We survived. I would rather pay Greece's bills than feed and care for that mob for a year. But they're wonderful kids and a joy to have around.
Speaking of Greece, the IMF simply can't keep its mouth shut. Today, somehow, their confidential report got "leaked" which suggests that for anything to work, payment obligations will have to be extended for at least 30 years and a healthy dollop of forgiveness slathered around on top. Now they are probably right in general but this doesn't make life easier for anyone. It has been gospel seemingly forever that for any debt arrangement to be finalized, the IMF must be involved as a monitoring factor of the debtor's performance if for no other reason. In this situation, Germany has made it a condition of the finalization of any agreement. So, riddle me this one Batman; if the IMF is screaming "debt forgiveness and maturity extension" whilst Germany is dead set against either, how does this get off square one? The other beaut of a spanner in these works is the suggestion openly being made that the U.S., upset at its rebuff in the negotiations, was the force behind the leak. The Duce's gang is not real bright but they can't be that stupid. Then again, it would fit in with the history of petulance always on display over the past few years so the suggestion is bound to find some traction. If there is anything to it, look out.
The good thing is that the entire affair once again gives support to the issue as to why we need the IMF at all which has been a point of mine for quite some time as loyal readers know. For certain, Chrissy is not involved in this ploy, she is far too bright, which means she is clearly being sandbagged. Now in the real world, the sandbagger would be identified and be out the door in a New York minute, but things don't work that way at the Fund. So, in the midst of a situation that could end the organization of Europe as we know it, we find the Fund, a pain in the bum under the best of conditions, suffering from internal revolt which massively complicates everything. Let's just chew on that one for a day or so and see what tomorrow brings in response to poor ol' Tsipras' report to the Parliament and his party which is taking place as we write. I'd rather fight the 8 year old Army from Central Illinois than face that.
Oh, in case you missed it, all 28 are over in Brussels trying to figure out who does what to whom. The Brits, always helpful, said not only "NO" to financial support, but "HELL, NO." Lovely, that.
Showing posts with label UK. Show all posts
Showing posts with label UK. Show all posts
Tuesday, July 14, 2015
Wednesday, May 28, 2014
IT COULD HAVE BEEN WORSE…COULDN'T IT?
The more I read of the goings-on of the weekend, the less I was sure. The EU, it appears, is very much at a cross-roads and there is no clear answer as to the route to be taken. What struck me in the result of these local and parliamentary elections across the continent was the sheer lack of conclusiveness in any result. Nowhere was there a vote for anything; everywhere the results were cast as a vote against something and despite local variances, that something was certainly the Union.
I asked my pal Gordon about Farage and his response was that he probably represents the views of 75% of the people in the UK which is always the sort of number that Gordon comes up with when agreeing with a position but this time the truism in the statement lies in the fact that when push comes to shove, no sane man can stand and say the UK stands with Europe. And if that cannot be said, then the Union is effectively finished with just the mopping up to be done and the face-saving to be continued. I suppose the Brits would hand in there is Brussels were to, in effect, disappear, tariffs lifted, etc. Amazingly, in the face all all that had just occurred the geniuses on the Commission just asked for another 3.5 billion Euros to run themselves with 500 million supposedly coming from the Brits. Stupidity such as this should be savored like a memorable meal or a fine wine but alas, it is just another step in a pattern of governing stupidity that rises no higher than an undercooked trotter. There is probably no room for another nail in that coffin an the left of the Channel.
And then there is France. Mme. Le Pen won nary a thing except about 22% of the popular vote and a bunch of seats in Brussels where her mob will be a complete pest, but what she did do was to shatter the socialist psyche to the point that it may not recover. Yes, Frankie will serve out, but he is an empty suit politically, leaving Germany and his gal Angie, in the position they so desperately wish to avoid; being out front with no different colored uniforms marching with them. Germany, for reasons that can be well-understood and magnified by the undeniably dominant position, does not like the images it creates. Worse yet, the first thing Mrs. Pen let drop was that if she were President, the Franc would be back! Oops. Now of course what everybody is babbling about over here is that her party is anti-Semitic and what an awful thing that it (it is), completely forgetting that France has probably been the most anti-Semitic country in the history of Europe and with an 8.5% Muslim population things probably aren't going to get much better, but it is not that that could sound the death knell for Europe. She wants out of the monetary union and recognizes that is France AND England leave, Finis, as they used to say at the end of the "art" movies into which we used to sneak.
Within the strictures of the Euro, it is nearly impossible for any country to spend its way out of the depression which continues to linger over western Europe and while it pains me to say it, Little Paulie Krugman who's Over There as we write and babbling on about this is correct. Of course Paulie, mesmerized by Europe's soft socialism can't think of anything else nor can Mme. Le Pen who has lived under it for too long. Not good.
With the exception of the Netherlands, it was a right to center right philosophy that swept across norther Europe but not so as we move south. And yet, many of the complaints were the same, as were many of the shouted proposed solutions. Curiously, there was no one wave of ideology but a concerted belief that what was in place didn't work. I'd like to take tomorrow to explore the Southern Tier as to the ideologies seemingly in place in that region and then try to tie everything up in a nice bow atop a box of bold predictions. Why not? Everybody else is.
I asked my pal Gordon about Farage and his response was that he probably represents the views of 75% of the people in the UK which is always the sort of number that Gordon comes up with when agreeing with a position but this time the truism in the statement lies in the fact that when push comes to shove, no sane man can stand and say the UK stands with Europe. And if that cannot be said, then the Union is effectively finished with just the mopping up to be done and the face-saving to be continued. I suppose the Brits would hand in there is Brussels were to, in effect, disappear, tariffs lifted, etc. Amazingly, in the face all all that had just occurred the geniuses on the Commission just asked for another 3.5 billion Euros to run themselves with 500 million supposedly coming from the Brits. Stupidity such as this should be savored like a memorable meal or a fine wine but alas, it is just another step in a pattern of governing stupidity that rises no higher than an undercooked trotter. There is probably no room for another nail in that coffin an the left of the Channel.
