Today, ECB President Draghi spoke to the Frankfurt Chamber of Commerce and proclaimed that the DARKEST CLOUDS OVER THE EUROZONE HAVE PASSED. Yes, since the July 26 pronouncement that the ECB would do anything to preserve the euro and its financial system–and also there would be “no taboos” on what the ECB could utilize to save the euro. The markets have certainly quieted, as has been reflected in the Italian and Spanish debt markets, as well as the equity markets across the European Union. In my opinion Mr. Draghi should not put away his boots and umbrella as some clouds may have passed but the radar is citing other severe fronts. President Draghi added in the Reuters piece: “But there is simply no alternative to the path of reform. Despite the good progress so far showing that adjustment is happening, reform efforts need to be sustained …. Countries need competitiveness to sustain growth.”
Archive for the ‘UK’ Category
Notes From Underground: Draghi Channels Bush’s “MissionAccomplished”
January 22, 2013Notes From Underground: In the Battle of the European Balance Sheet Bulges, Cameron Says “NUTS”
December 11, 2011Almost 67 years ago, U.S. General McAuliffe told the German command that the U.S. forces at Bastogne would not surrender and actually said it in a one-word response: NUTS. In a parallel response to German/Franco demands that all European nations surrender their sovereignty by succumbing to a “FISCAL COMPACT”, British Prime Minister David Cameron basically said the same as the U.K. moved to cast a veto vote on the proposals that resulted from the European Summit.
Notes From Underground: Housing Is Making It As the Foundation of Obama’s Domestic Agenda … Why Hasn’t Geithner Been Replaced?
October 24, 2011The speeches by FOMC GOVERNOR TARULLO and Vice Chair Yellen were followed up with an Obama speech on a “major” REFI operation and many articles in the media. In today’s Financial Times, Larry Summers just happened to have a piece titled, “WHY THE HOUSING BURDEN STALLS AMERICA’S ECONOMIC RECOVERY.” It seems that the administration has awakened to the fact that the credit crisis has been wrapped in a housing crunch that has kept consumer demand lackluster at best. (Also known as the Geithner plan: Aid the banks first and maybe help the debt-laden consumer/homeowner somewhere down the line.)
Notes From Underground: BIDEN GOES TO CHINA–”YOUR MONEY IS SAFE WITH US”
August 17, 2011(and I Thought Madoff Was In Jail)
It seems that Vice President Biden used some of his miles to head to China for his summer vacation. The Chinese have been vocal critics of the U.S. and its profligate ways. As the largest foreign holder of U.S. Treasury debt, the Chinese have more than a passing concern in the outcome of U.S. economic and fiscal policy. The Chinese are not the single largest holder of U.S. debt as that award goes to the FEDERAL RESERVE. The Obama administration sent BIDEN to reassure the Chinese that the U.S. still maintains a FICO score more than 720.
Notes From Underground: IT IS THAT TIME OF THE MONTH AGAIN? (TO VIEW THE PAINS OF LABOR)
July 7, 2011Yes, the ECB raised rates today and Trichet failed to listen to the wisdom offered by NOTES FROM UNDERGROUND. That means I have overestimated the wisdom of Trichet while underestimating the size of his ego. The rate rise to 1.5% was widely anticipated so the EURO was immediately sold but regained some strength after the ECB announced that it was WAVING THE MINIMUM CREDIT RATING FOR PORTUGUESE BONDS USED AS COLLATERAL FOR REPOS. As the ECB raises rates, it allows for weak collateral to be utilized thus allowing for a large liquidity infusion. This is a fine example of Dostoyevsky’s Grand Inquisitor as bread is taken from the people with one hand and returned to them with the other and the people believe it is a miracle. Europe has become a “ball of confusion.” Why raise rates when you are simultaneously lowering credit standards to prevent a sovereign default?
Notes From Underground: King Checks, Trichet raises but signals he is not necessarily a serial raiser
April 7, 2011As expected, the Bank of England held rates at 50 basis points and the ECB moved to raise rates to 1.25 percent. BOE Governor KING does not hold news conferences post-announcement so we will have to wait to find out if the MONETARY POLICY COMMITTEE (MPC) voted 5-3-1 again. Also, with inflation in the U.K. above the targeted level, Mr.King will be writing another to the ECHEQUER to explain why the BOE kept rates at the present level and held back from raising as prescribed by its mandate.
Notes From Underground: Canada’s government is a fallen angel while Merkel’s CDU suffers a severe setback
March 27, 2011The weekend news was not economic but political as governments all over the globe suffered major setbacks. The Liberals secured a “NO CONFIDENCE” vote in the Canadian Parliament and bring down the Harper Government. I know that Michael Ignatieff will claim that he is perserving the democratic basis of Canada as the ruling party was brought down on an issue of CONTEMPT. The only thing that appears contemptuous is the ego of Ignatieff. He claims that the TORIES are out of touch and out of control. The election is called for May 2 and then the electors will have the final say on who is out of touch. This will be the fourth general election in seven years and let’s hope the citizens of Canada show their anger and elect an outright majority so Canada can get on governing itself.
Notes From Underground: DOES DOMESTIC POLITICS TRUMP ALLEGIANCE TO LARGER POLITICAL ENTITIES?
March 24, 2011It seems that overnight many traders were selling the EURO because of news that the Portuguese Government was to fall. As I have written about this before, it is certainly no surprise. The only surprise was its timing as it comes as the “RUBBER STAMP SUMMIT” is taking place today and tomorrow. Also, the credit rating agencies downgraded many Spanish Banks, making the EU SUMMIT that much more volatile. Throw in the French anger toward the Germans regarding its Libyan decision and the mood in Europe continues to darken.
Notes From Underground: Franco/German spat ahead of this week’s SUMMIT of LOVE
March 23, 2011This Thursday and Friday the European Union had hoped to put the finishing touches on the European Stability Mechanism that will go into effect in 2013. The Sarkozy/Merkel-crafted plan would give succor to Chancellor Merkel ahead of this Sunday’s elections in Baden-Wurttemberg and hopefully halt the German voters’ antipathy toward all things EU. However, there appears to be friction between the giants of the European Union. Sarkozy is reportedly furious at the Germans for abstaining on the UN vote to impose a no-fly zone in Libya. Also, the French believe that Frau Merkel played politics and an anti-French card by moving to halt electricity production at seven NUCLEAR POWER plants, thus making the French look bad as well as having the impact of driving up electricity prices.
