American response was, "Who cares about Europe!" This morning consumer confidence in Germany showed a very good number and suddenly it was, "Europe looks good! Buy!" Right now the DOW is up 100 so maybe people do care., but "about what," is the question coupled with, "and why?"
In every battle you will be able to find an American Infantryman with this posting somewhere on his uniform; "Yea, though I walk through the Valley of Death I shall fear no evil, because I am the meanest (*&^%$ ^%$*&^ in the Valley!" Sort of like German Consumer Confidence. The Germans are the meanest *&^%$# *^^$##^ in Europe. Consumer Confidence has nothing to do with economics or finances. That doesn't trouble German consumers. The lowest level for German Consumer Confidence was the week last year after Chelsea defeated Bayen Munchen for the title in the Champions League. You can look it up. But Americans love German Consumer Confidence and Europe when the former shows a bump. Ecco, Europe # 1.
Now, Europe # 2 might be called Europe as the Euros see it. Well, what do we have. Starting in the south, Greece remains a mess and because of that Cyprus is, effectively, bust it through its banking system filled to the gunnels with Greek risk. Greece will not hit their targets mandated by the EU and will need more bail-out money and it is here that the German Consumers count as they will be dead set against it (it's REALLY their money after all) and Angie does want to face reelection with the Bavarian Housefraus screaming down her neck. If the Greeks don't get bailed out, good-buy Cyprus which gets the Russians seriously ticked because that's where they hid all their money. Not a good show all around.
Moving north a bit, Italy has elections this weekend and results next week. Things look awful. Beppe the comedian looks like he might even beat out Berlusconi for second with the party of an ex-Communist winning the thing. Now, who's in the coalition? Nobody knows but one thing at risk is all of the fiscal and governmental advances made under Monti may well be reversed. The yield on Italian debt is looking very shaky indeed.
I was pretty much expected that Spain and Portugal might not make their mandated debt to GDP rations but France? Well, yeah, France. It looks awful. 2014 at best for some and 2016 is being muttered in halls of the parliaments. The credibility of the EU is in tatters and the ECB is caught between a rock and a hard place: their version of QE--pick a number--has no backing anywhere. And what the hell was the $2 billion in five year raised by Spain early this week all about? A dollar bond for Spain? A move to take on currency risk just to keep peoples' minds off other things? Oh I know, "It was an attempt to open other markets..." Right. And a bull fight is a battle among equals.
"We are in a recession, mes amis. We all know this except the Americans. On our success they buy their stocks."
Finally, Perfidious Albion is sizing this thing up as a developing scenario in which to ask the British people in a referendum should we be in or out, not from the narrow standpoint of, "What's in it for me?" but simply as a life-saving measure of abandoning a sinking ship. The Euros know that will occur and at that stage, it's probably game, set and match.
Europe # 3 can be called, "Europe as Mrs. James' little boy, Charlie sees it." It has the capacity to be the disaster of the year from not only its own standpoint but from our standpoint as well and it seems to me that nobody, certainly nobody in the administration is paying very much attention at least at this stage which is understandable given the mess we have created for ourselves. Despite unprecedented buying by the Fed, the yield on our 10 year has moved from the third quarter to today from 1.75% to 2.01%. With the type of intervention we have been witnessing, that is not insignificant. It's not the end of the world either, but it is the first clear sign that all is not as calm in capital markets land as we have been told. Should we see a spike in Euro yields as I think we will not only in the southern tier but for France as well, we may not be the safe haven we have been or at least not at the same level. As we have seen, markets move in fits and starts but at some point everyone has the same idea and that's when the trouble starts. The sequester is meaningless from a fiscal standpoint but very important from how the markets react. Before The Leader fully decides to extract maximum political gain, he should stop and think of this not only from a domestic standpoint but from the European aspect where I believe things are on more of a hair trigger than people realize. We talked ourselves into a nether-world complacency over the past few months. There is a growing chance that we are going to get caught out again.
Sorry about yesterday...I was trying to get this piece put together. Have a good weekend.
In every battle you will be able to find an American Infantryman with this posting somewhere on his uniform; "Yea, though I walk through the Valley of Death I shall fear no evil, because I am the meanest (*&^%$ ^%$*&^ in the Valley!" Sort of like German Consumer Confidence. The Germans are the meanest *&^%$# *^^$##^ in Europe. Consumer Confidence has nothing to do with economics or finances. That doesn't trouble German consumers. The lowest level for German Consumer Confidence was the week last year after Chelsea defeated Bayen Munchen for the title in the Champions League. You can look it up. But Americans love German Consumer Confidence and Europe when the former shows a bump. Ecco, Europe # 1.
Now, Europe # 2 might be called Europe as the Euros see it. Well, what do we have. Starting in the south, Greece remains a mess and because of that Cyprus is, effectively, bust it through its banking system filled to the gunnels with Greek risk. Greece will not hit their targets mandated by the EU and will need more bail-out money and it is here that the German Consumers count as they will be dead set against it (it's REALLY their money after all) and Angie does want to face reelection with the Bavarian Housefraus screaming down her neck. If the Greeks don't get bailed out, good-buy Cyprus which gets the Russians seriously ticked because that's where they hid all their money. Not a good show all around.
Moving north a bit, Italy has elections this weekend and results next week. Things look awful. Beppe the comedian looks like he might even beat out Berlusconi for second with the party of an ex-Communist winning the thing. Now, who's in the coalition? Nobody knows but one thing at risk is all of the fiscal and governmental advances made under Monti may well be reversed. The yield on Italian debt is looking very shaky indeed.
I was pretty much expected that Spain and Portugal might not make their mandated debt to GDP rations but France? Well, yeah, France. It looks awful. 2014 at best for some and 2016 is being muttered in halls of the parliaments. The credibility of the EU is in tatters and the ECB is caught between a rock and a hard place: their version of QE--pick a number--has no backing anywhere. And what the hell was the $2 billion in five year raised by Spain early this week all about? A dollar bond for Spain? A move to take on currency risk just to keep peoples' minds off other things? Oh I know, "It was an attempt to open other markets..." Right. And a bull fight is a battle among equals.
"We are in a recession, mes amis. We all know this except the Americans. On our success they buy their stocks."
Finally, Perfidious Albion is sizing this thing up as a developing scenario in which to ask the British people in a referendum should we be in or out, not from the narrow standpoint of, "What's in it for me?" but simply as a life-saving measure of abandoning a sinking ship. The Euros know that will occur and at that stage, it's probably game, set and match.