And then there is France. Mme. Le Pen won nary a thing except about 22% of the popular vote and a bunch of seats in Brussels where her mob will be a complete pest, but what she did do was to shatter the socialist psyche to the point that it may not recover. Yes, Frankie will serve out, but he is an empty suit politically, leaving Germany and his gal Angie, in the position they so desperately wish to avoid; being out front with no different colored uniforms marching with them. Germany, for reasons that can be well-understood and magnified by the undeniably dominant position, does not like the images it creates. Worse yet, the first thing Mrs. Pen let drop was that if she were President, the Franc would be back! Oops. Now of course what everybody is babbling about over here is that her party is anti-Semitic and what an awful thing that it (it is), completely forgetting that France has probably been the most anti-Semitic country in the history of Europe and with an 8.5% Muslim population things probably aren't going to get much better, but it is not that that could sound the death knell for Europe. She wants out of the monetary union and recognizes that is France AND England leave, Finis, as they used to say at the end of the "art" movies into which we used to sneak.
Within the strictures of the Euro, it is nearly impossible for any country to spend its way out of the depression which continues to linger over western Europe and while it pains me to say it, Little Paulie Krugman who's Over There as we write and babbling on about this is correct. Of course Paulie, mesmerized by Europe's soft socialism can't think of anything else nor can Mme. Le Pen who has lived under it for too long. Not good.
With the exception of the Netherlands, it was a right to center right philosophy that swept across norther Europe but not so as we move south. And yet, many of the complaints were the same, as were many of the shouted proposed solutions. Curiously, there was no one wave of ideology but a concerted belief that what was in place didn't work. I'd like to take tomorrow to explore the Southern Tier as to the ideologies seemingly in place in that region and then try to tie everything up in a nice bow atop a box of bold predictions. Why not? Everybody else is.
Tuesday, February 18, 2014
THE BIG MELTDOWN
No, not the markets. It got to 43 F. today with sunny skies and you can't believe the amount of water that is sloshing around, so the next thing you will probably be hearing about is flooding in the fly-over zone. I can deal with warm.
It being a swamp out there I sat in today and did a bit of reading and thinking. I usually watch CNBC in the morning and one of the old timers that has been featured just about from the git-go is the floor manager for UBS, Art Cashin. Art has been around the market since you-know-who was a corporal and has reached the status and age in life when he can say pretty much anything he wishes. This morning was kind of a fun discussion rambling about credit, stimulus spending and tapering. One of the gorgeous young things which CNBC seems to attract in abundance had this exchange:
GYT: "Art, why do you thing the Fed is signaling that the taper is going to continue?"
ART: "Because it (the bond buying) doesn't work."
Well, that caused me to spill my Corn Flakes. Now I've been saying that for three years but I'm not Art Cashin. The other difference is I believed that the taper wasn't a 2014 event. I was pretty sure that in an election year, with all the intellectual investment that went into the bond buying program, it would be impossible for Yellen to essentially admit what Art figured out (and me) that it doesn't work. I learned a lesson: when a fact is so clearly evident it will be recognized as being such despite all the emotion and reputation that may be involved it declaring it not to be the case. If Cashin can say that out loud on CNBC, the taper is for real and why then certainly I was wrong. I'll try to learn from this. Oh, in case you missed it, a couple of days ago was the 5th anniversary of the Great Stimulus of 2009. That didn't work either.
Of course, one questions one's self when this occurs. Right now I'm asking myself why is the Euro trading like all is well Over There, the Pound is going through the roof with seeming no effect from the Loony Tunes up in the land of THE PEOPLE who are determined to follow the specter of Robert the Bruce right over the cliff and the Japanese who having witnessed the waste of a stimulus and print money schemes, are prepared to double down on all the stuff they have tried without success. My new found wisdom tells me that before I announce the answers to all these questions I damn well better have the answers myself. Right now I don't. It's also caused me to thing again about my comments about Chinese bubbles but I still think I have that one right. In the mean time, there is Italian politics, a cause of constant amusement…and no little concern…with Massimo somewhere in the flesh pots of Europe with his skis (and who know what else) AWOL when needed the most. We're working on that one.
One interesting little note was that the Troika is returning to Greece to discover what everyone knows, that the Greeks need a bundle to stay out of default and to figure out I suppose what new piece of legerdemain will be needed to get past this latest mess. The Greeks of course are quite convinced the current account surplus they've recently rung up is proof positive of they're sound condition setting aside for the moment that the surplus is a couple of million Euros and that they owe about a gazillion. It's going to be fun to watch but I've learned my lesson: I am not going to pre-judge it. Yeah, right.
It being a swamp out there I sat in today and did a bit of reading and thinking. I usually watch CNBC in the morning and one of the old timers that has been featured just about from the git-go is the floor manager for UBS, Art Cashin. Art has been around the market since you-know-who was a corporal and has reached the status and age in life when he can say pretty much anything he wishes. This morning was kind of a fun discussion rambling about credit, stimulus spending and tapering. One of the gorgeous young things which CNBC seems to attract in abundance had this exchange:
GYT: "Art, why do you thing the Fed is signaling that the taper is going to continue?"
ART: "Because it (the bond buying) doesn't work."
Well, that caused me to spill my Corn Flakes. Now I've been saying that for three years but I'm not Art Cashin. The other difference is I believed that the taper wasn't a 2014 event. I was pretty sure that in an election year, with all the intellectual investment that went into the bond buying program, it would be impossible for Yellen to essentially admit what Art figured out (and me) that it doesn't work. I learned a lesson: when a fact is so clearly evident it will be recognized as being such despite all the emotion and reputation that may be involved it declaring it not to be the case. If Cashin can say that out loud on CNBC, the taper is for real and why then certainly I was wrong. I'll try to learn from this. Oh, in case you missed it, a couple of days ago was the 5th anniversary of the Great Stimulus of 2009. That didn't work either.
