Under Starter’s Orders

If there is an entente between France and Germany at all any more, it’s getting less cordial by the day. For over a year now, this has been the eurozone (and Europe’s) biggest problem by miles. Forget the debts for a minute: the problem isn’t finding the short-term money to solve the euroblown fiasco, the problem is getting the two biggest players to agree on what to do.

Meanwhile, as the Sprouts spout poetry and design bond issues from the rags of derelicts, the sound of death knells, final trumps and folks heading for the hills is getting louder than Eastenders during an argument in the Queen Vic. Moody’s cut Spain’s credit rating by three notches yesterday, and withdrawals from Greek banks continued to accelerate. Crédit Agricole, France’s third-largest bank and itself on the sick list which dare not release its names, is making plans to ‘walk away’ from its wholly-owned Greek lender if Athens winds up quitting the euro. If it does, this will be the first time in history the French walked away from the sound of gunfire, but the reality of its ownership of Emporiki Bank is not quite as simple as chucking some keys through the door and sauntering down to Starbucks for a coffee. Everyone with half a brain knows this, but the MSM hoovered up the French spinette with its usual appetite.

As a result, pretty well all the Asian stocks finished much lower last night – and trust me, this is not because the Cryogenic Experiment formerly known as the Glaser family decided to move Manchester United’s Asian IPO to the US. This one too is about a great deal more than anything the financial press is up to speed with, and I hope to post upon the fascinating finances of this family shortly. Their gallant attempt to clone each other forty years ago hasn’t worked out that well on the whole, but in Delaware (where, like all the world’s crooks, they are based, and may thus file accounts in a fast and free manner) people with their eyes informally arranged and beards where the forehead should be are not that remarkable.

But if the Europeans are in a loveless marriage between the Don’t Knows and the Don’t Budges, Timmy Geithner is very much on their case. He ‘seeks more eurozone measures’ Reuters tell us this morning – but whether this is a switch away from metric or more bazookas remains unclear. He seeks them here, he seeks them there, he seeks those measures everywhere…but the Lady’s not for leveraging. The Fuhrerin remains as always for Gotterdammerung, the only problem being that she ain’t Gottadamnedidea how that’s going to work without everyone but Germany starving.

But Mr Geithner’s in luck, because Paris is set to propose a package of measures. A package means…a lot, right? Sadly, it’s the same lot we’ve seen a lot of times already. What we have here is a lottery.

Francois Hollande, being un homme des grands reflections, has spotted that €100bn for Spain is viewed by the markets as a sub-atomic amount compared to the ClubMed and peripheral problems as a whole. So while homoaeopathy is the Brussels weapon of choice when dealing with tertiary bubons, our Francois is clear that more is needed – and more directly, it’s needed by the banks. Especially the French banks, although far be it from me to suggest a less than noble motivation being involved.

What the markets need is the sight of a lot of hitherto laid-back people dashing about building up a genuinely fat wad, rather than engaging in onanism with a Beijing that clearly has no intention of offering help beyond the hectoring thing. And indeed, Frau Doktor Merkel is certainly up for the dashing: she dashes everyone’s hopes on a daily basis. I wouldn’t say the German leader has set out her stall, so much as opened a fortress selling sackcloths, ashes, and death if you don’t buy. So even though Paris is set to propose its package at the next summit on June 28th, it isn’t going to get anywhere. Better men than Monsieur Hollande have attacked this redoubt, and the dead bodies are there for all to see who wish so to do.

In the US, where Obama’s ‘genuine’ recovery has finally been revealed as a cheap knock-off made in Singapore, Mitt Romney seems at last to cottoned on to the possibility that his Second Coming may be at hand. The Black Dude over-reached himself last Friday by overtly stating “the US private sector is doing just fine” when it palpably obviously isn’t, and now oven-ready Mitt has offered American business the promise that Help is at Hand, and he is the main helper. Time magazine called this ‘faith before evidence’ ( a neat line given Romney’s odd beliefs) but th challenger goofed bigtime by saing that all Obama wants is “more fireman, more policeman, more teachers”. It turns out that most everybody in every community everywhere wants that too, so now Mitt is backtracking like a V8 Italian tank.