Europe # 3 can be called, "Europe as Mrs. James' little boy, Charlie sees it." It has the capacity to be the disaster of the year from not only its own standpoint but from our standpoint as well and it seems to me that nobody, certainly nobody in the administration is paying very much attention at least at this stage which is understandable given the mess we have created for ourselves. Despite unprecedented buying by the Fed, the yield on our 10 year has moved from the third quarter to today from 1.75% to 2.01%. With the type of intervention we have been witnessing, that is not insignificant. It's not the end of the world either, but it is the first clear sign that all is not as calm in capital markets land as we have been told. Should we see a spike in Euro yields as I think we will not only in the southern tier but for France as well, we may not be the safe haven we have been or at least not at the same level. As we have seen, markets move in fits and starts but at some point everyone has the same idea and that's when the trouble starts. The sequester is meaningless from a fiscal standpoint but very important from how the markets react. Before The Leader fully decides to extract maximum political gain, he should stop and think of this not only from a domestic standpoint but from the European aspect where I believe things are on more of a hair trigger than people realize. We talked ourselves into a nether-world complacency over the past few months. There is a growing chance that we are going to get caught out again.
Sorry about yesterday...I was trying to get this piece put together. Have a good weekend.
Tuesday, September 25, 2012
AS PREDICTED?
Sorry for the passage of time of which there will be more. Off to play Grandpa to Trouble & Strife's Grandma tomorrow for about a week so reports are going to be a bit spotty but at least we had a good day for commentary today.
Everybody's mad at the poor Greeks as the fact that Greece has absolutely no way to fulfill any of its financial commitments has come to life. What a farce! "What? You're broke? You can't be! You told us that you would do what is required! You need how much more? 15 Billion? Impossible!"...and so on and so forth. It reminds me of the infant in the stock broker ad on tv: "Want to see my shocked expression...?" France immediately jumped up proclaiming that Greece should get an immediate 2 year extension...which gives you a very accurate idea of the state to the French banks; mal, tres mal. Somewhere along the line someone has gotten the idea that Greece and Portugal actually count...just like the World's Dumbest Professor over at the U, he of the "scholarly papers." And speaking of Portugal the opposition smells blood in the water and another year or two of austerity is, IMHO, not on. Look for a full-fledged stand-off with the Troika within a fortnight and the increasing realization on the part of the leadership of Europe (forgive the oxymoron) that it might be wise to start exploring the best way to explain to the populous that we were only kidding when we said it would be unthinkable for any nation to leave the Union.
While all this was going on in Spain, which is a very real country, the autonomous state of Catalonia threatened to break away and proclaim themselves a separate and independent nation unless the receiver 15 Billion in new financing no questions asked. You might remember that in 1936 the Spanish had a bit of a family feud that sort of rolled into WWII, so statements like this are not taken lightly. A few army boys suggested that the killing of all Catalans might solve the problem which seems a bit extreme to me but then my hot Latin blood has cooled somewhat in my dotage. One MUST pray that nothing like this comes to pass but unfortunately a march this evening that was scheduled to protest the austerity plans and began peacefully enough suddenly turned into a horrific riot that was still continuing as I began this piece. Needless to say, markets tanked on the the sight of the dreadful images being transmitted from Madrid.
Finally, as if to put an exclamation point on all that was occurring, it seems that the Bundesbank has forced the ECB into a joint investigation as to whether the bailout facility is once and for all legal under EU law, and not to be outdone, Angie chipped in with the belief that no bank recap operation could begin until at least February of 2013 when she believes the proposed expanded regulatory powers of the ECB might be ready to go into effect...or to put it another way, kiss your banking systems good-bye unless you do what I say. This was an ugly day. I fear there will be more of the same in the future.
Thursday, September 20, 2012
...IF YOU CAN'T, TEACHhh
Went over to the U yesterday for a small symposium on Euroland and the state in which it finds itself. Clueless, except for one participant from the business school who started his career at the Fed. Long blabbering on the Little Paulie Krugman theory of debt and economic crises: throw as much money as possible at them and all will be well. Greece and Portugal never would have gotten into trouble if this had been done. Caused a bit of a ruckus when I suggested that for the purposes for which we were all in attendance Greece and Portugal really didn't count as serious countries, so let's stop talking about their situations. Didn't realize that one of the panelists considered himself an expert on Portugal and,"...had written many scholarly papers on the subject." I'm afraid I did: "As opposed to unscholarly papers?" Really shouldn't do that with academics; they become incensed.
It is a very interesting exercise, visiting and being exposed to the workings of academia. The validation of a thesis is the most important thing. Reality is somewhat secondary. And therefore, if you wish to prove Keynesian theory correct simply posit the improvements that have occurred since the promise of "at any cost" theory of central banking promulgated by Sr. Draghi a month or so ago. Such as, "the conclusion of the banking crisis," which of course hasn't concluded at all the fact of which is of no consequence because the claim that it has proves the theory. For the paltry sum of about 50 large a year, drivel like this is poured in the heads of unsuspecting children and woe be unto he who dares question the ravings of the great professor. I now have a far better understanding why the same mistakes are made every twenty years or so. Future generations are not apprised of history; they are taught personally perfected drivel. They never stand a chance.
Having said all that, the Spanish pulled off a pretty good auction today with an over bid 10 year going off at 5.666%. Nice improvement due entirely to the Draghi "put." A fundamental improvement? You be the judge. With new estimates of 80 billion Euros in new capital needed to fix the banking system I have my own thoughts on the matter but I am absolutely certain that 80 billion is insufficient in any case. Meanwhile, the Greeks and the Troika simply can't find common ground and the Greek finance minister is off to consult with his counterparts from Spain, Portugal and Italy. Can it be long before we hear talk of a "borrower's club?" Probably not. Of course it make not a lot of sense to have officials in Germany heard muttering that another Greek "haircut" may well be needed. Once again I ask, "Can't anyone here play this game?"
Finally, job numbers and purchasing numbers released today were not encouraging. I still don't like what I see.