Of course, one questions one's self when this occurs. Right now I'm asking myself why is the Euro trading like all is well Over There, the Pound is going through the roof with seeming no effect from the Loony Tunes up in the land of THE PEOPLE who are determined to follow the specter of Robert the Bruce right over the cliff and the Japanese who having witnessed the waste of a stimulus and print money schemes, are prepared to double down on all the stuff they have tried without success. My new found wisdom tells me that before I announce the answers to all these questions I damn well better have the answers myself. Right now I don't. It's also caused me to thing again about my comments about Chinese bubbles but I still think I have that one right. In the mean time, there is Italian politics, a cause of constant amusement…and no little concern…with Massimo somewhere in the flesh pots of Europe with his skis (and who know what else) AWOL when needed the most. We're working on that one.
One interesting little note was that the Troika is returning to Greece to discover what everyone knows, that the Greeks need a bundle to stay out of default and to figure out I suppose what new piece of legerdemain will be needed to get past this latest mess. The Greeks of course are quite convinced the current account surplus they've recently rung up is proof positive of they're sound condition setting aside for the moment that the surplus is a couple of million Euros and that they owe about a gazillion. It's going to be fun to watch but I've learned my lesson: I am not going to pre-judge it. Yeah, right.
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.
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.
Tuesday, January 29, 2013
BEFUDDLED AND BEWILDERED
Something called the Court for the European Free Trade Association ("EFTA"), headquartered in Luxembourg, sent down a ruling yesterday about which I can make neither hide nor hair and which has the capacity to cause a serious amount of confusion and difficulty for the Euros as they struggle to form a more perfect union--particularly in the financial sector.
You might remember...after all who could forget...that in 2008, the entire banking sector in Iceland ceased to exist which was the first chapter in the decline and collapse of Euroland which quickly followed. In the midst of the carnage there was a bank named Landsbanki (sounds like something out of Gulliver's Travels) that had a subsidiary named Icesave whose purpose in life seemed to be attracting deposits through offices in the UK and the Netherlands by paying above market interest rates which, by the by, is never a good sign. And so it came to pass that every bank in Iceland went bust, there were massive restructurings, depositors of Icesave had their deposits transferred to a newly formed bank and...oh wait a minute I left something out. Only the deposits of Icelander were transferred; the deposits of the Brits and the Dutch weren't. They were out to dry and on two separate occasions a referendum in Iceland prohibited the government from paying out the foreign depositors.
As you might imagine this did not go down well with the UK and Dutch governments who promptly grabbed everything they had of the parent and the subsidiary and paid out their citizens in full using those funds in addition to a substantial amount of taxpayer's money to do so. Law suits sprang up like tulips in the spring and then came the decision of yesterday.
Despite the fact that the EFTA rule required that all depositors be given parri passu treatment (see where I'm going with this), the court decided that given the systemic nature nature of the crisis and taking into account that Iceland is a small nation, Iceland need not be forced to make immediate restitution and could deny rights granted to their own citizens to another class of depositors. The legal basis? I guess it must be "it pays to be small" because there's nothing else around to justify this.
New agreements within the EU have made it clear that deposits of member state banks are now guaranteed up to 100,000 Euros by the member state in whom the deposit-taking institution is registered but one really must ask how good or enforceable is this codification if a bunch of good souls sitting in Luxembourg can decide that it's just not fair that poor little Iceland (or Luxembourg) be treated in this manner. Or to put it another way, who the hell would be dumb enough to place deposits cross-border which, in case you missed it, plays hell with the concept of no borders which the latest mob running the EU is trying to make reality, and does very little to help convince the Brits for whom finance is their lifeblood that they really want to be in this thing whole-hog.
As for me who toiled mightily in law school in the last century convinced that we should be a government of laws, not men, has to wonder if this "It makes me feel good" practice of jurisprudence might extend to the action against our friends the Argentines which is scheduled to be argued in front of the 2nd. Circuit in a few weeks. Look, we either have laws or we don't. We either have contracts that are enforced or we don't. I'm all in favor of people paying the consequence for stupid decisions but when you play by what everyone believes the rules to be and are forced into losses because of mere whim, then we venture in uncharted waters which are perilous for all. To it's credit, Iceland has always said that they intend to repay all deposits owed and continue to do so even having been given this gift, but the dead-beat Argentines will honor no such obligation having no honor whatsoever. They should not be rewarded by some made-up rule of law. The obligations of both nations were there for all to see and openly agreed. Enforce them.
You might remember...after all who could forget...that in 2008, the entire banking sector in Iceland ceased to exist which was the first chapter in the decline and collapse of Euroland which quickly followed. In the midst of the carnage there was a bank named Landsbanki (sounds like something out of Gulliver's Travels) that had a subsidiary named Icesave whose purpose in life seemed to be attracting deposits through offices in the UK and the Netherlands by paying above market interest rates which, by the by, is never a good sign. And so it came to pass that every bank in Iceland went bust, there were massive restructurings, depositors of Icesave had their deposits transferred to a newly formed bank and...oh wait a minute I left something out. Only the deposits of Icelander were transferred; the deposits of the Brits and the Dutch weren't. They were out to dry and on two separate occasions a referendum in Iceland prohibited the government from paying out the foreign depositors.
As you might imagine this did not go down well with the UK and Dutch governments who promptly grabbed everything they had of the parent and the subsidiary and paid out their citizens in full using those funds in addition to a substantial amount of taxpayer's money to do so. Law suits sprang up like tulips in the spring and then came the decision of yesterday.
Despite the fact that the EFTA rule required that all depositors be given parri passu treatment (see where I'm going with this), the court decided that given the systemic nature nature of the crisis and taking into account that Iceland is a small nation, Iceland need not be forced to make immediate restitution and could deny rights granted to their own citizens to another class of depositors. The legal basis? I guess it must be "it pays to be small" because there's nothing else around to justify this.
