A rare venture into politicoland.
Told you it was important. Today, the Leader, in the presence of two heads of state remarked that the Supreme Court had no right to review an act of a duly elected Congress. Funny, as to the question, I thought that it was exactly for the purpose of reviewing congressional actions that the Supreme Court was established. I must be wrong if The Leader says so. If that's the case why go through all this nonsense. Why not just say something like, "Supreme Court?" "SUPREME COURT?" I don't need no damn Supreme Court!" It would make life so much easier just like "I don't need no damn Constitution!"
Wonder if he has thought of that.
It's Holy Week so we will hear no more from Europe for at least a fortnight which is probably not a bad thing. And so thoughts turn to speculating over whether the recovery in the U.S. is real, whether it can continue on it's own or will the increasingly dreadful numbers out of Euroland finally have a spill-over effect into this hemisphere. I must say, I have never witnessed so many economists and talking heads not only hedging their bets but increasingly refusing to make any bets at all. No more of this, "On the other hand..." stuff at all. I have actually heard a couple of them admit that they don't know. Heady stuff. All I can say is that I don't like the direction of things either here or especially in Europe. The French elections are going to begin to dominate the news headlines in about a week and that outcome could well tell the tale. Remarkably, the left has said such dopey things that Sarkozy may actually be able to pull this thing out. Then again, he is Sarkozy and how does one run against oneself?
Less noticed, even by Americans, is the Mexican election in a few months which is vitally important to us and for which electioneering has just begun. We shall be watching developments to our south over the coming months, keeping in mind that this election will mark probably the successful conclusion to Mexican democratization which really began with Ernesto Zedillo 18 years ago. There are huge challenges facing Mexico no doubt, but they have made great strides. I firmly believe that it is vitally important to the future of the United States that the relationship between the two countries is normalized in the form of a hemispheric partnership which, along with Canada, secures the future for all three nations. Beginning tomorrow, that will become part of our focus.
Showing posts with label Sarkozy. Show all posts
Showing posts with label Sarkozy. Show all posts
Monday, April 2, 2012
Tuesday, March 6, 2012
WRITER'S CRAMP
Sorry gang, I could wax poetic but to what point. The date will be Thursday when we learn the fate of the swap and despite all the positive noise out there nobody has a clue of what's going to occur. I suspect the Greeks will get about 75-80% of the debt tendered, they will enact the Collective Action Clause and the CDSs will trigger--or at least some of them. After that, who knows what happens and to be honest not too many people care. This thing was all about the banks and on cue, the biggest holders of the debt in the banking sector have all said that they will tender which means the authorities feel that none of them will go toes up as a result. Now if the CDSs trigger that could cause the bailout to be posponed but half of Europe could care less because everybody knows that Greece is kaput and one might as well deal with that now as well as later. Of course, there will be no money for the banks in the future but we'll...oh hell, I don't know what we will do and I could care less as well. The punters will move on to Portugal but as the Portugese have no maturities until well into 2013 that trade is a bit tricker. I'm just going to wait until Thursday before I say another word.
In the meantime, one thing to look at are the polls in France. Right now, things look really bad for Sarkozy and French Soccer. You see, Hollande has proposed a top tax rate of 75% which means any soccer player that doesn't have two left feet will be out of France in a year. Mme. Sakorzy as well--with or without the old man--which would be a hell of a loss. The Socialists have also proposed a breakup of the French banking system along the lines of the Volker Rule which is step #1 according to some of my friends to the nationalization of the system. Au Revoir La Republique from any sort of economic performance in the coming years which makes the future of Euroland even bleaker than it is right now. Why anybody would keep their money in that place is beyond me (are you listening Matthew?), and yet some commentators are taking it in stride perhaps with the thought that he hasn't happened yet.
Not the markets, however. Waking up to the understanding that things are not all that well in Euroland and that there's a bit of a muddle on this side as well, the incredible surging stock market took a 200 point hit on the Dow today. Emerging market slippage added to the slide as the numbers out of Brazil were surprisingly (for some) poor. It might be a rather good ideal if one of the geniuses on tv wandered on down and asked those folks whatsup. What they would get is an earful of what this glut of money spewing forth from the Fed and soon-to-come ECB means to growth markets like Brazil: the inflationary pressure it causes makes it very difficult for these guys to cope. Best so far has been Mexico but it has been a struggle. But spewing along we go with Richard Fisher about the only guy in town who seems to understand what it is we may be causing.
Finally, Wells Fargo today put out a rather interesting report that didn;t get the coverage it should have given the political bent of the popular press. According to the Stagecoach, the greatly improving employment number has been more of a function of people simply stopping to search for jobs rather than a true economic shift. Run the numbers in the same manner and the real unemployment rate is 11.8% not 8.3%. I don't know. Ther have been earlier comments like this but things around here are looking a bit better, yet the study was pretty convincing. Problem is, we are not disconnected from the rest of the world; if folks are right about Europe and emerging markets, any positive move here no matter how real is unsustainable. And as for China? Good news there. My Really Smart Friend, Larry is there as we speak. We'll have the true scoop in a day or tow. Be patient.
In the meantime, one thing to look at are the polls in France. Right now, things look really bad for Sarkozy and French Soccer. You see, Hollande has proposed a top tax rate of 75% which means any soccer player that doesn't have two left feet will be out of France in a year. Mme. Sakorzy as well--with or without the old man--which would be a hell of a loss. The Socialists have also proposed a breakup of the French banking system along the lines of the Volker Rule which is step #1 according to some of my friends to the nationalization of the system. Au Revoir La Republique from any sort of economic performance in the coming years which makes the future of Euroland even bleaker than it is right now. Why anybody would keep their money in that place is beyond me (are you listening Matthew?), and yet some commentators are taking it in stride perhaps with the thought that he hasn't happened yet.
Not the markets, however. Waking up to the understanding that things are not all that well in Euroland and that there's a bit of a muddle on this side as well, the incredible surging stock market took a 200 point hit on the Dow today. Emerging market slippage added to the slide as the numbers out of Brazil were surprisingly (for some) poor. It might be a rather good ideal if one of the geniuses on tv wandered on down and asked those folks whatsup. What they would get is an earful of what this glut of money spewing forth from the Fed and soon-to-come ECB means to growth markets like Brazil: the inflationary pressure it causes makes it very difficult for these guys to cope. Best so far has been Mexico but it has been a struggle. But spewing along we go with Richard Fisher about the only guy in town who seems to understand what it is we may be causing.
Finally, Wells Fargo today put out a rather interesting report that didn;t get the coverage it should have given the political bent of the popular press. According to the Stagecoach, the greatly improving employment number has been more of a function of people simply stopping to search for jobs rather than a true economic shift. Run the numbers in the same manner and the real unemployment rate is 11.8% not 8.3%. I don't know. Ther have been earlier comments like this but things around here are looking a bit better, yet the study was pretty convincing. Problem is, we are not disconnected from the rest of the world; if folks are right about Europe and emerging markets, any positive move here no matter how real is unsustainable. And as for China? Good news there. My Really Smart Friend, Larry is there as we speak. We'll have the true scoop in a day or tow. Be patient.
Tuesday, December 6, 2011
HIGH FIVES
Such was the picture all across the world of Nikki and Angie holding up their hands to each other with outstreached fingers. "What does that mean," said the wags? Who the hell cares say I. That moment it time was about as meaningful or important as The Suit's first go-around with the German Finance Minister today. Got to hand it to him, however. Here's this guy, the head money guy in an administration that in three years has raised the national debt by four trillion dollars and who, in contravention of law, has managed not to present a budget for the running of the government of the United States for over two years. And he's over there telling the Euros how to get out of THEIR mess? That friends is what is called south of the Rio Grande, baludos which means...oh never mind.
Anyway, despite who's talking to who, My Really Smart Friend, Larry, says the game is over for Euroland and his thinking, as usual, is quite sound and based on experiences that we have both shared. To encapsulate the same, Larry's point is that it is all about Italy at this point. Forget Greece, both of us agree Greece is gone and perhaps Portugal as well but neither count and frankly, as I have often said, should never have counted. Italy is the key but not from the standpoint as it is being viewed at this point in time but from a somewhat longer standpoint, perhaps in a span of 12 to 18 months.