It is a very interesting exercise, visiting and being exposed to the workings of academia. The validation of a thesis is the most important thing. Reality is somewhat secondary. And therefore, if you wish to prove Keynesian theory correct simply posit the improvements that have occurred since the promise of "at any cost" theory of central banking promulgated by Sr. Draghi a month or so ago. Such as, "the conclusion of the banking crisis," which of course hasn't concluded at all the fact of which is of no consequence because the claim that it has proves the theory. For the paltry sum of about 50 large a year, drivel like this is poured in the heads of unsuspecting children and woe be unto he who dares question the ravings of the great professor. I now have a far better understanding why the same mistakes are made every twenty years or so. Future generations are not apprised of history; they are taught personally perfected drivel. They never stand a chance.
Having said all that, the Spanish pulled off a pretty good auction today with an over bid 10 year going off at 5.666%. Nice improvement due entirely to the Draghi "put." A fundamental improvement? You be the judge. With new estimates of 80 billion Euros in new capital needed to fix the banking system I have my own thoughts on the matter but I am absolutely certain that 80 billion is insufficient in any case. Meanwhile, the Greeks and the Troika simply can't find common ground and the Greek finance minister is off to consult with his counterparts from Spain, Portugal and Italy. Can it be long before we hear talk of a "borrower's club?" Probably not. Of course it make not a lot of sense to have officials in Germany heard muttering that another Greek "haircut" may well be needed. Once again I ask, "Can't anyone here play this game?"
Finally, job numbers and purchasing numbers released today were not encouraging. I still don't like what I see.
Tuesday, February 21, 2012
QUO VADIS?
Well, the deal got done and now I think it is appropriate to ask where do we go from here? Firstly, however, I must again admit to being a bit wrong in regard to my ststement that the Greeks would never accept an in-country monitoring group because there was mention of one in the release of the terms of the deal. It's function was considerably reduced, however. Rather than being there to set policy as per the original demand, it will be present to monitor only, which I guess it means it will serve as an early warning system as to the certainty of when the Greeks fall out of compliance. But we get through March; can June be far behind?
Where will we go? There will be a cool down period probably lasting for a few months as more focus will be placed on macre economic conditions both over there and over here, in addition to the global security questions focused primarily in the Middle East. There are very important national elections both here and there and a great shift of public interest is certain to occur especially in Euroland over the near term. In short, the best thing that can happen is for people to have their minds on other things except that with the traders may have it come out another way if they shift pressure to either Portugal or Ireland or both. Frankly, I can envision a scenario where politics may provoke a logical questioning in both countries along the lines of, "If the Greeks got theirs, why can we get ours?" Awkward, that. Remember, the Irish bailed out their banks on the backs of the Irish taxpayer (I know, me neither). A bit of debt relief would help mightily as the program for economic growth is already in place. Portugal amounts a speed bump. What would you prefer? A market/trader/speculator driven rescue or a rational appproach that pre-supposes an eventual need?
And what of Greece? It is madness it seems to me to hope for any upturn in either this or next year. Every cent of cash flow from whatever source is going to be transferred out of the country. Frankly, at some point Euro governments will be forced to recognize that good money after bad is not a sustainable policy and it will end. I would argue, therefore, in this breathing space it would be a very good idea to get proactive (I hate that word) with both Portugal and Ireland or future events will certainly overtake them. Mind you, I'm not saying that this immediate saga is over; this agreement is fragile as can be and could still fall apart, only that the players are in place and now is the time to move forward into other obvious areas of concern. I'm going to try to focus on other things in the coming weeks with the caveat that we'll be ready the return to the scene of this crime if events demand. A change of pace will be fun.
Where will we go? There will be a cool down period probably lasting for a few months as more focus will be placed on macre economic conditions both over there and over here, in addition to the global security questions focused primarily in the Middle East. There are very important national elections both here and there and a great shift of public interest is certain to occur especially in Euroland over the near term. In short, the best thing that can happen is for people to have their minds on other things except that with the traders may have it come out another way if they shift pressure to either Portugal or Ireland or both. Frankly, I can envision a scenario where politics may provoke a logical questioning in both countries along the lines of, "If the Greeks got theirs, why can we get ours?" Awkward, that. Remember, the Irish bailed out their banks on the backs of the Irish taxpayer (I know, me neither). A bit of debt relief would help mightily as the program for economic growth is already in place. Portugal amounts a speed bump. What would you prefer? A market/trader/speculator driven rescue or a rational appproach that pre-supposes an eventual need?
And what of Greece? It is madness it seems to me to hope for any upturn in either this or next year. Every cent of cash flow from whatever source is going to be transferred out of the country. Frankly, at some point Euro governments will be forced to recognize that good money after bad is not a sustainable policy and it will end. I would argue, therefore, in this breathing space it would be a very good idea to get proactive (I hate that word) with both Portugal and Ireland or future events will certainly overtake them. Mind you, I'm not saying that this immediate saga is over; this agreement is fragile as can be and could still fall apart, only that the players are in place and now is the time to move forward into other obvious areas of concern. I'm going to try to focus on other things in the coming weeks with the caveat that we'll be ready the return to the scene of this crime if events demand. A change of pace will be fun.
Wednesday, February 1, 2012
FALSE RELIANCE
"Where the hell were you?"
"I go home. Why?"
"Because you were supposed to call yesterday and tell me what happened. I waited and waited and had nothing to write."
"Bah, niente. Thatsa what happened. Charlie, this is no good. You don't know, Nobody knows. Thatsa why I no call. So we have this big dinner and meeting and we all kiss, kiss, make love we smile and we all agree.'
"So what do you mean nothing happened?"
"HA! You think that because we agree, something happened? We agree to agree but not to do anything." We coordinate...to hell we do. All we coordinate is how much that Strega of a Tedesche is and what a stupido of a finance minister. The English...he say what we all think but he's got his own money. And the Greeks...one say to me that she wants them to go back to 1942 when they last run Greece. Only difference this time they no fire a shot!"
"Whew. So it's come to that. You know Massimo, she does have a point. It's Germany's money and the Golden Rule is in play: if you have the gold you make the rules."
"Ha! Very funny, ma she really means it. Look, Charlie, this is all a dream. Sure, Greece say 'ok come in and run the country,' and what do you think happen then? Riots, that's what happens. Ma, she no want to...how you say..."
"Compromise?"
"Si, compromise. So we all go home and we still talk and talk and talk. And she no want to buy the bonds that Mario own, so Mario say he do nothing because unless someone buy the bonds he just wait to get paid, and he wait for Portugal and he wait for us. Mario, hesa tough guy, he no gonna move on this, so we wait until someone talk some sense into her. He sell the bonds with no profit...he know he has to do that, but his laws say he no can give a discount and Mario is a very serious man. Of course if he do that here, he must do it for everybody, but if she want a deal that's what have to happen.