New agreements within the EU have made it clear that deposits of member state banks are now guaranteed up to 100,000 Euros by the member state in whom the deposit-taking institution is registered but one really must ask how good or enforceable is this codification if a bunch of good souls sitting in Luxembourg can decide that it's just not fair that poor little Iceland (or Luxembourg) be treated in this manner. Or to put it another way, who the hell would be dumb enough to place deposits cross-border which, in case you missed it, plays hell with the concept of no borders which the latest mob running the EU is trying to make reality, and does very little to help convince the Brits for whom finance is their lifeblood that they really want to be in this thing whole-hog.
As for me who toiled mightily in law school in the last century convinced that we should be a government of laws, not men, has to wonder if this "It makes me feel good" practice of jurisprudence might extend to the action against our friends the Argentines which is scheduled to be argued in front of the 2nd. Circuit in a few weeks. Look, we either have laws or we don't. We either have contracts that are enforced or we don't. I'm all in favor of people paying the consequence for stupid decisions but when you play by what everyone believes the rules to be and are forced into losses because of mere whim, then we venture in uncharted waters which are perilous for all. To it's credit, Iceland has always said that they intend to repay all deposits owed and continue to do so even having been given this gift, but the dead-beat Argentines will honor no such obligation having no honor whatsoever. They should not be rewarded by some made-up rule of law. The obligations of both nations were there for all to see and openly agreed. Enforce them.
Thursday, January 10, 2013
A YEAR OF LIVING DANGEROUSLY
Welcome back. Sorry I am a bit delayed in getting started again, but by this time I'm sure you realize that I'm not the most on-time guy you ever met--especially when the grand kids are in the middle. They win every time which we didn't on January 7. In fact it was worse than being a Republican in Washington which we will get to in a minute, but first, over there.
It's still Christmas but slowly, things are coming back to life with the realization that the three big events which will shape the EU this year will be the elections in Italy and Germany and the referendum in the UK as to its future membership. As I had mentioned, I had overlooked the the UK for much of last year but it is now impossible to do so. We are heading over in a month's time (a shaky date contingent on a number of things at which point I will have a better perspective) but right now, with a certain dependency on the manner in which the question is put, one should expect the UK to leave the EU despite the now somewhat screeching implorings of The Leader and his administration. The effect would be a sea-change and important to the readers of this ongoing plot because of the effect this would have on finance and banking world-wide. Sadly, I am forced to admit at this time that I am clueless, but given that London is, and will probably remain, the center for international finance no longer in coalition with the Euros, any end-game one could dream up might well wind up as the state of play. Near term, I suspect things will remain quite for a bit: now, quiet doesn't mean better--it just means...well...quiet as witnessed by Spain's 10 year auction today which went well by any standard although one should keep in mind that it was revealed about a week ago that Spain has picked the pockets of it's government pension funds to purchase it own debt. My word, the place is looking more and more like Illinois every day. Segue to over here.
The Leader is heady with power and prepared to pick a fight on just about anything following his victory in the first battle of the Great Tax War. Now one battle does not a campaign make and the foreboding specter of the debt ceiling looms before us, but it is clear that the man is in no mood to compromise and therefore it remains to be seen just how much fight is left in the Republicans in the House before a total victory can be declared. In the mean time, the new generals are being put forward, most notably Jacob Lew as the replacement for The Suit, a notorious gutter fighter as opposed to more amiable candidates such as Billy the Dud from the NY Fed and The Bair With Very Little Brain who was dying for the job.
While all of this was going on, insanity began to creep out into the open regarding what the administration might do to avoid a fight altogether.
There are two beauties out there. One is the striking of the One Trillion Dollar Platinum Coin to be deposited with the Fed By Treasury thereby by-passing Congress and providing all the funding The Leader needs...provided we don't run out of Platinum. The other is the tried and true issuance of script in lieu of currency with which we paid our maturing debts just like California did a few years ago. "Hey, no problem! As soon as we get over this little hurdle we'll redeem all that's out there but in the mean time, you can use the stuff or sell it to our banks who we will instruct to purchase the same. After all, the buggers have been hoarding TRILLIONS!"
What seems to have been overlooked by the geniuses behind this idea is the fact that we don't have to merely refinance a trillion or eight this year but it appears that we are in need of almost $1.5 TRILLION OF NEW MONEY! Let's have a contest: how many of you think the amount available, outside of direct purchases by the Fed, will exceed $.50? Love to hear from you.
Finally, after a couple of years, the first set of regs were released by the Consumer Protection Agency, you know, that piece of insanity created by Lizzy Warren, now junior Senator from Mass. Joy at the wisdom of the thing. It seems that if the banks play by the rules which include a repayment formula of no more than a requirement of 46% income to debt, the banks will granted "safe harbor" status whilst having been placed into a position where they can no longer make "sub-prime" mortgage loans unless they are Fanny and Freddie qualified. Absolute genius screamed the Times and those of it's ilk. Funny, I have always been of the view that the only really new idea that has come around in a while was the Sermon on the Mount. Everything else is simply a variation on a theme. This reg is no different, only in my time it was called "Red Lining;" I guess what side of the fence you are on makes a difference. Wonder what Rev. Jackson thinks?
It's still Christmas but slowly, things are coming back to life with the realization that the three big events which will shape the EU this year will be the elections in Italy and Germany and the referendum in the UK as to its future membership. As I had mentioned, I had overlooked the the UK for much of last year but it is now impossible to do so. We are heading over in a month's time (a shaky date contingent on a number of things at which point I will have a better perspective) but right now, with a certain dependency on the manner in which the question is put, one should expect the UK to leave the EU despite the now somewhat screeching implorings of The Leader and his administration. The effect would be a sea-change and important to the readers of this ongoing plot because of the effect this would have on finance and banking world-wide. Sadly, I am forced to admit at this time that I am clueless, but given that London is, and will probably remain, the center for international finance no longer in coalition with the Euros, any end-game one could dream up might well wind up as the state of play. Near term, I suspect things will remain quite for a bit: now, quiet doesn't mean better--it just means...well...quiet as witnessed by Spain's 10 year auction today which went well by any standard although one should keep in mind that it was revealed about a week ago that Spain has picked the pockets of it's government pension funds to purchase it own debt. My word, the place is looking more and more like Illinois every day. Segue to over here.