The immediate gameplan is to keep Italy current in the sense of the servicing of its debt. Europe could not stand an Italian default in the sense of what is being discussed regarding Greece or for that matter Portugal. Remember, it it still about the banks and the associated politics and they are still not ready. And so, the game plan is to keep Italy alive--to buy time so to speak--for as long as possible until...well, that's where the trouble starts.
Both of us made our bones in the debt crisis of the 1980s. Both of us made our careers in international finance and sovereign risk finance and it is therefor understandable that we make comparisons with that period when looking at Europe today. I would think that both of us are looking at what has occured over the last few days at the possible changes in the governance of the Italian state and asking ourselves is this going to be enough? In Larry's case the answer is no; in mine, I'm not sure but it I must admit the prospects aren't brilliant.
The problem in regard to Italy is exactly the same as we found in Mexico and Latin America in the late eighties and if we think about it for a minute what we are about to face in the United States. We can service debt: the government can always raise taxes but that is not a solution. The only real solution is growth and the question then becomes is the level of debt in the case of Italy so great that it will, under any future scenario, sap so many resources in its servicing to prohibit the level of growth needed without a massive restructuring of governance and a net reduction in the stock of debt outstanding. In the case of Mexico and Latin America it was not until the stock of debt was reduced (by approximately 35%) thru the use of Brady Bonds that conditions were set for the renewal of growth which has culminated in the vast improved economies all across the region. Italy appears to be today as Latin America was so many years ago in the remedy appears to be the same: a large reduction in the stock of debt through a restruction and forgiveness before growth can resume. And it is here where two old friends diverge; I think it could happen within the context of a restructured Euro zone, Larry does not as he believes any attempt would have to take place in the context of the strict fiscal straightjacket as proposed by Frau Merkel and M. Sarkorzy and that will simply take too long. In that he is correct but tune in tomorrow and I'll tell you why I'm more optomistic...not much mind you but hey, someone has to be.
Anyway, despite who's talking to who, My Really Smart Friend, Larry, says the game is over for Euroland and his thinking, as usual, is quite sound and based on experiences that we have both shared. To encapsulate the same, Larry's point is that it is all about Italy at this point. Forget Greece, both of us agree Greece is gone and perhaps Portugal as well but neither count and frankly, as I have often said, should never have counted. Italy is the key but not from the standpoint as it is being viewed at this point in time but from a somewhat longer standpoint, perhaps in a span of 12 to 18 months.
The immediate gameplan is to keep Italy current in the sense of the servicing of its debt. Europe could not stand an Italian default in the sense of what is being discussed regarding Greece or for that matter Portugal. Remember, it it still about the banks and the associated politics and they are still not ready. And so, the game plan is to keep Italy alive--to buy time so to speak--for as long as possible until...well, that's where the trouble starts.
Both of us made our bones in the debt crisis of the 1980s. Both of us made our careers in international finance and sovereign risk finance and it is therefor understandable that we make comparisons with that period when looking at Europe today. I would think that both of us are looking at what has occured over the last few days at the possible changes in the governance of the Italian state and asking ourselves is this going to be enough? In Larry's case the answer is no; in mine, I'm not sure but it I must admit the prospects aren't brilliant.
The problem in regard to Italy is exactly the same as we found in Mexico and Latin America in the late eighties and if we think about it for a minute what we are about to face in the United States. We can service debt: the government can always raise taxes but that is not a solution. The only real solution is growth and the question then becomes is the level of debt in the case of Italy so great that it will, under any future scenario, sap so many resources in its servicing to prohibit the level of growth needed without a massive restructuring of governance and a net reduction in the stock of debt outstanding. In the case of Mexico and Latin America it was not until the stock of debt was reduced (by approximately 35%) thru the use of Brady Bonds that conditions were set for the renewal of growth which has culminated in the vast improved economies all across the region. Italy appears to be today as Latin America was so many years ago in the remedy appears to be the same: a large reduction in the stock of debt through a restruction and forgiveness before growth can resume. And it is here where two old friends diverge; I think it could happen within the context of a restructured Euro zone, Larry does not as he believes any attempt would have to take place in the context of the strict fiscal straightjacket as proposed by Frau Merkel and M. Sarkorzy and that will simply take too long. In that he is correct but tune in tomorrow and I'll tell you why I'm more optomistic...not much mind you but hey, someone has to be.
Monday, December 5, 2011
FROM THE RIDICULOUS TO THE RIDICULOUS
What else can one say. Nikki and Angie came out--hand in hand--I might add, to their press conference today where they announced that they were in complete agreement on a totally impossible plan to regigger the EU by March of next year. Did what they said make sense? More so than not I suppose but there is absolutely no chance for their plan to be accomplished within the time frame. None. But the "complete agreement" part resulted in the DOW opening up 145. So much for the "it's all about Europe" supposed sentiment on Wall Street which if true those two could come out tomorrow and announce that they are in complete agreement that the moon is made out of and equal mixture of Brie and Limburger and we could watch the DOW reach 15,000. It's nuts.
Not to be outdone S & P followed up with the thought that they might have to downgrade every country in Europe if the big meeting at the end of this week doesn't ratify the joint proposals. Do any of you get the feeling--like me--that the irrelevancy of the rating agencies looms larger day by day? I mean, there's a gutsy call and a threat all rolled up into one bundle. The fact that France is trading around an A+ level rather than the AAA rating currently assigned, seems not to have arrived on S & P's doorstep as of yet. I'm sure this will galvanize the Heads of State into action.
And to top of this day of stupidity, The Suit's journey across the pond was characterized as The Leader putting "tremendous pressure" on the Europeans and The Suit as "being prepared to show the Europeans how to do it" by Jim Kramer on CNBC today proving that his supply of stupid pills need not yet be renewed by his friends at Treasury. Having been thrown the hell of of Europe just over a month ago, I guess The Suit feels with some added advice from his buddy, Jim, he's once again ready for prime time. This is while the Vice President, good ol' Joe Biden is announcing to the world that the Euros "Know what to do." Mindless.
I got a missive over the weekend from my Really Smart Friend, Larry, that I'll share, in part, with you tomorrow. It is not happy reading and perhaps a bit too negative in scope from my standpoint, but I confess that his stuff requires multiple reads and I'm not there yet. Tell you one thing, however. The Euro closed at 1.33 and change today after the "full agreement." I don't think either of us would be long.
More tomorrow
Not to be outdone S & P followed up with the thought that they might have to downgrade every country in Europe if the big meeting at the end of this week doesn't ratify the joint proposals. Do any of you get the feeling--like me--that the irrelevancy of the rating agencies looms larger day by day? I mean, there's a gutsy call and a threat all rolled up into one bundle. The fact that France is trading around an A+ level rather than the AAA rating currently assigned, seems not to have arrived on S & P's doorstep as of yet. I'm sure this will galvanize the Heads of State into action.
And to top of this day of stupidity, The Suit's journey across the pond was characterized as The Leader putting "tremendous pressure" on the Europeans and The Suit as "being prepared to show the Europeans how to do it" by Jim Kramer on CNBC today proving that his supply of stupid pills need not yet be renewed by his friends at Treasury. Having been thrown the hell of of Europe just over a month ago, I guess The Suit feels with some added advice from his buddy, Jim, he's once again ready for prime time. This is while the Vice President, good ol' Joe Biden is announcing to the world that the Euros "Know what to do." Mindless.
I got a missive over the weekend from my Really Smart Friend, Larry, that I'll share, in part, with you tomorrow. It is not happy reading and perhaps a bit too negative in scope from my standpoint, but I confess that his stuff requires multiple reads and I'm not there yet. Tell you one thing, however. The Euro closed at 1.33 and change today after the "full agreement." I don't think either of us would be long.
More tomorrow
Friday, December 2, 2011
WITH A WHIMPER
Which is the way the week ended except for the remarkable scene in the House of Representatives today where, as predicted, the MF GLOBAL affair took on a whole new dimention. With a large bi-partisian vote, the House Agricultural sub commitee issued a subpoena for Jon Corzine to appear before it on December 8. Now for the non-American readers and for those who are not political junkies--which is about 99% of you--the Congress has not subpoened a sitting or retired U.S. Senator in over 100 years; this is no small thing. When they turn on their own it's big. It is ironic as well that this action took place of the tenth anniversary of the bankruptcy of Enron, which led to Sarbanes-Oxley which was designed specifically to make transparent corporate balance sheets, which was written in part by Gary Gensler, who was the regulator for MF GLOBAL, whose accounting shenagans in the purchase of Euro debt led to its bankruptcy, whose...oh bother. This is going to be fun to watch.