"Will it?"
"Ma sure. What else can we do? And some overlook..."
"Oversight."
"Si, oversight for Greece come in and as soon as we get past March we all say the hell with that and the Greeks do whatever they want but Italia begin to get better and maybe Portugal is in trouble but we keep that going for months and we talk and talk and talk. We are good with that, Charlie.
"You sure as hell are. When does this get done?"
"Who know, who care? A day, two days, a week? It get done someway. You know, Charlie, if we just say the hell with Greece at the beginning we be much better off. They want to leave, we write a new law so they can leave. We protect the banks and we go on. This Union...you know I was a big supporter but now..."
"I know, Massimo. I know. Thanks old friend. Ciao"
"Ciao Charlie, I call tomorrow, promise."
"No, we're on the road. Our granddaughter turns 16 this weekend."
"AH! La Bella! Now that one..."
"MASSIMO!
"Ha Charlie, you forget. Sono Italiano...SEMPRE!
"I go home. Why?"
"Because you were supposed to call yesterday and tell me what happened. I waited and waited and had nothing to write."
"Bah, niente. Thatsa what happened. Charlie, this is no good. You don't know, Nobody knows. Thatsa why I no call. So we have this big dinner and meeting and we all kiss, kiss, make love we smile and we all agree.'
"So what do you mean nothing happened?"
"HA! You think that because we agree, something happened? We agree to agree but not to do anything." We coordinate...to hell we do. All we coordinate is how much that Strega of a Tedesche is and what a stupido of a finance minister. The English...he say what we all think but he's got his own money. And the Greeks...one say to me that she wants them to go back to 1942 when they last run Greece. Only difference this time they no fire a shot!"
"Whew. So it's come to that. You know Massimo, she does have a point. It's Germany's money and the Golden Rule is in play: if you have the gold you make the rules."
"Ha! Very funny, ma she really means it. Look, Charlie, this is all a dream. Sure, Greece say 'ok come in and run the country,' and what do you think happen then? Riots, that's what happens. Ma, she no want to...how you say..."
"Compromise?"
"Si, compromise. So we all go home and we still talk and talk and talk. And she no want to buy the bonds that Mario own, so Mario say he do nothing because unless someone buy the bonds he just wait to get paid, and he wait for Portugal and he wait for us. Mario, hesa tough guy, he no gonna move on this, so we wait until someone talk some sense into her. He sell the bonds with no profit...he know he has to do that, but his laws say he no can give a discount and Mario is a very serious man. Of course if he do that here, he must do it for everybody, but if she want a deal that's what have to happen.
"Will it?"
"Ma sure. What else can we do? And some overlook..."
"Oversight."
"Si, oversight for Greece come in and as soon as we get past March we all say the hell with that and the Greeks do whatever they want but Italia begin to get better and maybe Portugal is in trouble but we keep that going for months and we talk and talk and talk. We are good with that, Charlie.
"You sure as hell are. When does this get done?"
"Who know, who care? A day, two days, a week? It get done someway. You know, Charlie, if we just say the hell with Greece at the beginning we be much better off. They want to leave, we write a new law so they can leave. We protect the banks and we go on. This Union...you know I was a big supporter but now..."
"I know, Massimo. I know. Thanks old friend. Ciao"
"Ciao Charlie, I call tomorrow, promise."
"No, we're on the road. Our granddaughter turns 16 this weekend."
"AH! La Bella! Now that one..."
"MASSIMO!
"Ha Charlie, you forget. Sono Italiano...SEMPRE!
Thursday, January 19, 2012
MEDITATION
That's how yesterday was spent; in meditation. I was saying to myself, "Self, is this the way they are really going to go? Have they really all gotten together and said ok, we've run out of ideas and when you run out of ideas just throw money at it?" It really looks that way.
Now I am still having a hard time believing the conslusion to which I have come but there doesn't seem to be any other explaination. Over here it started last week with Ben and Billy the Dud seemingly ready to buy every upside down house in the country. This week the clamor...muted to be sure...was for QE III in a "meaningful" amount as one observer put it which is code of course for a trillion dollars. Over there, the ECB made it very clear that it was prepared to come up with at least as much as the wildly successful 3 year facility for the banks and yesterday the IMF announced that it was looking for an additional $500 billion and asking the EU to increase it's bail-out fund to at least a trillion Euros to contain the risk of contagion in the financing of Europe's sovereign debt...a 450 billion Euro increase at a minimum. Now let's see, close to a trillion from the ECB, a trillion from the bail-out fund, $500 million from the IMF (minimum); where is Everett Dirksen when you need him? At least the Euro side is sterilized--we know where that's going to wind up--but the dollars from QE III? Boy, I bet the rest of the world, places like Brazil for example, are just going to love that. But do these guys care? Nah. Not a thought. The battle that Brazil has to fight in taming the inflation that these actions create...well, that's their problem.
The IMF announcement is a classic. Any lawyer can tell you that the first thing that is taught to you in law school is never ask a question unless you're damn well sure what the answer is going to be, so in this case for all the denials (and they were immediate) that the U.S. was going to participate in this money-raising exercise, we are. Mme. Lagrande is a very good lawyer and with the U.S. holding 18% of the voting stock of the IMF unless she was sure the U.S. was there, she never would have said a word. This will of course cause an uproar in Congress but The Leader and The Suit don't need Congress for this one.
And there, dear readers, is the plan. There is no longer any doubt that all the money in the world will be made available just as we speculated last week but now I am sure. I'm shocked I suppose but not surprised. Even the time frame is revealed which coincides with the maturity of the ECB facility. For the next three years. Tomorrow, Mario Monti will release his restructuring plan for Italy. The early leaks point to a well-reasoned approach and a recognition that what ails Italy and by extention the EU, is not simply a financing bind but, indeed, a structural deformity in Italian society, with specific steps to be taken within a specified timetable, which I bet is three years. We shall see. In the mean time Italy and Spain both had relatively successful bond auctions with a modest reduction in yields for both but still at levels far too high to be sustainable.