In fact, he has plenty to go at: foreclosures rose year-over-year in May for the first time in more than two years (as predicted here in April) and Obama’s much-trumpeted bobs and economic activity is clearly a sham if one has the eye for it. But Romney isn’t going anywhere other than back ino the footnotes of history. Just when it seemed like the GOP could choose a one-legged duck as the Candidate and win, they chose a paraplegic duck with a penchant for kamikaze.

And just as Spain asked Europe for a bailout topping $125 billion, Amancio Ortega, the Spaniard who founded retailer Inditex, was confirmed as the eurozone’s trichest man. The tycoon’s fortune rose €2.7bn billion to around €36 billion yesterday – according to the Bloomberg Billionaires Index. On the Bloomberg site, however, the septuagenarian’s stonking wealth was expressed in dollars. I’d imagine it is indeed in dollars.

62 thoughts on “Under Starter’s Orders

  1. Well, it looks like fisticuffs may be the order of the day:

    “Pimco throws German federal bonds from their securities account

    The asset managers of Pimco have thrown German bonds out of their securities account. By taking over the debts of other countries Germany will lose its credit rating. True, Pimco is not infallible, but the U.S. company is one of the most prestigious in its field. This trend will continue.”

    More here, but in German:

    http://www.welt.de/finanzen/article106587039/Investor-Pimco-wirft-Bundesanleihen-aus-Depots.html

    And Hollande has to contend with more that a cat-fight between Ségolène Royal and Valérie Trierweiler –

    “The tone is getting rougher in Europe

    Schäuble against Hollande: French pension age in breach of EU rules

    German SME News | Posted: 14:06:12, 01:38 | Last updated: 14:06:12, 01:39

    A setback in the Franco-German friendship: Finance Minister Wolfgang Schäuble has criticised the decision of the French President to partially reintroduce the retirement age at 60. Thereby, Hollande is acting contrary to the European route of march. Germany is ready to show solidarity – but only if agreements are adhered to.”

    Time to restock with bier & schnaps plus snacks!

    • François Hollande’s interview on Greek channel MegaTV:
      “We will support you as much as possible, but if you don’t stick to austerity measures there are other EZ countries waiting for you in the next corner….”.
      Iphigenia scenario for Greece more and more probable…

    • Excellent video. Farage looking like he has the bit between his teeth :-)
      I love the piece where he reminds the assembled muppets that Italy is required to borrow money at nearly 7% to loan it to Spain at 3%, to meet its EZ comradeship obligations. You couldn’t make this up.

      Actually you probably could…Gordon Brown borrowed money at x% for the purpose of depositing it in kiddies saving accounts…another mad socialist idea of good economics.

    • yes, excellent vid thanks for sharing. I love Farage’s euro rampages, but as
      a true alternative to liblabcon I’m not convinced UKIP would cut the mustard yet

      • @fried. UKIP or a similar party don’t need to be a replacement to the Big Three, they just need to the grit in the oyster that forms a pearl. It could happen.

    • “looming impending disaster”. This disaster has already occurred – the destruction of the euro as a candidate alternative to the dollar as global reserve currency. It is totally clear now there will be no deposits parked in euros from China, the Gulf, or anywhere.

    • From wikipedia:
      “A sinking fund is a fund established by a government agency or business for the purpose of reducing debt by repaying or purchasing outstanding loans and securities held against the entity. It helps keep the borrower liquid so it can repay the bondholder.
      The sinking fund was first used in Great Britain in the 18th century…. ”

      Oh you wicked British people! It’s you who invented this. And you named it sinking fund – now that is British humor :-)

    • @kfc. With the ‘S’ and the ‘F’ in there, there’s an anagram called SNAFU waiting in the wings – but I can’t quite get there …..

  2. With regard to poor François, the most ridiculous thing is that he hasn’t got full powers yet, but already his credibility has taken a hammering because of his lack of judgement. This is a man who lived with Segolene for 30 odd years, gave her 4 children but not his name, & now cannot even exercise any influence over his latest partner.
    The decline of La France will go into overdrive at 7am Monday morning, oh, sorry, I forgot that half of France doesn’t work on Mondays, so perhaps Tuesday morning?