The Leader is heady with power and prepared to pick a fight on just about anything following his victory in the first battle of the Great Tax War. Now one battle does not a campaign make and the foreboding specter of the debt ceiling looms before us, but it is clear that the man is in no mood to compromise and therefore it remains to be seen just how much fight is left in the Republicans in the House before a total victory can be declared. In the mean time, the new generals are being put forward, most notably Jacob Lew as the replacement for The Suit, a notorious gutter fighter as opposed to more amiable candidates such as Billy the Dud from the NY Fed and The Bair With Very Little Brain who was dying for the job.
While all of this was going on, insanity began to creep out into the open regarding what the administration might do to avoid a fight altogether.
There are two beauties out there. One is the striking of the One Trillion Dollar Platinum Coin to be deposited with the Fed By Treasury thereby by-passing Congress and providing all the funding The Leader needs...provided we don't run out of Platinum. The other is the tried and true issuance of script in lieu of currency with which we paid our maturing debts just like California did a few years ago. "Hey, no problem! As soon as we get over this little hurdle we'll redeem all that's out there but in the mean time, you can use the stuff or sell it to our banks who we will instruct to purchase the same. After all, the buggers have been hoarding TRILLIONS!"
What seems to have been overlooked by the geniuses behind this idea is the fact that we don't have to merely refinance a trillion or eight this year but it appears that we are in need of almost $1.5 TRILLION OF NEW MONEY! Let's have a contest: how many of you think the amount available, outside of direct purchases by the Fed, will exceed $.50? Love to hear from you.
Finally, after a couple of years, the first set of regs were released by the Consumer Protection Agency, you know, that piece of insanity created by Lizzy Warren, now junior Senator from Mass. Joy at the wisdom of the thing. It seems that if the banks play by the rules which include a repayment formula of no more than a requirement of 46% income to debt, the banks will granted "safe harbor" status whilst having been placed into a position where they can no longer make "sub-prime" mortgage loans unless they are Fanny and Freddie qualified. Absolute genius screamed the Times and those of it's ilk. Funny, I have always been of the view that the only really new idea that has come around in a while was the Sermon on the Mount. Everything else is simply a variation on a theme. This reg is no different, only in my time it was called "Red Lining;" I guess what side of the fence you are on makes a difference. Wonder what Rev. Jackson thinks?
Thursday, December 20, 2012
WINDING DOWN
This will be the penultimate post before the new year unless something really important happens--a highly subjective phrase--at which point I'll try to make some sense of what has occurred.
In the mean time, I'll be thinking about something to which I haven't given much credence and therefore attention; are the Brits--or to put it another way--Mr Cameron really serious about leaving the EU in short order. This is a story that has really flown under the radar except in the UK and yet from the standpoint of the EU it is far, far more important than what happens to Greece on whom so much time and treasure has been wasted. This is the real Europe we are talking about not some Aegean side-show and today Mr. Cameron made it very clear that nothing is off the table.
I wish There was something to discuss regarding the financial state of my country but there isn't other than to say that it stinks. What is becoming more and more obvious is there is to be no grand bargain along the lines of The Leader's ill-fated debt commission or anything else for that matter. There will be patchwork fixes throughout the year leading to who knows what. The administration, in intellectual lockstep with their guy Krugman, are convinced that the deficit can be financed forever and the Reps have, it seems, convinced themselves that they can do nothing. Maybe they are both right and we have found the new paradine where the old rules simply don't matter if you own the printing press. The French, throughout the years have complained about that and perhaps they are correct. Then again, the world ends tomorrow so do we care? See you on the other side.
In the mean time, I'll be thinking about something to which I haven't given much credence and therefore attention; are the Brits--or to put it another way--Mr Cameron really serious about leaving the EU in short order. This is a story that has really flown under the radar except in the UK and yet from the standpoint of the EU it is far, far more important than what happens to Greece on whom so much time and treasure has been wasted. This is the real Europe we are talking about not some Aegean side-show and today Mr. Cameron made it very clear that nothing is off the table.
I wish There was something to discuss regarding the financial state of my country but there isn't other than to say that it stinks. What is becoming more and more obvious is there is to be no grand bargain along the lines of The Leader's ill-fated debt commission or anything else for that matter. There will be patchwork fixes throughout the year leading to who knows what. The administration, in intellectual lockstep with their guy Krugman, are convinced that the deficit can be financed forever and the Reps have, it seems, convinced themselves that they can do nothing. Maybe they are both right and we have found the new paradine where the old rules simply don't matter if you own the printing press. The French, throughout the years have complained about that and perhaps they are correct. Then again, the world ends tomorrow so do we care? See you on the other side.
Thursday, November 15, 2012
ANYONE WITH A BRAIN, PLEASE STAND.
This really happened today. Down in Atlanta, Bernanke was speaking to some bunch called Operation Hope which is organized to get more folks into home ownership, you know, that old "American Dream" stuff that starts and ends at home ownership leaving out most of that fuzzy affordability stuff in the middle. Seems as though Ben is upset at the banks claiming that they have raised their standards so high that it difficult for prospective home owners to get a mortgage and hence, no fulfillment of the dream for you today my friend. Now the sight of a regulator telling those whom he regulates to lower their standards is pretty rare...like never seen before. We've seen Congress do it with predictable results but Congress is composed of politicians who are, by definition, craven and stupid. Regulators have allowed it to occur being fradie-scared at what the politicians might say about them but have never really publicised the fact. Then here comes Ben, and while Ben is down in Atlanta trying to pry open the hearts and wallets of the bankers, his guys up in D.C. announce that they have told the 30 largest banks to get ready for another stress test with part of this one assuming a 12% unemployment rate. 12% Say WHAT? You want me to have capital for a 12% unemployment economy? Well, hell, I don't need a stress test for that. I'LL JUST GO ALL CASH AND NOT LEND A DIME TO ANYONE YOU MORON! HOW DOES 100% CAPITAL SOUND TO YOU?