Unfortunately, Corzine is supposed to testify on the same day as the big Euro-leaders pow-wow next which is not great timing for yours truly. I wonder if there's a finance bar in the neighborhood with 10 televisions carrying the important stuff of the day? I'll have to start searching. If there isn't I might start on...probably make a fortune. Anyway, next week is the week to watch beginning with the Nick and Angie show on Monday which should be a real crowd pleaser, moving on to the Group of 27 and concluding with the Corzine pinata on Capitol Hill. I can barely keep still. The betting window is now open on whether Jersey City Johnny takes the Fifth which means he avails himself of his Constitutional right not to testify. THAT would be a show-stopper. And since nothing else of importance went on today I'm going to rest up for next week with a Softly as I Leave You tip of the Fedora to Carter for being more and more creative as we travel along this long, long road.
See you next week.
Unfortunately, Corzine is supposed to testify on the same day as the big Euro-leaders pow-wow next which is not great timing for yours truly. I wonder if there's a finance bar in the neighborhood with 10 televisions carrying the important stuff of the day? I'll have to start searching. If there isn't I might start on...probably make a fortune. Anyway, next week is the week to watch beginning with the Nick and Angie show on Monday which should be a real crowd pleaser, moving on to the Group of 27 and concluding with the Corzine pinata on Capitol Hill. I can barely keep still. The betting window is now open on whether Jersey City Johnny takes the Fifth which means he avails himself of his Constitutional right not to testify. THAT would be a show-stopper. And since nothing else of importance went on today I'm going to rest up for next week with a Softly as I Leave You tip of the Fedora to Carter for being more and more creative as we travel along this long, long road.
See you next week.
Tuesday, October 25, 2011
SANGUE PER SANGUE
TThere will be no meeting of the finance ministers tomorrow so I was half right. There will be a meeting of the heads of state so that some completely useless but high-sounding communique can be issues because they have to say something as silly as that sounds. Given what occured over the weekend it might be interesting to watch the goings-on because it might turn into something like an Israeli parliament meeting and an actual fist-fight might break out.
I must admit, for the first time I'm beginning ro get worried not because the facts have become any different but because of the rhetoric which reache a feaver pitch on Sunday with Burlesconi being called out and insuted by Sarkozy and Angie and Frank telling the British P.M., David Cameron, "You have missed an excellent chance to shut up."
Politicians of all stripes have huge egos (The Leader being an exception as he is nothing but ego) and it is therefore not a particularly wise thing to do to tell one's peers to shut up or how to run his country but that is exactly what happened. The fact that most of this came from the little popinjay Sarkozy made it even worse as there is wide agreement that he is the dumbest guy (or girl) in the room. In addition, the fact the Mme. Sarkozy is a hell of a lot better looking than Burlesconi's once-17 year old girl friend even made things worse if I know Italians. The meeting disolved into a shouting match and obviously things have yet to calm down, hence, no concrete action on Wednesday.
I tell this tale not because in the long run this incident will be the deciding point but because the well is now poisoned on a personal level and that makes agreement even harder. In addition, while a British P.M. is used to being insulted in public as are his political colleagues, they take badly to this occuring at the hands of a fro...er...Frenchman, they react badly. Mr Cameron had to resist and turn back a very strong demand from members of his own party to call for a referendum on Britian's continued membership in the EU which would surely result in a demand that Britian depart. Whilst not a killer, that would be a devestating blow to the Union.
Sarkozy's actions are clearly the result of the shades being raised on the state of his country's credit and in particular on the state of the French banking system which is now being exposed as having done nothing to get it's house in order for the past three years. Keeping in mind that the present head of the IMF, Mme. Lagrande, was the former French finance minister and in that role responsible for the condition of the banking system, the IMF is now seriously compromised. Today, The Suit, who in the recent past had always made warm, fuzzy noises about helping out particularly through the good offices of the IMF, started walking back that cat now that things were getting ugly. Sarkozy is desperate in the sense that he is way behind in the early polls and must protect French assets in the game if he has any chance at all of holding on to the Presendency. Obviously the leaked number of 108 billion Euros of new capital believed to be needed is based upon only what the remaining Euros will pony up in any sort of recapitalization plan which will not go very far, meaning France will have to come up with a lot more on its own for its own banks, which means bye, bye their triple-A rating which means...oh why bother. The fact is NOBODY knows what's needed because there has been no agreement on a figure of debt relief for Greece, and Italy has to be delt with first which translates into Burlesconi and his party (coalition?) must do what Merkel and Sarkozy want him to do.
That the Euros have cocked this up so badly almost defies belief. Greece is rapidly becoming an afterthought and more and more of this drama's happy ending has been placed upon the badly maligned Burlosconi to do the right thing according to the maligners. Will he? We shall see. Oh, by the by, for the non-Italian speakers out there: Sangue per Sangue? That means blood for blood. Italians are very serious about certain things.
I must admit, for the first time I'm beginning ro get worried not because the facts have become any different but because of the rhetoric which reache a feaver pitch on Sunday with Burlesconi being called out and insuted by Sarkozy and Angie and Frank telling the British P.M., David Cameron, "You have missed an excellent chance to shut up."
Politicians of all stripes have huge egos (The Leader being an exception as he is nothing but ego) and it is therefore not a particularly wise thing to do to tell one's peers to shut up or how to run his country but that is exactly what happened. The fact that most of this came from the little popinjay Sarkozy made it even worse as there is wide agreement that he is the dumbest guy (or girl) in the room. In addition, the fact the Mme. Sarkozy is a hell of a lot better looking than Burlesconi's once-17 year old girl friend even made things worse if I know Italians. The meeting disolved into a shouting match and obviously things have yet to calm down, hence, no concrete action on Wednesday.
I tell this tale not because in the long run this incident will be the deciding point but because the well is now poisoned on a personal level and that makes agreement even harder. In addition, while a British P.M. is used to being insulted in public as are his political colleagues, they take badly to this occuring at the hands of a fro...er...Frenchman, they react badly. Mr Cameron had to resist and turn back a very strong demand from members of his own party to call for a referendum on Britian's continued membership in the EU which would surely result in a demand that Britian depart. Whilst not a killer, that would be a devestating blow to the Union.
Sarkozy's actions are clearly the result of the shades being raised on the state of his country's credit and in particular on the state of the French banking system which is now being exposed as having done nothing to get it's house in order for the past three years. Keeping in mind that the present head of the IMF, Mme. Lagrande, was the former French finance minister and in that role responsible for the condition of the banking system, the IMF is now seriously compromised. Today, The Suit, who in the recent past had always made warm, fuzzy noises about helping out particularly through the good offices of the IMF, started walking back that cat now that things were getting ugly. Sarkozy is desperate in the sense that he is way behind in the early polls and must protect French assets in the game if he has any chance at all of holding on to the Presendency. Obviously the leaked number of 108 billion Euros of new capital believed to be needed is based upon only what the remaining Euros will pony up in any sort of recapitalization plan which will not go very far, meaning France will have to come up with a lot more on its own for its own banks, which means bye, bye their triple-A rating which means...oh why bother. The fact is NOBODY knows what's needed because there has been no agreement on a figure of debt relief for Greece, and Italy has to be delt with first which translates into Burlesconi and his party (coalition?) must do what Merkel and Sarkozy want him to do.
That the Euros have cocked this up so badly almost defies belief. Greece is rapidly becoming an afterthought and more and more of this drama's happy ending has been placed upon the badly maligned Burlosconi to do the right thing according to the maligners. Will he? We shall see. Oh, by the by, for the non-Italian speakers out there: Sangue per Sangue? That means blood for blood. Italians are very serious about certain things.