  3. The game is up, has been up for decades, the smoke is clearing, we are all stuffed, we are all kidding ourselves that there can be a solution, it is just not possible.
    We are living in a society? that has more people taking than making, a society of overheads being seen as production and paper/IT shuffling as something productive.
    If we were to look as Europe as an analogy of the body, we are sending all the slowly congealing blood/money to the head/governor whilst allowing the state/limbs to atropy and the heart/people to shrivel, and as the toxins build due to lack of circulation we slowly die.

  4. I think there’s a misprint; a stinking fund seems much more likely. Hydrogen disulphide, every schoolboy’s favourite!

  5. Just had a horrid thought having read all this. With Greece only able to pay July’s old peoples pensions…and Spain having already cleaned out most of its state pension funds…..very shortly we are all going to have a massive problem with looking after the elderly of Southern Europe….many of whom dutifully paid into funds or are widows of those who did.

    What came to mind was ‘Soylent Green’ a 1973 ( mebbe not so SiFi ) movie where the hero makes a very unpleasent connection between the involentary euthanasia of the over 70′s and a green government made food used to feed the masses……… google it for the gory details !

    • Soylent Green – Horrible GrahamD….
      And horrible it will be for the elders – especially those in large metropolitan areas (in countryside it will be better – easier to find food, ties that bind to take care of the elders).
      I have already made my emergency plans to send my mother back to our village in Crete, if things go terribly wrong…

    • I seem to remember it was also the dissenters who ended up as Soylent Green.
      On a more serious note, if this is the truth and not nother bluff by the Greek government, then we are looking at a humanitarian crisis. Will that be the catalyst for people to realise this is more than just an economic problem? We can be sure that the politicians won’t have any plans to help out.

      • MaxC & Nick…..Without wishing to be totally doom and gloom, if / when the value of the Euro plummits by this winter ….and Russia still wants an equivalent amount of real dosh for its gas…….we could ALL have a hell of a humanitarian crisis across much of Central Europe, particularly when the mercury dips to -5 or -10 or more…….

        …….Waste EUR 99 Billion on Spainish Zombie Banks if you insist ‘Dear Sprouts’ …but for Gods sake stick the other Billion into blankets, tinned food, camping gas and sleeping bags and civic centres and soup kitchens…..some folks somewhere…….who are totally innocent of all this crap are gonna need all the help that they can get for sure in 6 months time…..and yes, I agree totally that politicians should be planning this now

        ……or are we all really going to let people starve or freeze to death in Europe in 2012 while we allow governments to print funny paper money for the bankers and play Brussels’ mindless games?

      • @GrahamD
        Continental Europe is heavily dependent on Russian gas pipelines.
        But i had the impression that UK (with the North Sea production and the nuclear plants) was almost self sufficient in energy (at least regarding heating). So, this is not the case?

      • If that happens the US will commence humanitarian airlifts and set up shelters and field hospitals, making the Europeans look like the squabbling fools they always have been (and worse).

      • Fair question Jason…..I just hope that it all comes apart while it is still summer so there is some sort of fighting chance of sorting something before winter…I suppose by ‘we’ I mean that surely any reasonable humanist based society, unbiased areas of the media, decent politicians (ok just a few) may need to use whatever limited means that we collectivly have at our disposal….to do this insanity down….(.John and this blog being a fine example, particularly when the MSMs pick up the story a few days later. )

        Whether ‘we’ should be campaigning to our Govt or contributing to the Red Cross…or both….is a good question…..as MaxC said…methinks this is not even on any politicians radar right now ! I’m no closet socialist, nor a doom and gloom-monger but it is’nt rocket science to see how this situation could rapidly move from an unsavable financial disaster into a full blown humanitarian crisis by midwinter….believe me…I hope to hell it won’t

      • @Nick Yup we in Uk are probably better off than most for energy security…although not my area of expertise….simply saying that if the value of the Euro plummits, lots of govenrments and individuals…and companies reliant on gas for their production, in much of Middle Europe are going to have a very rough time indeed, particularly if the effect is to add 25% odd to the price of gas. In UK our suppliers will just stick up the price ‘in sympathy’ whatever !