Things aren't much better Over There. Europe officially went double-dip today with riots in Athens and Madrid along with a few other little dust-up in other financial garden spots. The German special finance minister to Greece managed to state in public that it takes 3000 Greeks to do the work of 1000 Germans which nearly got him killed by a mob whilst walking from one building to the next, irrespective of the probable accuracy of his assertion. Spain was told to hurry up with their bail-out demands before it's too late for the EU to do anything about them and Angie and Chrissie threw hissy-fits at each other as to whether Greek debt held by EU members should be forgiven. And while all this was going on, the British Press got ahold of a secret EU report that purportedly would reduce the payments from Brussels to the UK by 25% over the next seven years at a time when the Brits are half out the door already.
Honest to God you can't make this stuff up.
Anyway I called Massimo about his morning shocker of the other day.
"OK, the Greek banks take down the issue, go to the the Central bank who buys it from them and ships them right off to the ECB in Frankfurt. Right?"
"Bravo, Charlie, ma you leave out one little thing."
"What?"
"The vigor...viga...vichett.."
"The vigorous? What the hell are you talking about?"
"Si, the vig...that's it!"
"WHAT?!"
"Oh Charlie, tu es proprio Americano. In between, everybody takes a little...well...not so little piece. Wonderful business, no?"
"You mean they discount it every time?"
"Sure Charlie, who knows?"
I'm telling you, you can't make this stuff up.
Things aren't much better Over There. Europe officially went double-dip today with riots in Athens and Madrid along with a few other little dust-up in other financial garden spots. The German special finance minister to Greece managed to state in public that it takes 3000 Greeks to do the work of 1000 Germans which nearly got him killed by a mob whilst walking from one building to the next, irrespective of the probable accuracy of his assertion. Spain was told to hurry up with their bail-out demands before it's too late for the EU to do anything about them and Angie and Chrissie threw hissy-fits at each other as to whether Greek debt held by EU members should be forgiven. And while all this was going on, the British Press got ahold of a secret EU report that purportedly would reduce the payments from Brussels to the UK by 25% over the next seven years at a time when the Brits are half out the door already.
Honest to God you can't make this stuff up.
Anyway I called Massimo about his morning shocker of the other day.
"OK, the Greek banks take down the issue, go to the the Central bank who buys it from them and ships them right off to the ECB in Frankfurt. Right?"
"Bravo, Charlie, ma you leave out one little thing."
"What?"
"The vigor...viga...vichett.."
"The vigorous? What the hell are you talking about?"
"Si, the vig...that's it!"
"WHAT?!"
"Oh Charlie, tu es proprio Americano. In between, everybody takes a little...well...not so little piece. Wonderful business, no?"
"You mean they discount it every time?"
"Sure Charlie, who knows?"
I'm telling you, you can't make this stuff up.
Tuesday, October 23, 2012
AN UNFORTUNATE FEELING CONFIRMED
For a few weeks now I've been saying I don't like what I see and feel about this market. I'm afraid yesterday's and today's performances have confirmed my fears. Today was a truly lousy day with neither Euroland, Over Here or any place else in the world providing even a sliver of good economic news as an off-set.
Corporate earnings were stinko which seemed to take a lot of people by surprise which for the life of me I can't understand as the evidence of declining economic conditions were evident for some time and are now coupled with the impending presidential election which at this point is, at least in the minds of the professionals who monitor these things, too close to call. Sovereign wise, the Greek talks have gone badly with no agreement on the conditions under which new bail-out funds would be provided and just when it looked like things in Spain were looking up, here comes Moody's this morning with a down-grade of 5 Spanish states which was rattling to Euroland to say the least.
Which brings me to another of those little conundrums that trouble me so much. Why downgrade the states? They don't have any money. Anyone except those resident in a nut house knows that the credit of these entities is entirely dependent on the central government. Too scary-'fraid to downgrade Spain? Then do us all a favor and get the hell out of the business! We would all be so much better off without you mucking about. Throw the States' obligations into the same pot containing those of the central government and you have a pile of liabilities That may just be too much to finance given the fact that the only source of financing are the Spanish banks operating under the Draghi put, and so without so much as breaking a sweat, here we are back to where we started before everyone began having visions of sugar plums which is not at all a good place to be. Problem is, having more or less convinced themselves that they had some breathing space, the leaders began speaking of things like universal bank supervision, transaction taxes and the like and stopped focusing on the immediate problems at hand. Then of course has been the Frankie and Angie little back and forth's of which there has been a good deal written but also as a result of this somewhat fanciful dialog has been developing one of the most significant issues to face the EU since it's founding---the status of the United Kingdom. Is the UK in or out and if still in, for how long? I've been thinking about this for some time and will continue to do so before writing on it, but may I suggest you think about it as well? This mess is moving rapidly to a very bad place and I'm not sure that even if there is the understanding whether there is the political will to remedy the situation. I think that in the next few days the market will reveal to us just how tragic this drama could be. Watch and wait is the order of the day.
Corporate earnings were stinko which seemed to take a lot of people by surprise which for the life of me I can't understand as the evidence of declining economic conditions were evident for some time and are now coupled with the impending presidential election which at this point is, at least in the minds of the professionals who monitor these things, too close to call. Sovereign wise, the Greek talks have gone badly with no agreement on the conditions under which new bail-out funds would be provided and just when it looked like things in Spain were looking up, here comes Moody's this morning with a down-grade of 5 Spanish states which was rattling to Euroland to say the least.