Monday, October 24, 2011
LITTLE PAULIE'S LAMENT
While calling yet again for the opening of the ECB spigot, and speculating that it wasn't going to happen because of silly things like constitutions, laws and regulations, Krugman finally came clean about his beliefs, agendas and as I have urged all to recognize, the true dogma of The Leader and the present administration. It was an remarkable unveiling and I wonder what the commentary will be if, indeed, The Times will print any, but I shall print the operative paragraphs and follow with my own commentary.
"The broader problem, however", Krugman writes, "is that the whole euro system was designed to fight the last economic was. It is a Maginot line built to prevent a replay of the 1970's which is worse than useless when the real danger is a replay of the 1930's...
That of course is utter crap. The Euro system was not in any way designed to address anything in the 1970's and had no thought of the 1930's except in the context of a study of economic history. The idea was a monetary union to be followed, as the midwives believed, by an inevitable political union in some shape and form not, to avoid another economic catastrophy but a political one as the wise men realized that Europeans, taken seperately, don't like each other very much. The facilitation of trade and the creation of wealth thru the mechanism of a common currency was the rational that drove the process. Krugman continued...
"The story of postwar Europe is deeply inspiring. Out of the ruins of war, the Europeans built a system of peace and democracy, constructing along the way societies that, while imperfect--what society isn't?-- are arguably the most decent in human history."
To say he is merely delusional would be inaccurate. He is a fool. Now being a fool doesn't mean one is unintelligent, it just means that one is a...well, a fool. The most decent in history? Hardly. The implication that the Europe's recovery was accomplished solely by Europeans...a monstrosity of a historical perversion. Little Paulie will no doubt point to things like universal health care and ignore the viscious racial incitement, violence and discrimination that has existed and appears on the increase since the War ended. Nor will he consider for a moment that the very freedom and existence of Western Europe hung by a thread at one point and was preserved only under the umbrella of American military might. He continues...
"Yet that achievement is under threat because of the European elite, in its arrogance, locked the Continent into a monetary system that recreated the gold standard...[and]...The bitter truth is that it is looking more and more as if the euro system is doomed...Europe might be better off if it collapses sooner rather than later"
No Mr. Krugman, what will collapse is the soft socialism of the welfare state that collapsed under its own weight as it was destined to do. What has collapsed is the belief that pitting class against class is a winning political strategy that can be counted upon to continually purchase votes with the false promise of social peace. What has collapsed is the false premise that everyone is "deserving" regardless of effort and that there is in every society an intellectual elite such as yourself whose duty in life is to guide the lessfortunate as to the manner in which and by what rules life should be lived. What has collapsed is Plato's false belief in the wise men. There are none so wise. And lament though you might, your "most decent society" is no more. It spent itself to death.
The flailing about on the part of The Leader and this adminstration, so painful to watch, is because of the beliefs shared with Mr. Krugman. It would appear that reality has finally interveened in the grand design and the fear, shock and desperation is almost palpable. They may survive politically, but the concept will not. If we fail to learn from the Euros we will almost certainly face even a graver crisis in the coming years...no matter what the political bent of the governmental leadership.
Enough of the Gospel according to St. Charlie. Barring something REALLY important, we'll go back to the Euros tomorrow and their wonderfully insolvent banks. It was a fun time over the week-end: Nikki and Angie jumped all over Silvio...a sure sign to the conoscenti that L'affair est mort...which is another way of saying they are just sick of one another. Anon.
Wednesday, October 19, 2011
OH, WHAT A LOVELY RIOT!
The Greeks sure know how to throw a party! 100,000 of them out in the streets throwing rocks, Molotov cocktails, yelling, screaming and at the first sign of tear gas...hed home. Why not? Nothing else to do like go to work. Wonderful international theater all captured by the all-seeing eye of every tv network in the western world and then some. You see, the Greek Parliament votes tomorrow on the austerity measures deemed necessary by the Troika before another cent is released from the bail-out facility. And austere they are. If the folks at the Zuccotti Park love-in ever got a look at those heavens knows what the reaction might be. The thought is too terrifying to contemplate.
Of course, the whole thing is a farce which everybody understands except for the true believers in the total wellfare state for who would substitute government payments for wages, leaving aside for the moment the issue of who the government taxes to get the money to make the payments if nobody pays taxes because nobody earns anything because nobody works. It is a farce because whatever the parliament passes tomorrow is a sham, never intended to be implemented for any extented period of time because the "orderly" default of Greece, soon to be allowed by the remaining Euros as soon as they can
1. Put a ring around Italy,
2. Figure out how to rationalize the banks and then
3. Reduce Greece's debt burden to a level where (hopefully) draconian cuts in the economy will no longer be needed. The Greek Parliament will act appropriately so that it gets its Euro fund money which buys time to put the aforementioned in place. If it were me I'd rather watch Oedipus Rex--you know, the one about the guy that solves the riddle of the spinx (like who knew there was one), offs his old man, marries mom and then things REALLY start going south...But I digress.
This afternoon, Sarkozy was off to Berlin--once again--to meet with Frau Merkel--once again--because nothing had been settled despite what The Grauniard had to say about things. Now look guys, I just didn't fall off a turnip truck. Something going on with thos two. Paris yesterday, Berlin tomorrow: if I were The Grauniard I'd post a couple of newies with a cameraman down to a couple of the Greek Island because one day somebodys going to get a shot of those two on Kalmynos, diving for sponges and sucking on each other's toes. Imagine, ol' Sarkozy telling people that he wants the French banks to recapitalize in the public markets! You couldn't find a blind dead man who would buy French bank equity in a Haitian graveyard. Obviously just another ploy to get to see Angela again. Instead of talking about saving Europe they should start picking out furniture. Anyway, I've had enough fun with this. Let's see what happens tomorrow in Parliment. Ouzo and baklava anyone?
Of course, the whole thing is a farce which everybody understands except for the true believers in the total wellfare state for who would substitute government payments for wages, leaving aside for the moment the issue of who the government taxes to get the money to make the payments if nobody pays taxes because nobody earns anything because nobody works. It is a farce because whatever the parliament passes tomorrow is a sham, never intended to be implemented for any extented period of time because the "orderly" default of Greece, soon to be allowed by the remaining Euros as soon as they can
1. Put a ring around Italy,
2. Figure out how to rationalize the banks and then
3. Reduce Greece's debt burden to a level where (hopefully) draconian cuts in the economy will no longer be needed. The Greek Parliament will act appropriately so that it gets its Euro fund money which buys time to put the aforementioned in place. If it were me I'd rather watch Oedipus Rex--you know, the one about the guy that solves the riddle of the spinx (like who knew there was one), offs his old man, marries mom and then things REALLY start going south...But I digress.
This afternoon, Sarkozy was off to Berlin--once again--to meet with Frau Merkel--once again--because nothing had been settled despite what The Grauniard had to say about things. Now look guys, I just didn't fall off a turnip truck. Something going on with thos two. Paris yesterday, Berlin tomorrow: if I were The Grauniard I'd post a couple of newies with a cameraman down to a couple of the Greek Island because one day somebodys going to get a shot of those two on Kalmynos, diving for sponges and sucking on each other's toes. Imagine, ol' Sarkozy telling people that he wants the French banks to recapitalize in the public markets! You couldn't find a blind dead man who would buy French bank equity in a Haitian graveyard. Obviously just another ploy to get to see Angela again. Instead of talking about saving Europe they should start picking out furniture. Anyway, I've had enough fun with this. Let's see what happens tomorrow in Parliment. Ouzo and baklava anyone?
Monday, October 17, 2011
AS PREDICTED
Told ya so. I didn't expect the government to change but after the first failed vote the Slovaks got themselves a new government and voted "Aye" on the increased bail-out package. Joy, satisfaction and praise even from the former managing editor of the New York Times who pointed out the true exceptionalism of Slovakia in comparison to those who might reserve this claim for the good ol' U.S. of A. A putz if there ever was one but then again it IS The Times.
Up went the stock market fueled by this bit of news last week and the anticipation of the Sarkozy/Merkel tryst of the weekend and down it came today after the German Finance minister dumped a huge pot of cold water on the thought that there would be some "Grand Plan" announced at next week's G-20 gathering. Herr Schaeuble has gotten into this annoying habit of actually speaking the truth from time to time probably because he's in the center of things and actually does know what's going on as well as being attuned to the fact that any "Grand Plan" is going to be based mainly on the use of his money. Suffice to say, nothin' goin' down next week or anytime soon for that matter. The Greeks get their money, the can gets kicked and Christmas comes along. Oh yeah, as Steve Jobs would have said, "there's just one more thing..." the French elections.