Within my meditation came the realization that this was one hell of a bet. Monti I am sure is serious in what he is trying to do, but if the returns are not what are expected and the growth that is absolutely essential is not achieved--not only in Italy mind you but throughout the Union--the waste of resources and the destruction of wealth that will result will be monumental and chaotic. These guys have gone all-in and I gues I never thought that they would. I honestly thought that the plan would be to muddle along and deal with a minor default here and there but now that option appears to be gone. Now, Greece HAS to work. Now, Portugal cannot be ignored. Now, Spain CANNOT be allowed to fail despite the enormous financial burden it faces which, through the disclosure of the debt owed by the independent states, grows daily. At least that's what I came up with. I would certainly like to hear from you as to whether you think I'm correct or what it is that I have missed
Now I am still having a hard time believing the conslusion to which I have come but there doesn't seem to be any other explaination. Over here it started last week with Ben and Billy the Dud seemingly ready to buy every upside down house in the country. This week the clamor...muted to be sure...was for QE III in a "meaningful" amount as one observer put it which is code of course for a trillion dollars. Over there, the ECB made it very clear that it was prepared to come up with at least as much as the wildly successful 3 year facility for the banks and yesterday the IMF announced that it was looking for an additional $500 billion and asking the EU to increase it's bail-out fund to at least a trillion Euros to contain the risk of contagion in the financing of Europe's sovereign debt...a 450 billion Euro increase at a minimum. Now let's see, close to a trillion from the ECB, a trillion from the bail-out fund, $500 million from the IMF (minimum); where is Everett Dirksen when you need him? At least the Euro side is sterilized--we know where that's going to wind up--but the dollars from QE III? Boy, I bet the rest of the world, places like Brazil for example, are just going to love that. But do these guys care? Nah. Not a thought. The battle that Brazil has to fight in taming the inflation that these actions create...well, that's their problem.
The IMF announcement is a classic. Any lawyer can tell you that the first thing that is taught to you in law school is never ask a question unless you're damn well sure what the answer is going to be, so in this case for all the denials (and they were immediate) that the U.S. was going to participate in this money-raising exercise, we are. Mme. Lagrande is a very good lawyer and with the U.S. holding 18% of the voting stock of the IMF unless she was sure the U.S. was there, she never would have said a word. This will of course cause an uproar in Congress but The Leader and The Suit don't need Congress for this one.
And there, dear readers, is the plan. There is no longer any doubt that all the money in the world will be made available just as we speculated last week but now I am sure. I'm shocked I suppose but not surprised. Even the time frame is revealed which coincides with the maturity of the ECB facility. For the next three years. Tomorrow, Mario Monti will release his restructuring plan for Italy. The early leaks point to a well-reasoned approach and a recognition that what ails Italy and by extention the EU, is not simply a financing bind but, indeed, a structural deformity in Italian society, with specific steps to be taken within a specified timetable, which I bet is three years. We shall see. In the mean time Italy and Spain both had relatively successful bond auctions with a modest reduction in yields for both but still at levels far too high to be sustainable.
Within my meditation came the realization that this was one hell of a bet. Monti I am sure is serious in what he is trying to do, but if the returns are not what are expected and the growth that is absolutely essential is not achieved--not only in Italy mind you but throughout the Union--the waste of resources and the destruction of wealth that will result will be monumental and chaotic. These guys have gone all-in and I gues I never thought that they would. I honestly thought that the plan would be to muddle along and deal with a minor default here and there but now that option appears to be gone. Now, Greece HAS to work. Now, Portugal cannot be ignored. Now, Spain CANNOT be allowed to fail despite the enormous financial burden it faces which, through the disclosure of the debt owed by the independent states, grows daily. At least that's what I came up with. I would certainly like to hear from you as to whether you think I'm correct or what it is that I have missed
Friday, April 15, 2011
EURO FOLLIES
The great thing about the New York Times is whenever you need a laugh, just read it. The other day they ran an op ed piece written by a sociology professor at the University of Notre Dame entitled, "Portugal's Unnessary Bailout." In academia, if a professor of one discpline were to criticise the scholarship of a colleague in another discpline he would be academically tarred and feathered but outside of the hallowed halls anything goes. Dispite displaying a woeful lack of knowledge of sovereign financing and capital markets, the good professor concludes that all that was needed was for the EU simply to aggressively buy Portugese bonds (thereby displaying another woeful lack of knowledge of the EU's rules and regs) and all would have been fine. There are dark forces out there suggests Prof. Fishman. Credit rating agencies for one. The IMF for another (actually, I agree with him there), and anti-Kenesians to be sure. Memo to sociology majors under the Dome: unless he teaches a gut course, I'd avoid his classes. Anyone that prepared to make himself look silly in public has sociolgical problems.
However true to form, the editorial boys and girls at the Gray Lady followed up today with, "An Undemocratic Bailout," suggesting that the Euro forcing Portugal to accept a bailout package befor the formation of a new government would end democracy on the Peninsular as we know it. How's about a bridge loan until a new government is formed, they suggest? A bridge to where you might ask? Not discussed. Now of course the Times and Prof. Fishman couldn't give a toss about Portugal--well he might, he has a new book coming out--but what they do care about is the now-joined battle in this country concerning our own little Portugese debt profile. Remember those dark forces? Allow them to win in Portugal and they just might gain the upper hand here. If it wasn't so patheticaly obvious, the juxtaposition's intent would be truly funny. As such it just gets a giggle. Oh, by the way children, Greece's 2 year yielded 18% today.
Of course by playing silly bugger with each other, the Euros allow this sort of nonsense to go on.
It's your banks, it's always is going to be your banks. Own up to it, cover their bums, force out the present management and move on. There's so many women involved in European politics and finance one would think there would be a Lady Macbeth among them. Be bloody, bold and resolute. Otherwise you are going to face the babbling we have to put up with here in the pages of the New York Times.
See you next week
However true to form, the editorial boys and girls at the Gray Lady followed up today with, "An Undemocratic Bailout," suggesting that the Euro forcing Portugal to accept a bailout package befor the formation of a new government would end democracy on the Peninsular as we know it. How's about a bridge loan until a new government is formed, they suggest? A bridge to where you might ask? Not discussed. Now of course the Times and Prof. Fishman couldn't give a toss about Portugal--well he might, he has a new book coming out--but what they do care about is the now-joined battle in this country concerning our own little Portugese debt profile. Remember those dark forces? Allow them to win in Portugal and they just might gain the upper hand here. If it wasn't so patheticaly obvious, the juxtaposition's intent would be truly funny. As such it just gets a giggle. Oh, by the way children, Greece's 2 year yielded 18% today.