  6. Has anybody seen this?
    “Due to the extreme volatility some market analysts foresee could result in the coming days, OANDA fxTrade will not accept any trading activity from 6:00 AM EST until approximately 3:00 PM EST, on Sunday, June 17, 2012. OANDA believes the convergence of a major market event during off-market hours represents a potential trading risk and has taken this rare step to protect traders from excessive rate fluctuations.”

    http://www.zerohedge.com/news/due-extreme-volatility-some-market-analysts-foresee

    • @kfc: Yes, I saw that earlier. Oanda are FX traders and they’re advising clients not to have open positions over the coming weekend because of anticipated volatility. On Monday morning, the rates will be set to actual and this could leave some clients with large losses if they had open positions.

      Because of Greek elections? Probably.

      If volatility occurs, it’ll be between a number of currencies including – but not limited to – UKPxUSD, USDxEUR, UKPxEUR etc.

  7. @kfc1404.Madness is in the air.The market adjustment,down 15 percent, scheduled for August, should arrive straight after the Greeks vote.

  8. This conflict of interests, culture and ideologies between nation states gives me hope that we shall not see this Superstate in my lifetime and, I hope, in the lifetime of my grandchild.

    • @ groundedkiwi.The UK glasshouse has the PM at Leveson,whilst the market tornado gathers pace.You really could not make this one up,Healey at Heathrow 1976…

      • Healey at Heathrow was when it all started to turn around. Labour was out in 2+ years then we were into the 1979-2008 period. Salvation starts for the Greeks next weekend if they can grab it. Just like the UK they will have a tough couple of years before the sunny uplands come into view.

    • @SITC. I have often said that the W.I. would do a better job of running the country than this lot. The out of work and the feckless would be put to work getting things done, the bills would be paid, we’d live within our means. The hungry would be fed and no money wasted on either malingerers or instruments of death and destruction. Bring it on.

  9. In the meantime, just read in local news that the German parties agreed on approval of Fiscal Pact and ESM. Can anyone confirm that?

    • Nick Markakis:
      The Social Dems and Greens (oppo) think they have govt agreement to introduce financial transaction tax across Eurozone. That was the condition for giving the govt the 2/3rds parl. support needed to get the fiscal pact thru. The Free Dems (part of Merkel’s wobby coalition) still think it can be stopped or least delayed. But the FDP are like Cleggites on steroids to make up for tiny support. But as they would say: size isn’t everything.
      One thing: when it comes to the crunch (which could be very soon) Merkel will “save” Europe, whatever the cost (as German eurosceptics would see it). Even she knows the cost of unravelling the Euro or of allowing Greece to infect Spain, Italy etc would outweigh the financial cost of putting German creditworthiness behind club med.

  10. “ECB council member Jens Weidmann says the future of the euro is not subject to market timeframe, as markets change their focus every two weeks”. Now either he has gone completely mad or I have? I need pastoral care and reassurance.

  11. ’50 year storm’ heading for Britain bringing downpours and 70mph winds,’ screams the DT. Since when did financial tsunamis arrived accompanied by wind and rain? But every cloud has a silver lining…with the operative word being silver.

  12. There is a marvellous article on Zero Hedge concerning the refusal by the ECB to release details to Bloomberg under a Freedom of Information requestI,of the series of swaps transactions undertaken by the Greek Debt Management Office, arranged by Goldman Sachs, during the last decade with the aim of hiding the true debt levels of the Greek Goverment. The ECB stated that they had refused the request as the situation at this time was delicate and they did not wish to further inflame the situation further. Tyler Durden speculates, as to whether the reason given by the ECB was the complete truth or could it be that it would put Mario Draghi in an invidious position as he was the head of Goldman Sachs International during the period 2002-2005, that department evidently being involved in structuring and executing the transactions in question.

  13. Just sensing that the can may have run out of road. Can’t see the good news anywhere. Needs bold and prompt action – from Berlin. No sign of it yet. Making noises about long term commitment but no joint bank account yet. Maybe the rest of the bust EZ economies will throw Germany out and print? Best option at the moment for them?

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