The Socialist Party has chosen Francois Holland, a moderate leftist, to run against He With The Hottest First Lady Around, preggers or not, in next year's Presidential election. Right now, the Socialists could run five guys named Schwartz against Sarkozy and each would win, a reflection of how low is his standing. There is no doubt that the Euroland financial mess will be high of the list of campaign issues as it will be for Frau Merkel which means that both leaders have to tred very cautiously...beginning now. To be honest, I have no real feel for the French electorate's leaning at this point but being the good pol that he is, M. Sarkozy is certain not to agree to anything definitive until he has concluded that the decision will gain him votes in the election. Not only is that going to take a bit of time, but the kissy, kissy/huggie, huggie relationship now going on with his German counterpart may come under a bit of strain if the German electorate and the French mob don't see eye to eye. The last time that happened, if I remember correctly, was some time around the Second Crusade and it was iffy then.
And so, we move into the start of another week, of speculation, posturing and nonsensical reporting from the know-nothings who call themselves the financial press. Of course this gives The Leader more time to hone his "It's all Europe's fault" campaign. Then again, next week is a GREAT football weekend, the World Series AND the All Blacks against France. France? FRANCE?! The lads wont even need the Haaka.
Up went the stock market fueled by this bit of news last week and the anticipation of the Sarkozy/Merkel tryst of the weekend and down it came today after the German Finance minister dumped a huge pot of cold water on the thought that there would be some "Grand Plan" announced at next week's G-20 gathering. Herr Schaeuble has gotten into this annoying habit of actually speaking the truth from time to time probably because he's in the center of things and actually does know what's going on as well as being attuned to the fact that any "Grand Plan" is going to be based mainly on the use of his money. Suffice to say, nothin' goin' down next week or anytime soon for that matter. The Greeks get their money, the can gets kicked and Christmas comes along. Oh yeah, as Steve Jobs would have said, "there's just one more thing..." the French elections.
The Socialist Party has chosen Francois Holland, a moderate leftist, to run against He With The Hottest First Lady Around, preggers or not, in next year's Presidential election. Right now, the Socialists could run five guys named Schwartz against Sarkozy and each would win, a reflection of how low is his standing. There is no doubt that the Euroland financial mess will be high of the list of campaign issues as it will be for Frau Merkel which means that both leaders have to tred very cautiously...beginning now. To be honest, I have no real feel for the French electorate's leaning at this point but being the good pol that he is, M. Sarkozy is certain not to agree to anything definitive until he has concluded that the decision will gain him votes in the election. Not only is that going to take a bit of time, but the kissy, kissy/huggie, huggie relationship now going on with his German counterpart may come under a bit of strain if the German electorate and the French mob don't see eye to eye. The last time that happened, if I remember correctly, was some time around the Second Crusade and it was iffy then.
And so, we move into the start of another week, of speculation, posturing and nonsensical reporting from the know-nothings who call themselves the financial press. Of course this gives The Leader more time to hone his "It's all Europe's fault" campaign. Then again, next week is a GREAT football weekend, the World Series AND the All Blacks against France. France? FRANCE?! The lads wont even need the Haaka.
Tuesday, October 11, 2011
CORRECTIONS AND CONFIRMATIONS
My Really Smart-Ass Friend, Larry rang the other day to remind me it was Slovakia not Slovenia that still had a spanner in the works as to the approval of the enhanced EuU bailout facility. Slovenia, Slovakia...like who cares. , whatever. No, he was right of course to point out the error and I apologize as it is important. Slovakia is voting as this is being written and the motion will be approved either at this vote or at the next one...or at the one after that or the one after that. Greece will get their money which will keep them going for a month or so while great plans will be made. More importantly, the hold-up by a small, impoverished country like Slovakia highlights one of the great problems that has always faced the Union; it's all-in or nobody's in. Uninamity is hard to achieve especially when it involves money and taxes and this will be the ongoing issue moving foward.
Meanwhile, over the weekend, M.Sarkozy and Frau Merkel agreed that they will agree sometime in the future at a date to be determined as to how to recapitalize Euro banking. Marking this as the solution to Europe, our DOW moved up 330 points yesterday and all fears of a fouth quarter recession ended. Great minds truly at work. But while this nonsense was going on some important early steps in the process were being taken as predicted and more will come.
France, Belgium and Luxembourg agreed to the break-up of Dexia about which we spoke last week. I do not have the details of the terms but surely the depositors will be protected whilst the equity and debt holders will no doubt take a bath. While all of this was going on the Greek authorities announced the intervention of Proton Bank and in Spain the proposed merger of Banco Pastor into Banco Popular Espanol was announced as well. This marks the first merger of the so-called listed banks in some 10 years and follows the merger of a number of savings institutions or "cajas" which had occured earlier in the year. Whilst the cajas' problems were more as a result in exposure to the blown up Spanaish real estate market, the listed banks, while exposed there as well, also have exposure to Spanish and European soverign debt. Pastor had been rumored to have been in trouble for some time so this comes a no surprise but this activity is in reality on the periphery of European banking at the present time. Nevertheless, the process of the consolidation of Euro banking has begun as predicted and will continue apace. The Euros can pull it off and in the past week or so they are showing signs of having worked though some of the political problems of the Union which is good. But, for this process to be successful, there cannot be a continued assult upon the other prominent soverigns. The expected approval of Slovakia (thank you Larry) is he first step in that process. Arranging for Greece's eventual default remains a work in progress.
Across the Ponf, politicians are all atwitter about the release of the first draft of the so-called "Volker Rule" which in initial form has raised more questions than answers. Tall Paul must love it. What he envisioned was a simple redraft of Glass Steagal and what he got was an absolute dog's breakfast that amost seems to be designed to be made up as people go along. It's too soon to really comment on the thing but it seems to me that Tall Paul is once again proven to be smarter than most of the mutts charged with the responsibility for this thing. It's either two sentences or no sentences. Lets see who's right in the end
We have to go out of town to help out #2 son and family for a couple of days as one of the grandkids needs some surgery. Baby sitiing duties call. Nothing serious but help is required. Don't know how long we'll be gone but I'm beting not much new isgoing to happen for the next couple of days. If I'm wrong I'll grab a machine and comment. See you in a bit
Meanwhile, over the weekend, M.Sarkozy and Frau Merkel agreed that they will agree sometime in the future at a date to be determined as to how to recapitalize Euro banking. Marking this as the solution to Europe, our DOW moved up 330 points yesterday and all fears of a fouth quarter recession ended. Great minds truly at work. But while this nonsense was going on some important early steps in the process were being taken as predicted and more will come.
France, Belgium and Luxembourg agreed to the break-up of Dexia about which we spoke last week. I do not have the details of the terms but surely the depositors will be protected whilst the equity and debt holders will no doubt take a bath. While all of this was going on the Greek authorities announced the intervention of Proton Bank and in Spain the proposed merger of Banco Pastor into Banco Popular Espanol was announced as well. This marks the first merger of the so-called listed banks in some 10 years and follows the merger of a number of savings institutions or "cajas" which had occured earlier in the year. Whilst the cajas' problems were more as a result in exposure to the blown up Spanaish real estate market, the listed banks, while exposed there as well, also have exposure to Spanish and European soverign debt. Pastor had been rumored to have been in trouble for some time so this comes a no surprise but this activity is in reality on the periphery of European banking at the present time. Nevertheless, the process of the consolidation of Euro banking has begun as predicted and will continue apace. The Euros can pull it off and in the past week or so they are showing signs of having worked though some of the political problems of the Union which is good. But, for this process to be successful, there cannot be a continued assult upon the other prominent soverigns. The expected approval of Slovakia (thank you Larry) is he first step in that process. Arranging for Greece's eventual default remains a work in progress.