Of course by playing silly bugger with each other, the Euros allow this sort of nonsense to go on.
It's your banks, it's always is going to be your banks. Own up to it, cover their bums, force out the present management and move on. There's so many women involved in European politics and finance one would think there would be a Lady Macbeth among them. Be bloody, bold and resolute. Otherwise you are going to face the babbling we have to put up with here in the pages of the New York Times.
See you next week
Wednesday, April 6, 2011
RANDON THOUGHTS
Well, I am an idiot. Notre Dame stank it up almost as bad as Butler the night before and as a result Hoosiers 2 will not be coming shortly to a theater near you. The Mid-West is in mourning. Congrats Huskies and Aggies.
Portugal raise arounf 1 billion Euros today in 6 and 12 month bills carrying yields of 5.1 and 5.9 per cent respectively. Way too high to be in any way sustainable. The coverage ratio was well over 2x but nobody is really sure who the buyers might be. They sure weren't the Portugese banks. Methinks the actors in this play must be the ECB and sovereigns of various shapes and sizes. How does Brazil and China sound? More importantly, does anyone see a pattern emerging? Nobody appears to be standing in line to buy U.S. Treasury obligations...just like Portugal and Greece and the maturity of what is being issued appears to be getting shorter and shorter...just like Portugal and Greece. Odd, don't you think?
If you listen to the Dems on the Hill and the NY Times, Rep. Ryan is the Anti-Christ. Knew it would be bad but the reaction now they got their talking points all lined up is downright over the top. One wag went so far as to accuse him of attempting to solve the problem by insuring that seniors would die early from lack of medical care. Ryan was on the Obama fiscal commission but declined to endorse the majority report and yet he incorporated a good deal of the broad recommendations of that report with changes, of course. I guess I will never be a politician but for the life of me I cannot understand why he did not give more credit to that report and the commissions two chairs which The Leader completely ignored. I also think there is too much talk on his side about reducing taxes to spur growth and too little talk of the commission's and my idea that even with a reduction in marginal rates the flattening of the code and the removal of deductions and loopholes will undoubtably produce more revenue which is the key of course, not taxe rates. Taxes must be paid to produce revenue. When GE has 1000 tax attorneys looking for ways NOT to pay taxes, coupled with high priced lobbiests, the result will be what we have read about in the papers...every time. By the way, one thing that is missing in Rep. Ryan's proposal is some method by which if we get anything good it had better be carved in stone otherwise the first chance a single party gets to change things, it will. Are you waiting like I am to see what little Paulie has to say tomorrow? It should be great.
Finally, with all of this going on, the Euro is up around 1.43 and Oil at $109. Going to visit the grandkids this weekend and are not looking forward to gassing up. Guess I shouldn't worry, however, as Ben and Bill the Dud tell me prices aren't going up. I feel better just thinking about those guys being in control.
Portugal raise arounf 1 billion Euros today in 6 and 12 month bills carrying yields of 5.1 and 5.9 per cent respectively. Way too high to be in any way sustainable. The coverage ratio was well over 2x but nobody is really sure who the buyers might be. They sure weren't the Portugese banks. Methinks the actors in this play must be the ECB and sovereigns of various shapes and sizes. How does Brazil and China sound? More importantly, does anyone see a pattern emerging? Nobody appears to be standing in line to buy U.S. Treasury obligations...just like Portugal and Greece and the maturity of what is being issued appears to be getting shorter and shorter...just like Portugal and Greece. Odd, don't you think?
If you listen to the Dems on the Hill and the NY Times, Rep. Ryan is the Anti-Christ. Knew it would be bad but the reaction now they got their talking points all lined up is downright over the top. One wag went so far as to accuse him of attempting to solve the problem by insuring that seniors would die early from lack of medical care. Ryan was on the Obama fiscal commission but declined to endorse the majority report and yet he incorporated a good deal of the broad recommendations of that report with changes, of course. I guess I will never be a politician but for the life of me I cannot understand why he did not give more credit to that report and the commissions two chairs which The Leader completely ignored. I also think there is too much talk on his side about reducing taxes to spur growth and too little talk of the commission's and my idea that even with a reduction in marginal rates the flattening of the code and the removal of deductions and loopholes will undoubtably produce more revenue which is the key of course, not taxe rates. Taxes must be paid to produce revenue. When GE has 1000 tax attorneys looking for ways NOT to pay taxes, coupled with high priced lobbiests, the result will be what we have read about in the papers...every time. By the way, one thing that is missing in Rep. Ryan's proposal is some method by which if we get anything good it had better be carved in stone otherwise the first chance a single party gets to change things, it will. Are you waiting like I am to see what little Paulie has to say tomorrow? It should be great.
Finally, with all of this going on, the Euro is up around 1.43 and Oil at $109. Going to visit the grandkids this weekend and are not looking forward to gassing up. Guess I shouldn't worry, however, as Ben and Bill the Dud tell me prices aren't going up. I feel better just thinking about those guys being in control.
Wednesday, March 23, 2011
END GAME
We must be getting close because Bill Rhodes appeared on CNBC today. For those of you who don't know him, Bill is a retired Vice Chairman of Citibank who made his bones back in the eighties by running damn near every soverign debt restructuring for the better part of 15 years and then some. He was really good at what he did. Relentless. He would never give up. I not sure he understood all of what he was doing but his #1 job was to save Citibank who had a pile of crap from every dead beat country in the world and he did it. Made a fortune along the way and owned the best Roledex in the history of the western world...a Roledex is where one kept business cards, addresses...oh hell, it's an IPhone for old people. Anyhoo, there was Bill looking a bit older and considerably thinner proclaiming that this Euro thing better get fixed because it is really a banking mess and as everyone knows the banks are more important in Europe than they are here.
When Rhodes appears can a restructuring be far behind? He would love it; one last great fight before the all eternal night. And so, I'm even more in favor of doing the right thing if for no other reason to give Bill another shot at it and watch the Ghosts rise up to save the world one more time. Who says a remake can't be better than the original?
Just might happen, too. The Portugese parliament met today and came up with...NAO. Or at least I think that's what happened as it was looking like that when I wrote this. Given that every opposition party had stated that they would not be supportive of the government's plan that Jose saying he was going to resign if they did not, I suspect we will have a fallen government when we wake up tomorrow morning. The Portugese 10 year yield was moving closer to 8%..assuming a bid that is...and that of course is completely unsustainable. If the government falls it will be the better part of two months before another is formed, and down the road the can gets kicked while on the touch line the cry goes up, "Put in Rhodes, Put in Rhodes!" Delicious.