Which brings me to another of those little conundrums that trouble me so much. Why downgrade the states? They don't have any money. Anyone except those resident in a nut house knows that the credit of these entities is entirely dependent on the central government. Too scary-'fraid to downgrade Spain? Then do us all a favor and get the hell out of the business! We would all be so much better off without you mucking about. Throw the States' obligations into the same pot containing those of the central government and you have a pile of liabilities That may just be too much to finance given the fact that the only source of financing are the Spanish banks operating under the Draghi put, and so without so much as breaking a sweat, here we are back to where we started before everyone began having visions of sugar plums which is not at all a good place to be. Problem is, having more or less convinced themselves that they had some breathing space, the leaders began speaking of things like universal bank supervision, transaction taxes and the like and stopped focusing on the immediate problems at hand. Then of course has been the Frankie and Angie little back and forth's of which there has been a good deal written but also as a result of this somewhat fanciful dialog has been developing one of the most significant issues to face the EU since it's founding---the status of the United Kingdom. Is the UK in or out and if still in, for how long? I've been thinking about this for some time and will continue to do so before writing on it, but may I suggest you think about it as well? This mess is moving rapidly to a very bad place and I'm not sure that even if there is the understanding whether there is the political will to remedy the situation. I think that in the next few days the market will reveal to us just how tragic this drama could be. Watch and wait is the order of the day.
Thursday, May 6, 2010
A TALE OF TWO CITIES
I said this was going to be a long one today, but it is not. It's going to be short and hopefully thought provoking. The two cities are Washington and Frankfurt, the time is the present and the issue is not the fall of French Royalty but perhaps of the European Union.
Back in 2008 Hank Paulson and Ben Bernanke, old DUSTOFF himself said, in effect, the American Financial system will not fail. Everybody believed them and the worldwide financial system did not fail. Today, Jean Claude Trichet said Greece would not default and every trader in Europe looked up from their stickey buns and said, "Bugger off." And therein is the difference. European liquidity dried up, dealers went home, the U.S stock market tanked in a nanosecond--not as a direct reaction to be sure--and the world is looking decidedly dicer today than at any time since 2008. The bailout of Greece will fail and the contagion will spread as the Europeans and their central bank have proven unable to deal with this crisis either in a timely or effective fashion. Money may enter Greece and if it does it will go straight out the door to the banks that hold the debt who will run like hell to get as far away from Greece as possible; Greece will be cut off from future flows, the amount of financing will in any case prove to be inadequate and what was deemed impossible will occur: an EU country will default. In the meantime, vultures are circling the obvious candidates and do not be surprised if the next headline involves the state of European banking or one or two individual banks who are faced with real difficulty.
The ramifications? All thoughts of the Euro as an alternative to the dollar will be, to understate it a bit, put on hold. The realization that this is not a political union but a gaggle of politicians will come to the fore. The chance of massive capital flight or repositioning of capital away from Europe is very real and the gap between Germany and the rest will widen to the point where it may be politically impossible to rationalize to the German people why the EU is good for them. This is a very, very awkward time gang and one in which this country is not in a position to play any sort of leadership role even if this mob in D.C. had a clue. One thing they should keep in mind, however: M. Trichet is powerless because he needs 16 politicians to agree with any of his pronouncements. The more "oversight" by pols over a supposedly independent central bank, the more paralysis one creates in times when action is required and needless to say (or perhaps not) the entrance of politicians is concurrent with the exit of credibility.
Looks like a hung parliament in Blighty. This is going to be a kick.
See you tomorrow
Back in 2008 Hank Paulson and Ben Bernanke, old DUSTOFF himself said, in effect, the American Financial system will not fail. Everybody believed them and the worldwide financial system did not fail. Today, Jean Claude Trichet said Greece would not default and every trader in Europe looked up from their stickey buns and said, "Bugger off." And therein is the difference. European liquidity dried up, dealers went home, the U.S stock market tanked in a nanosecond--not as a direct reaction to be sure--and the world is looking decidedly dicer today than at any time since 2008. The bailout of Greece will fail and the contagion will spread as the Europeans and their central bank have proven unable to deal with this crisis either in a timely or effective fashion. Money may enter Greece and if it does it will go straight out the door to the banks that hold the debt who will run like hell to get as far away from Greece as possible; Greece will be cut off from future flows, the amount of financing will in any case prove to be inadequate and what was deemed impossible will occur: an EU country will default. In the meantime, vultures are circling the obvious candidates and do not be surprised if the next headline involves the state of European banking or one or two individual banks who are faced with real difficulty.
The ramifications? All thoughts of the Euro as an alternative to the dollar will be, to understate it a bit, put on hold. The realization that this is not a political union but a gaggle of politicians will come to the fore. The chance of massive capital flight or repositioning of capital away from Europe is very real and the gap between Germany and the rest will widen to the point where it may be politically impossible to rationalize to the German people why the EU is good for them. This is a very, very awkward time gang and one in which this country is not in a position to play any sort of leadership role even if this mob in D.C. had a clue. One thing they should keep in mind, however: M. Trichet is powerless because he needs 16 politicians to agree with any of his pronouncements. The more "oversight" by pols over a supposedly independent central bank, the more paralysis one creates in times when action is required and needless to say (or perhaps not) the entrance of politicians is concurrent with the exit of credibility.
Looks like a hung parliament in Blighty. This is going to be a kick.
See you tomorrow
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.
Wednesday, March 25, 2009
NO GELT FOR GILT
Thought we might tie up a few loose ends in the thinking that we have
floated about over the past week.
Today, the most recent Gilt auction failed with few bids than needed
showing interest in the Bonds being offered. For those not familiar
with the term, a Gilt is the name for a Treasury bond issued by H.M
Treasury--the U.K. equivalent of a U.S. Treasury. From it we derive
the phrase "gilt-edged" meaning the best of the best.
Now whilst not unheard of, an auction failure is a very unusual thing
and not something that should be ignored. The out maturity was 40
years; a very long maturity for even a governmental issue. So I said
to myself, "Self, you may have gotten this one bang on as to why."