Across the Ponf, politicians are all atwitter about the release of the first draft of the so-called "Volker Rule" which in initial form has raised more questions than answers. Tall Paul must love it. What he envisioned was a simple redraft of Glass Steagal and what he got was an absolute dog's breakfast that amost seems to be designed to be made up as people go along. It's too soon to really comment on the thing but it seems to me that Tall Paul is once again proven to be smarter than most of the mutts charged with the responsibility for this thing. It's either two sentences or no sentences. Lets see who's right in the end
We have to go out of town to help out #2 son and family for a couple of days as one of the grandkids needs some surgery. Baby sitiing duties call. Nothing serious but help is required. Don't know how long we'll be gone but I'm beting not much new isgoing to happen for the next couple of days. If I'm wrong I'll grab a machine and comment. See you in a bit
Wednesday, August 24, 2011
BASE METAL
Gold was down almost 100 bucks today. You think the stuff was lead. Oil was down as well and as a consequence the DOW was up 145 points. Go figure. The combination of the drop in commodities and the continued anticipation that Bernanke will announce that the Fed is back in the game on Friday is causing a number of the talking heads to recommend stocks as the place to be. Funny, because if the Fed heads in the direction of QE III, the dollar will surely weaken, commodities will rise and the market will rise as well? As I said, go figure. I don't understand it any more and I thinl I'll stop trying. Anyway, there weren't any after-shocks the weather was beautiful, there was nary a peep from Euroland and everyone was happy. I'm happy.
Speaking of Euroland, I gave a ring over there today to see what was going on with Greece. My man on the scene assured me that all was fine. "How can it be," I asked. "They have a big payment this week." "Oh, they made the payment," was the reply. "WHAT!" said I. "Where did they get the money?!" "Charlie, you really don't want to know," was all I got.
Well, that sure knocks my time table out the window. I do want to know where the Greeks came up with 7 or 8 billion Euros but I'm not going to find out. No resttructure, no re-lending from what I can discerne, just a flat-out repayment. Remarkable. My bet would be on the ECB but it's just a guess. The important thing is this sends the signal that the Euros are going to kick the can just to find out how long is the road. Or, to put it another way, nobody can go broke as long as there's someone out there stupid enough to lend more money. Don't even know who got repaid. I must admit I feel pretty dumb not to have seen this coming although upon reflection it was probably an even-money bet.
So where do we go from here? I guess everyone is waiting on Germany to say 'Ja" to the Eurobond idea incorporating their money and a far more close fiscal union. I still say that's not going to happen but after what I discovered today I must admit to be less certain than yesterday...but not by much. That is the preferred solution in a lot of camps, not because everyone is anxious for Germany to achieve complete dominance over Europe but because the alternative could be really ugly.
While all of this was going on, France gave up the fiction and announced a new austerity package to combat a greater fiscal deficit which has come about as a result of greatly reduced GDP estimates for the coming quarter and year. The Leader would love the plan: tax the rich (more) at every level but that's neither here nor there. I just found the timing amusing as for the last month He With the Hottest First Lady in Town has been blabbering on about fiscal unions and balanced budgets while at home he's sloshing around in red ink. Are politicians all the same all around the world? I guess they are. Silly me for asking.
Thursday, August 18, 2011
INCOMMING!!!
The Guns of August began firing today as expected. The trigger was a completly accurate story on the front page of the WSJ concerning the Ney York Fed and the world's banking system..a story which I hinted at the other day. Now its one thing for your friend, Charlie, to write about this but its quite another thing for the Journal to headline it although that shouldn't be the case. My comments were really informed speculation--been there, done that--knowing how these things work. The Journal or any decent newspaper can't work that way. Somebody spilled the beans and the result was to be expected; markets crashed and stayed crashed all day and will stay crashed for some time.
I don't know whether Billy the Dud is in town or out at Amagansett this being August, but wherever he is, he better damn well put out the word that in times like this KEEP YOUR MOUTH SHUT! God, I know the Euros can't find their asses with both hands in the middle of the Haupbanhoff Strasse at high noon but the New York Fed? Memo to Bill: if you do nothing else try to maintain whatever confidence is left. The next thing you do is get Kramer off CNBC in the morning whaere today he simply tried to cover his butt for the mess he made in 2008 and panicked everyone again. With this stuff he's way out of his league; time to say good-bye.
That's not to say there isn't a big problem. The Euro banks have stuffed themselves full of as many dollars as they can get their hands on for pure liquidity purposes and the political initiative is dead. The three states in Germany that are needed to finance this thing have said no way, Merkel is finished politically and everyone knows it and my Really Smart Friend, Larry, told me today that France is the only game in town and that is not very reassuring because the last time the France won anything on their own was with Joan of Arc and we know how that worked out. He was in the country, drinking one of his really excellent bottles of Barolo and staring at an open ticket to Zermat. Encouraging, that.
All that remains, barring a real miracle, is the final discussion of who dies in the financial sector and what Europe looks like in six months. This mob have managed to take what amounted to a 30 billion Euro misunderstanding and turn it into God knows what by a total lack of leadership, intelligence, failure to act and stupid little turf battles between the ECB and the politicians with the pols trying to protect their precious banks who, if the truth be known, are really too dumb to be allowed to survive. Mind you, our institutions are not the seats of genius, but come on! You could see this coming for two years and you guys did nothing. Incroyable.
Economic numbers today were just awful as well. The Philly Fed report when it came out at 10:00am looked like a bad print. Housing starts were awful and the jobs picture was not encouraging. But things really can't be too bad because I guess The Leader is still heading up to the Vineyard for 11 days. Nice place Martha's Vineyard. Filled with those middle class folks of whom The Leader is so fond. Hard working folks with good Union jobs, living in $15, 000, 000 bungalows as should we all. I'm sure he'll get a lot of good ideas for his jobs speech in September. What a country.
I don't know whether Billy the Dud is in town or out at Amagansett this being August, but wherever he is, he better damn well put out the word that in times like this KEEP YOUR MOUTH SHUT! God, I know the Euros can't find their asses with both hands in the middle of the Haupbanhoff Strasse at high noon but the New York Fed? Memo to Bill: if you do nothing else try to maintain whatever confidence is left. The next thing you do is get Kramer off CNBC in the morning whaere today he simply tried to cover his butt for the mess he made in 2008 and panicked everyone again. With this stuff he's way out of his league; time to say good-bye.
That's not to say there isn't a big problem. The Euro banks have stuffed themselves full of as many dollars as they can get their hands on for pure liquidity purposes and the political initiative is dead. The three states in Germany that are needed to finance this thing have said no way, Merkel is finished politically and everyone knows it and my Really Smart Friend, Larry, told me today that France is the only game in town and that is not very reassuring because the last time the France won anything on their own was with Joan of Arc and we know how that worked out. He was in the country, drinking one of his really excellent bottles of Barolo and staring at an open ticket to Zermat. Encouraging, that.
All that remains, barring a real miracle, is the final discussion of who dies in the financial sector and what Europe looks like in six months. This mob have managed to take what amounted to a 30 billion Euro misunderstanding and turn it into God knows what by a total lack of leadership, intelligence, failure to act and stupid little turf battles between the ECB and the politicians with the pols trying to protect their precious banks who, if the truth be known, are really too dumb to be allowed to survive. Mind you, our institutions are not the seats of genius, but come on! You could see this coming for two years and you guys did nothing. Incroyable.
Economic numbers today were just awful as well. The Philly Fed report when it came out at 10:00am looked like a bad print. Housing starts were awful and the jobs picture was not encouraging. But things really can't be too bad because I guess The Leader is still heading up to the Vineyard for 11 days. Nice place Martha's Vineyard. Filled with those middle class folks of whom The Leader is so fond. Hard working folks with good Union jobs, living in $15, 000, 000 bungalows as should we all. I'm sure he'll get a lot of good ideas for his jobs speech in September. What a country.
Wednesday, August 17, 2011
ALL QUIET ON THE EURO FRONT
Fortunately. That is not to say things will remain that way. The day dawned with the almost universal agreement that the Sok/Merk show might not have a long run if any run at all. The range of comment went from "day-dreaming" to "a cheeky attempt to control Europe for the benefit of France and Germany." I am more in the first camp believing that they simply do not have a clue. The Eurobond idea was probably the last one that could avert a default down the road but that has been effectively killed by Frau Merkel's probably correct reading of the mood of the German voter.