Northward, on the Emerald Isle, the lads are getting their Irish up. Being told what to do by the Germans and the Continentals has never gone down very well and time has not improved the digestion. And so tomorrow, the continuation of last week's Euro conference which should be a doozy not the least bit aided by the fact they everyone has gotten stuck in the sand box called Lybia over on the political side. Nothing like an undeclared war to liven things up but of course with The Leader desperately trying to figure out how to extract himself from the mess into which he got himself, maybe all the troubles of the world can be blamed on us Americans. God knows there is precedent for that. We shall be watching and looking for material which I am sure will be forthcoming.
Oh, my Texas buddy, Denny, wrote to mention that there is a computer somewhere up at MIT that does things like figure out CPI. I don't know if there is but Denny says this thing is now predicting inflation at the end of the year to be 8.3%. Not good for Mrs. James' little boy Charlie and his fixed (almost) income. In the mean time, more and more Fed watchers are beginning to believe that the son of QE II will be born in the not too distant future because Mr. B. and Billy the Dud are completely enamoured with the concept. I REALLY hope Rhodes gets that restructuring gig. I'm going to need a job.
When Rhodes appears can a restructuring be far behind? He would love it; one last great fight before the all eternal night. And so, I'm even more in favor of doing the right thing if for no other reason to give Bill another shot at it and watch the Ghosts rise up to save the world one more time. Who says a remake can't be better than the original?
Just might happen, too. The Portugese parliament met today and came up with...NAO. Or at least I think that's what happened as it was looking like that when I wrote this. Given that every opposition party had stated that they would not be supportive of the government's plan that Jose saying he was going to resign if they did not, I suspect we will have a fallen government when we wake up tomorrow morning. The Portugese 10 year yield was moving closer to 8%..assuming a bid that is...and that of course is completely unsustainable. If the government falls it will be the better part of two months before another is formed, and down the road the can gets kicked while on the touch line the cry goes up, "Put in Rhodes, Put in Rhodes!" Delicious.
Northward, on the Emerald Isle, the lads are getting their Irish up. Being told what to do by the Germans and the Continentals has never gone down very well and time has not improved the digestion. And so tomorrow, the continuation of last week's Euro conference which should be a doozy not the least bit aided by the fact they everyone has gotten stuck in the sand box called Lybia over on the political side. Nothing like an undeclared war to liven things up but of course with The Leader desperately trying to figure out how to extract himself from the mess into which he got himself, maybe all the troubles of the world can be blamed on us Americans. God knows there is precedent for that. We shall be watching and looking for material which I am sure will be forthcoming.
Oh, my Texas buddy, Denny, wrote to mention that there is a computer somewhere up at MIT that does things like figure out CPI. I don't know if there is but Denny says this thing is now predicting inflation at the end of the year to be 8.3%. Not good for Mrs. James' little boy Charlie and his fixed (almost) income. In the mean time, more and more Fed watchers are beginning to believe that the son of QE II will be born in the not too distant future because Mr. B. and Billy the Dud are completely enamoured with the concept. I REALLY hope Rhodes gets that restructuring gig. I'm going to need a job.
Thursday, April 15, 2010
DANDELIONS
Anybody out there like dandelions? They are really a delicious additions to a salad; bright, crunchy and slightly bitter. My grandmother loved dandelions. My neighbor seems to love dandelions...well, actually, she and her husband are, I suspect, the founders of the green movement and her lawn is covered with dandelions, which in the fullness of time produce that wonderful white thingy that every kid in the world blows off and spreads the seeds to every lawn within a hundred miles, which if not treated, are destroyed.
I was spraying the progeny of her last year's crop this morning when she advanced onto my property and told me I was destroying the planet. I asked her if the Weed be Gone might destroy her if--accidentally of course--I managed to spray her. She left in fear and anger. I fear I may have to build a fence. They make good neighbors or so I read someplace. Anyway, if you like dandelions, come on over. You can graze the neighbor's front lawn.
The scene today reminded me of The Leader and his Congressional caucus on financial regulatory caucus of yesterday. Two sides, of entirely different persuasion, each speaking nonsense to the other. In the case of the Repubs they were afraid to get roiled (memo to Mitch: by showing up you jerk you guaranteed it). In the case of The Leader because he hasn't the slightest idea of the substance of the subject and as usual, simply showed up to make political points which from time to time he does very well--except when he gets the crap kicked out of him by some guy named Ryan at which point he falls back onto his, "Let me be a petulant punk because I am the President" roll--which is becoming more and more the case. I have simply lost interest in commenting on this disgraceful exhibition any longer. I think I'm just going to wait and see what this Congress comes up with and comment on the final product except for this observation: if there are people who wish to game the system, they will game the system. Chris the Crook will not prevent it; indeed, look at his personal record. Imagine, he and Barney in the forefront of the protection of the American people. You couldn't make this stuff up. As for the "loyal opposition:" Ha! Over the past three generations, we have weened morality out of our society; this is the failure of the system. As for regulation, some guy named Mo had a pretty good set of rules a way back when. Maybe we should take a look at those one more time.
Looking across the pond, Greece and Portugal did very well in the Bond markets earlier in the week with a blow-out auction of 2 and 10 year stuff on behalf of the latter. The terms for the Greeks via the EU are becoming clearer and the IMF will be involved which, as suggested, was probably the way it was going to be all-along. The pressure appears to be off for a while but the political situation all across Europe is still quite fragile and any upset there could roil the markets once again. It was messy, but all-inall, I think the Euros did a pretty good job of holding things together...for now. The German by- elections will be important and within a month we have the general election in the UK which, while not what it used to be in the Grand Scheme of Things (sorry Mr. Bull), still must be watched. It's the politics not the finances which will be driving Europe in the coming months and then when June comes around nobody will care about anything other than the World Cup. Ah peace and quite until August and then we have pennant races and the start of football. Things are looking up.
Once again, thanks for all of you who helped with Google. It is greatly appreciated.
I was spraying the progeny of her last year's crop this morning when she advanced onto my property and told me I was destroying the planet. I asked her if the Weed be Gone might destroy her if--accidentally of course--I managed to spray her. She left in fear and anger. I fear I may have to build a fence. They make good neighbors or so I read someplace. Anyway, if you like dandelions, come on over. You can graze the neighbor's front lawn.