As opposed to just about every other nation in the Group of 20, and
quite a few others as well the Union of English Speaking Peoples--in
this case the U.S. and the U.K. have decided that the way out of this
nasty little patch in which we find ourselves is to spend every Pound
and Dollar that can be found or manufactured as quickly as possible by
the respective governments involved and if you can't raise the funds
through normal channels by selling bonds to the Great Unwashed, have
our Central Banks buy the damn things themselves. Somewhere, someone
got this foolish idea that a policy such as that might, somewhere
down he line result in a touch of inflationary pressure and that in
the period from now to 40 years out this just might affect the
purchasing power of a fixed rate debt instrument of that maturity. As
to the price in the midst of this thing if you own it, the trading
lads might advise you that you are long and very, very wrong.
Unfortunately, H.M. Treasury had the lads on today and got hammered.
Perhaps they had no choice but today's result does not auger well for
the next auction on this side of the pond, but of course Ben's Boys
stand ready to scoop up the excess if the long dated stuff doesn't
sell as confirmed on Monday by the Fed.
Which brings us back to our friends, the Chinese. I speculated that
they were becoming increasingly unhappy with the state of play and
were signaling that changes needed to be made while at the same time
reducing dramatically the maturity profile of their portfolio. Within
two days of that posting they floated the idea that perhaps what was
needed was either a brand new reserve currency or an alternative to
help out the dollar. SDR's were bandied about in an IMF setting.
Now, in the real world little is known about SDRs and none of it any
good, but even with that being the case I would have thought that no
rational person would if could be avoided, place any responsibility
with the IMF for anything greater than country profiles and almost
immediately the idea was dismissed throughout Europe and by
commentators in the U.S. Wrong again Charlie. I spokesman for Our
Hero, Tim announced today that there might be merit in a discussion on
the subject. One wonders whether this was the same guy that stuck in
the reference to currency manipulation in Our Hero's earlier foray
into Asian finances, our whether the D.C. gang was merely buying time
to try to figure out how to address the question more fully--having
nothing else much better to do. Of course with this mob there's
always the chance that it just might be another mistake, but it did
engender a call from Europe today asking me if, "You chaps have cone
stark raving mad?" (he was a Brit). I demurred.
Anyway, it seems to me that the place to be in a couple of weeks time
is at the G20 meeting in Praha. I sincerely hope that our side has
it's act together and doesn't try to turn this thing into a discussion
on greater governmental intervention and oversight in the financial
world for I suspect the Euros are going to have none of it. Which
means that Our Hero and his boss had best get their act together. The
Boss was a long way from having it together at his presser last
night. The specter of U.S/U.K. provoked inflation is not a welcome
sight to these folks who don't care much for us for starters. But I
guess The Boss will be ready for he is a really smart guy...or so they
tell me.
floated about over the past week.
Today, the most recent Gilt auction failed with few bids than needed
showing interest in the Bonds being offered. For those not familiar
with the term, a Gilt is the name for a Treasury bond issued by H.M
Treasury--the U.K. equivalent of a U.S. Treasury. From it we derive
the phrase "gilt-edged" meaning the best of the best.
Now whilst not unheard of, an auction failure is a very unusual thing
and not something that should be ignored. The out maturity was 40
years; a very long maturity for even a governmental issue. So I said
to myself, "Self, you may have gotten this one bang on as to why."
As opposed to just about every other nation in the Group of 20, and
quite a few others as well the Union of English Speaking Peoples--in
this case the U.S. and the U.K. have decided that the way out of this
nasty little patch in which we find ourselves is to spend every Pound
and Dollar that can be found or manufactured as quickly as possible by
the respective governments involved and if you can't raise the funds
through normal channels by selling bonds to the Great Unwashed, have
our Central Banks buy the damn things themselves. Somewhere, someone
got this foolish idea that a policy such as that might, somewhere
down he line result in a touch of inflationary pressure and that in
the period from now to 40 years out this just might affect the
purchasing power of a fixed rate debt instrument of that maturity. As
to the price in the midst of this thing if you own it, the trading
lads might advise you that you are long and very, very wrong.
Unfortunately, H.M. Treasury had the lads on today and got hammered.
Perhaps they had no choice but today's result does not auger well for
the next auction on this side of the pond, but of course Ben's Boys
stand ready to scoop up the excess if the long dated stuff doesn't
sell as confirmed on Monday by the Fed.
Which brings us back to our friends, the Chinese. I speculated that
they were becoming increasingly unhappy with the state of play and
were signaling that changes needed to be made while at the same time
reducing dramatically the maturity profile of their portfolio. Within
two days of that posting they floated the idea that perhaps what was
needed was either a brand new reserve currency or an alternative to
help out the dollar. SDR's were bandied about in an IMF setting.
Now, in the real world little is known about SDRs and none of it any
good, but even with that being the case I would have thought that no
rational person would if could be avoided, place any responsibility
with the IMF for anything greater than country profiles and almost
immediately the idea was dismissed throughout Europe and by
commentators in the U.S. Wrong again Charlie. I spokesman for Our
Hero, Tim announced today that there might be merit in a discussion on
the subject. One wonders whether this was the same guy that stuck in
the reference to currency manipulation in Our Hero's earlier foray
into Asian finances, our whether the D.C. gang was merely buying time
to try to figure out how to address the question more fully--having
nothing else much better to do. Of course with this mob there's
always the chance that it just might be another mistake, but it did
engender a call from Europe today asking me if, "You chaps have cone
stark raving mad?" (he was a Brit). I demurred.
Anyway, it seems to me that the place to be in a couple of weeks time
is at the G20 meeting in Praha. I sincerely hope that our side has
it's act together and doesn't try to turn this thing into a discussion
on greater governmental intervention and oversight in the financial
world for I suspect the Euros are going to have none of it. Which
means that Our Hero and his boss had best get their act together. The
Boss was a long way from having it together at his presser last
night. The specter of U.S/U.K. provoked inflation is not a welcome
sight to these folks who don't care much for us for starters. But I
guess The Boss will be ready for he is a really smart guy...or so they
tell me.
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