There was an element of bemusement in my mind to all of the happenings of yesterday, particularly the call for strict rules conserning budget deficits applying to all of the member countries. Not surprisingly, perhaps, such rules already exist and have so existed since the Euro became the common currency. They have been broken a number of times in the past--the first time by Germany when things got tight on the home front a few years back--who at the time simply said to their Euro partners, "Stuff it" or the Teutonic equivalent thereof. So has France; so has Italy and of course there's Greece. Let's just say it's hard to be encouraged by such new thinking.
So where do we go from here? Frankly, I don't think the question is where but when. My bet is sooner rather than later but a number of my far more intelligent friends tell me we have a bit more time. My worry is that our guys may not be sufficiently worried as to the effect bad things in Europe can have in the U.S. and are in allignment with our friend, Jaime, who thinks what happens in Europe stays in Europe. As you know I respectfully disagree, then again can we really prepare? Maybe The Suit is not on the Magical Bus Trip with his boss because he's drawing up contingency plans back in D.C. Then again, as a good friend pointed out, "They're going through Illinois. Chicago is in Illinois. People get thrown under buses in Illinois." I hope the former view is correct but it does make you wonder.
Stay alert.
There was an element of bemusement in my mind to all of the happenings of yesterday, particularly the call for strict rules conserning budget deficits applying to all of the member countries. Not surprisingly, perhaps, such rules already exist and have so existed since the Euro became the common currency. They have been broken a number of times in the past--the first time by Germany when things got tight on the home front a few years back--who at the time simply said to their Euro partners, "Stuff it" or the Teutonic equivalent thereof. So has France; so has Italy and of course there's Greece. Let's just say it's hard to be encouraged by such new thinking.
So where do we go from here? Frankly, I don't think the question is where but when. My bet is sooner rather than later but a number of my far more intelligent friends tell me we have a bit more time. My worry is that our guys may not be sufficiently worried as to the effect bad things in Europe can have in the U.S. and are in allignment with our friend, Jaime, who thinks what happens in Europe stays in Europe. As you know I respectfully disagree, then again can we really prepare? Maybe The Suit is not on the Magical Bus Trip with his boss because he's drawing up contingency plans back in D.C. Then again, as a good friend pointed out, "They're going through Illinois. Chicago is in Illinois. People get thrown under buses in Illinois." I hope the former view is correct but it does make you wonder.
Stay alert.
Tuesday, August 16, 2011
AU PRIS DE MA BLOND...
...il fait mal, fait mal, fait mal. Nikki met with his hot blond buddy Angela today and came up with rien, zip, nada, niente. It would have been better IMHO had they not met at all and unquestionably better had they just kept their mouths shut. With the numbers showing growth has stopped in Euroland, yields on Italian and Spanish paper heading north again and the Greeks looking at a beaucoup Euro repayment in a week all these two chuckleheads could come up with was an assurance that the bail-ou facility was big enough (it isn't), a call for a United states of Europe to be led by a Belgian for the next 2 1/2 years, higher taxes on shares transactions and higher taxes rates--the word they used was "conforming" among all states. For those who have been dead for a while that means Ireland.
The reaction was an audible gasp on both sides of the pond as if the collective thought raced through the synapses of every observer at the same time: "Are these two as dumb as The Leader and if so, wadda we do now?!" Well, it beats the hell out of me but I think what happened...or didn't happen...pretty much insures a Greek default sooner rather than later and serious trouble down the road with possibly Italy and almost certainly, Spain. The U.S. of Euroland will go nowhere and the Irish will require armed force before they relent on their tax code and of course it is never a real good idea to get into a fight with the Irish. Over here, the markets tanked before coming back a good deal from their lows but I'm not sure that the result of this failure on the part of Europe's two most important leaders has been fully understood. My bet would be continued weakness, especially in the financial sector, even in the face of surprisingly good numbers today regarding plant utilization and corporate profits.
Obviously, Frau Merkel knows she doesn't have the votes to get Germany fully behind a European bail-out and without Germany, nothing happens. If there is such a thing as an orderly collapse over the next few months that's about the best I think one can hope for and I would expect that we will see is the rationalization of the financial sector in Euroland. The problem is, of course, I'm not at all sure that anyone really knows the true state of European banking much less the state of any individual bank which is going to cause some sleepless nights for all concerned. Then again, if the weeding-out process begins--probably through mergers with vast government support--the politics of the individual countries will play the dominant role and I for one wouldn't even pretend to understand or begin to spectulate as the direction that will take. It will probably be ugly.
Tomorrow's open in Europe will be interesting. The ban on short-selling in some markets will have absolutely no effect if this thing is programmed to go south. There simply will not be a bid out there for either equities or fixed income soverign debt. Then again, I may be far too pessimistic and negative in my view of what occured today and if so, I wouldn't mind a "Ho Hum" day at all but I don't think we are set up for that. No one was particularly optomistic as to the results of today's chit-chat but the results I think it's fair to say were particularly disappointing. Hold on tight; it might be a wild ride.
The reaction was an audible gasp on both sides of the pond as if the collective thought raced through the synapses of every observer at the same time: "Are these two as dumb as The Leader and if so, wadda we do now?!" Well, it beats the hell out of me but I think what happened...or didn't happen...pretty much insures a Greek default sooner rather than later and serious trouble down the road with possibly Italy and almost certainly, Spain. The U.S. of Euroland will go nowhere and the Irish will require armed force before they relent on their tax code and of course it is never a real good idea to get into a fight with the Irish. Over here, the markets tanked before coming back a good deal from their lows but I'm not sure that the result of this failure on the part of Europe's two most important leaders has been fully understood. My bet would be continued weakness, especially in the financial sector, even in the face of surprisingly good numbers today regarding plant utilization and corporate profits.
Obviously, Frau Merkel knows she doesn't have the votes to get Germany fully behind a European bail-out and without Germany, nothing happens. If there is such a thing as an orderly collapse over the next few months that's about the best I think one can hope for and I would expect that we will see is the rationalization of the financial sector in Euroland. The problem is, of course, I'm not at all sure that anyone really knows the true state of European banking much less the state of any individual bank which is going to cause some sleepless nights for all concerned. Then again, if the weeding-out process begins--probably through mergers with vast government support--the politics of the individual countries will play the dominant role and I for one wouldn't even pretend to understand or begin to spectulate as the direction that will take. It will probably be ugly.
Tomorrow's open in Europe will be interesting. The ban on short-selling in some markets will have absolutely no effect if this thing is programmed to go south. There simply will not be a bid out there for either equities or fixed income soverign debt. Then again, I may be far too pessimistic and negative in my view of what occured today and if so, I wouldn't mind a "Ho Hum" day at all but I don't think we are set up for that. No one was particularly optomistic as to the results of today's chit-chat but the results I think it's fair to say were particularly disappointing. Hold on tight; it might be a wild ride.
Monday, August 15, 2011
GOD'S IN HIS HEAVEN
...all's right with the world? Seems like it. DOW closed up 215, the ECB is busily buying Greece, Italy, Spain and anybody else that's on offer and Sarkozy and Merkel meet tomorrow with visions of sugar plums dancing in everybody's heads, the groundwork having been laid over the weekend.
I think what has really happened is the the Euros woke up and realized that it was August, what had occured was a bad dream and decided to go back on holiday hoping the two major heads of state could blabber on until September. It will probably work barring something really stupid like the Greeks saying something like, "We're not going to take it anymore!" which they will at some point but please, not now. To add to the show The Leader is on a bus trip to press the flesh in the mid-west and call for tax increases for the next three days. There are three buses involved, each reportedly costing $1 million but who's counting. Nobody is in D.C. (which may not be a bad thing) despit our continued fiscal mess and The Swiss are still talking about pegging their currency to the Euro something they have resisted since the beginning of time--or the Euro--which ever came first. You can't make this stuff up.
The guys really about to take the gas-pipe are the leaders of China who in the word's of My Really Smart Friend, Larry are well and truly stuck in the dollar trap that he has been talking about for over a year now. Caught up in a fiscal and monetary policy of their own making they have no alternative but to continue to hold dollars and bitch about the United States which isn't a bad thing in itself but more than a bit of sour grapes coming from them. As long as their economy is totally export driven (because that's what creates jobs and boy, do they need job) the bucks keep piling up. They would love to diversify but into what. For better or worse we are the reserve currency and no other capital market is as big or deep. So thank you China. Maybe you should hire My Really Smart Friend, Larry, although I'm not sure he has a solution...at least not one they would accept. Then again, the situation continues to provide me with considerable unease because I'm a firm believer that if you owe a bank a million dollars, you are in trouble but if you owe a billion...well, you know how that comes out. Hey, rather than Larry, maybe they should hire Donald Trump! He's lived his life with that thought in mind and has done verywell, thank you.