The scene today reminded me of The Leader and his Congressional caucus on financial regulatory caucus of yesterday. Two sides, of entirely different persuasion, each speaking nonsense to the other. In the case of the Repubs they were afraid to get roiled (memo to Mitch: by showing up you jerk you guaranteed it). In the case of The Leader because he hasn't the slightest idea of the substance of the subject and as usual, simply showed up to make political points which from time to time he does very well--except when he gets the crap kicked out of him by some guy named Ryan at which point he falls back onto his, "Let me be a petulant punk because I am the President" roll--which is becoming more and more the case. I have simply lost interest in commenting on this disgraceful exhibition any longer. I think I'm just going to wait and see what this Congress comes up with and comment on the final product except for this observation: if there are people who wish to game the system, they will game the system. Chris the Crook will not prevent it; indeed, look at his personal record. Imagine, he and Barney in the forefront of the protection of the American people. You couldn't make this stuff up. As for the "loyal opposition:" Ha! Over the past three generations, we have weened morality out of our society; this is the failure of the system. As for regulation, some guy named Mo had a pretty good set of rules a way back when. Maybe we should take a look at those one more time.
Looking across the pond, Greece and Portugal did very well in the Bond markets earlier in the week with a blow-out auction of 2 and 10 year stuff on behalf of the latter. The terms for the Greeks via the EU are becoming clearer and the IMF will be involved which, as suggested, was probably the way it was going to be all-along. The pressure appears to be off for a while but the political situation all across Europe is still quite fragile and any upset there could roil the markets once again. It was messy, but all-inall, I think the Euros did a pretty good job of holding things together...for now. The German by- elections will be important and within a month we have the general election in the UK which, while not what it used to be in the Grand Scheme of Things (sorry Mr. Bull), still must be watched. It's the politics not the finances which will be driving Europe in the coming months and then when June comes around nobody will care about anything other than the World Cup. Ah peace and quite until August and then we have pennant races and the start of football. Things are looking up.
Once again, thanks for all of you who helped with Google. It is greatly appreciated.
Monday, February 15, 2010
DON'T BLAME ME!
Blame George Bush. Hell, I don't know why the Euros didn't do a deal over the weekend with the Greeks. Because nobody wants to? Could be. As Paul commented, "It's Greece, who cares?" Aside from the bond holders I suspect that there are a few hundred members of the European Parliament in Brussels earning a couple of hundred thousand Euros a year for doing sweet fanny adam care even though in the best of weather Brussels is a God-awful town even when the trains don't run into one another but in the winter it's unlivable. Good Grub, though. Sensational if the truth be known but only if you like butter and cream like me.
I suspect it just hasn't gotten bad enough yet. It will, rest assured. Carter asked, "Who's next?" and to be honest, I hadn't thought about it. I guess the felling over there is let's not have a next one, let's try to end it with the Greeks but to an extent it's sort of like putting the toothpaste back in the tube; the problem has been exposed and a lot depends upon how much international co-operation is present. One thing you might keep a eye on, however, is how this mess over there is affecting things over here. Last Wednesday, we had a perfectly stinking auction of $16billion worth of long bonds Primary dealers were forced to take down almost 50% of the issue. Now I recognize with the economic conditions being what they are all around the world, 30 year bonds should not be expected to be the smell of the week but this auction was bad with a capital B. I keep going back to the point I've been trying to make over and over; this business is ll about trust and perception. It really doesn't make a difference what the reality of, say, Spain's finances might be. If the perception is Spain's finances stink, they stink. In today's world, Greece affects Spain, Spain affects Portugal, Portugal affects God knows who and they all affect us...at some point, even if it means nothing more than paying up for a 30 year issue.
As to this little Euro mis-understanding, there was a tiny miracle today in the New York Times. Paul Krugman actually got it right and wrote something that actually made sense. Seems as though he's cottoned on to the fact that when your fiscal policy originates in Athens but your monetary policy is set about 1000 miles away you may have a problem. He also thinks that political union may not be a bad thing to go along with monetary union but that might be hard to come by. Way to go Paulie, Bay-bee! Some of us had that germ of an idea some 20 years ago but welcome to the party. Wonder way he's saying this now when his guy is in deep do-do? Maybe I'm too suspicious, oh well. Anyway, Carter, my loyal reader, the real answer to your question may not be Spain, Italy, Portugal or any of the usual suspects. The real answer may be the EU itself, as impossible or unreal as that may seem. It's a good story. We'll be watching it this week.
I suspect it just hasn't gotten bad enough yet. It will, rest assured. Carter asked, "Who's next?" and to be honest, I hadn't thought about it. I guess the felling over there is let's not have a next one, let's try to end it with the Greeks but to an extent it's sort of like putting the toothpaste back in the tube; the problem has been exposed and a lot depends upon how much international co-operation is present. One thing you might keep a eye on, however, is how this mess over there is affecting things over here. Last Wednesday, we had a perfectly stinking auction of $16billion worth of long bonds Primary dealers were forced to take down almost 50% of the issue. Now I recognize with the economic conditions being what they are all around the world, 30 year bonds should not be expected to be the smell of the week but this auction was bad with a capital B. I keep going back to the point I've been trying to make over and over; this business is ll about trust and perception. It really doesn't make a difference what the reality of, say, Spain's finances might be. If the perception is Spain's finances stink, they stink. In today's world, Greece affects Spain, Spain affects Portugal, Portugal affects God knows who and they all affect us...at some point, even if it means nothing more than paying up for a 30 year issue.
As to this little Euro mis-understanding, there was a tiny miracle today in the New York Times. Paul Krugman actually got it right and wrote something that actually made sense. Seems as though he's cottoned on to the fact that when your fiscal policy originates in Athens but your monetary policy is set about 1000 miles away you may have a problem. He also thinks that political union may not be a bad thing to go along with monetary union but that might be hard to come by. Way to go Paulie, Bay-bee! Some of us had that germ of an idea some 20 years ago but welcome to the party. Wonder way he's saying this now when his guy is in deep do-do? Maybe I'm too suspicious, oh well. Anyway, Carter, my loyal reader, the real answer to your question may not be Spain, Italy, Portugal or any of the usual suspects. The real answer may be the EU itself, as impossible or unreal as that may seem. It's a good story. We'll be watching it this week.
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