Sarkpzy v. Merkel, round two. We'll be watching
I think what has really happened is the the Euros woke up and realized that it was August, what had occured was a bad dream and decided to go back on holiday hoping the two major heads of state could blabber on until September. It will probably work barring something really stupid like the Greeks saying something like, "We're not going to take it anymore!" which they will at some point but please, not now. To add to the show The Leader is on a bus trip to press the flesh in the mid-west and call for tax increases for the next three days. There are three buses involved, each reportedly costing $1 million but who's counting. Nobody is in D.C. (which may not be a bad thing) despit our continued fiscal mess and The Swiss are still talking about pegging their currency to the Euro something they have resisted since the beginning of time--or the Euro--which ever came first. You can't make this stuff up.
The guys really about to take the gas-pipe are the leaders of China who in the word's of My Really Smart Friend, Larry are well and truly stuck in the dollar trap that he has been talking about for over a year now. Caught up in a fiscal and monetary policy of their own making they have no alternative but to continue to hold dollars and bitch about the United States which isn't a bad thing in itself but more than a bit of sour grapes coming from them. As long as their economy is totally export driven (because that's what creates jobs and boy, do they need job) the bucks keep piling up. They would love to diversify but into what. For better or worse we are the reserve currency and no other capital market is as big or deep. So thank you China. Maybe you should hire My Really Smart Friend, Larry, although I'm not sure he has a solution...at least not one they would accept. Then again, the situation continues to provide me with considerable unease because I'm a firm believer that if you owe a bank a million dollars, you are in trouble but if you owe a billion...well, you know how that comes out. Hey, rather than Larry, maybe they should hire Donald Trump! He's lived his life with that thought in mind and has done verywell, thank you.
Sarkpzy v. Merkel, round two. We'll be watching
Saturday, May 8, 2010
SATURDAY?
A Saturday post? I never felt it was in the cards but this European situation is driving me around the twist.
I don't get these people. Stating that it is absolutely imperative to "build a fence around Greece," and assuring all that a comprehensive set of strategies will be in place by Sunday, He With The Hottest First Lady Around cancelled his plans to journey to Moscow for the celebration of the victory in WW II and stayed home. M. Sarkozy whose nation was on the winning side (with a bit of help) is somewhat important in the European financial package but Frauline Merkel, who is absolutely essential to the process and who was on the losing side headed off to Russia. Will someone PLEASE explain these clowns to me? Or better yet, explain to THEM that this thing is all about street creds and this is not the way to earn them.
I called a couple of old friends in Europe, one of who is still in the game as to their reaction. "Charlie," one said, "They have better to have a something for real on Monday's morning or this could be tot early" (Hans' losing battle with the English language continues). Jane agreed. "They have promised to produce, so they must." With their outlook, I fully agree, but this thing has been so bizarre up to this point, who knows. Anyway, there is one thing about which we can be thankful. Given the manner in which the Germans have cocked this up, can you imagine how they would have managed the peace had they won?
We await Monday's open
I don't get these people. Stating that it is absolutely imperative to "build a fence around Greece," and assuring all that a comprehensive set of strategies will be in place by Sunday, He With The Hottest First Lady Around cancelled his plans to journey to Moscow for the celebration of the victory in WW II and stayed home. M. Sarkozy whose nation was on the winning side (with a bit of help) is somewhat important in the European financial package but Frauline Merkel, who is absolutely essential to the process and who was on the losing side headed off to Russia. Will someone PLEASE explain these clowns to me? Or better yet, explain to THEM that this thing is all about street creds and this is not the way to earn them.
I called a couple of old friends in Europe, one of who is still in the game as to their reaction. "Charlie," one said, "They have better to have a something for real on Monday's morning or this could be tot early" (Hans' losing battle with the English language continues). Jane agreed. "They have promised to produce, so they must." With their outlook, I fully agree, but this thing has been so bizarre up to this point, who knows. Anyway, there is one thing about which we can be thankful. Given the manner in which the Germans have cocked this up, can you imagine how they would have managed the peace had they won?
We await Monday's open
Thursday, March 25, 2010
OEDIPUS REX
Look guys, it's not like somebody married their mother. The Greeks did what the Greeks do, they lied about their finances and you guys did would you guys do, winked and nodded at what the Greeks did all the while knowing that at some point everybody was going to get caught in this little charade and now is that point so let's get on with it and them then refinance already. Besides, you are making me look REALLY bad and wrong and I'm about to get REALLY pissed off. If that isn't bad enough now the Fro...er...French have started a cat fight of their own between He With the Hottest First Lady inTown (M. Le President), his #1 political rival who just happens to be the President of the IMF and the Head of the European Central Bank who used to be the Finance Minister of La Belle Republique. Under normal circumstances this would be a kick and a half but as I said, it's making me look bad.
I really thought this thing would be settled by now but with the adamant stand of Ms Merkel as to German support and her apparent requirement that the IMF get involved causing M. Sarkozy to damn near rupture himself and M. Trichet to lament over the fact that the EU should not need to involve the IMF (there's is no love for M. Strauss-Kahn here either) the mood is not sanguine. Fitch downgraded Portugal yesterday and continues to warn on Greece, the Euro continued to tank today (oh, those German exporters!) Ms. Merkel added to the fray in with language reminding one of the 1918 reparations (these guys just don't seem to forget) and the Spanish are getting very antsy as eyes are being turned towards them. Later in the day there was a talk about a joint effort, supplying funds at "the average of EU borrowing costs" which would involve the IMF. One is tempted to ask if that cost would be weighted in some way as to individual borrowers but that would probably be not constructive at this stage. We shall continue to wait and observe.
Meanwhile, on the other side of the world, the Chinese told the Congress to go suck on a rock as to the alignment of the Yuan. Predictable as we mentioned here yesterday. As relaxed as I was about the Greek drama...and perhaps as wrong as I could be...I remain very concerned as to how this situation could play itself out. I wouldn't mind being wrong here but with state of American politics in this, an important election year, the lack of understanding of Chinese politics and China in general on the part of the major players coupled with the important political issues internal to China as well as the ever-present issue of "face" when dealing in this part of the world, things could go REALLY south. I hope the administration has the ability to get hold of this quickly. Again, we shall wait and observe.
Sweet sixteen tonight. I hate Ky..
I really thought this thing would be settled by now but with the adamant stand of Ms Merkel as to German support and her apparent requirement that the IMF get involved causing M. Sarkozy to damn near rupture himself and M. Trichet to lament over the fact that the EU should not need to involve the IMF (there's is no love for M. Strauss-Kahn here either) the mood is not sanguine. Fitch downgraded Portugal yesterday and continues to warn on Greece, the Euro continued to tank today (oh, those German exporters!) Ms. Merkel added to the fray in with language reminding one of the 1918 reparations (these guys just don't seem to forget) and the Spanish are getting very antsy as eyes are being turned towards them. Later in the day there was a talk about a joint effort, supplying funds at "the average of EU borrowing costs" which would involve the IMF. One is tempted to ask if that cost would be weighted in some way as to individual borrowers but that would probably be not constructive at this stage. We shall continue to wait and observe.
Meanwhile, on the other side of the world, the Chinese told the Congress to go suck on a rock as to the alignment of the Yuan. Predictable as we mentioned here yesterday. As relaxed as I was about the Greek drama...and perhaps as wrong as I could be...I remain very concerned as to how this situation could play itself out. I wouldn't mind being wrong here but with state of American politics in this, an important election year, the lack of understanding of Chinese politics and China in general on the part of the major players coupled with the important political issues internal to China as well as the ever-present issue of "face" when dealing in this part of the world, things could go REALLY south. I hope the administration has the ability to get hold of this quickly. Again, we shall wait and observe.
Sweet sixteen tonight. I hate Ky..
Subscribe to:
Posts (Atom)