Sound bites from the left. Sound bites to the right; here I am, stuck in the middle with you (STEALERS WHEEL). The House Budget Committee was in full political regalia as posturing for the home folks and November’s election was in full force. Most of the questions are redundant or ridiculous and in some cases, both. An exception was Committee Chairman Paul Ryan, who asked Mr.Bernanke if the FED‘s policies had corrupted the BOND markets that they stopped sending a credible signal. It has been a consistent theme of NOTES that the BOND market is broken as an indicator of inflation expectations because the FED‘s large scale asset program has created an artificial support to LONG-TERM BOND PRICES.
Posts Tagged ‘Canada’
I’M UP ON THE TIGHTROPE,ONE SIDES HATE AND ONE IS HOPEIT’S A CIRCUS GAME WITH YOU AND ME
It was a day of dueling flapjawing as the European elite was out talking about everything that needs to be done to save the EURO and Sarkozy promising that there would not be any European defaults. Again to paraphrase Jimmy Breslin: Sarkozy is a little man in search of a balcony. The time for public orations is past and the call to action is immediate and real. Global investors don’t want any more rhetoric. Next Friday is considered the day of reckoning but if the EUROCRATS have any sense all the needed policy will have been put in place by the December 9th meeting so that the markets will have absorbed the “shock and awe” and there will be no disappointment.
Yes, all the news about Prime Minister Berlusconi is pure puff and nonsense. The Italian economic situation will not change one iota when Silvio steps aside and, in fact, I would argue that the situation will become more volatile. Italy has seen so many governments come and go since the end of WORLD WAR II that it must be the role model for Japan. Mr. Berlusconi may be a scoundrel but the markets and the Italians know what they have and it seems that Berlusconi the known is better than what may come next. If the present government falls there is a possibility that a more leftist coalition will be formed and it is doubtful if it would be prone to pass an AUSTERITY plan.
(Another day older and deeper in debt.)
No surprises from the ECB as they held rates at 1.5% as Trichet ended his reign at the helm of European banking by paying homage to the FONZ: Never admit that you were wrong. The ECB did announce that it was extending its policy of providing liquidity to EUROZONE banks at extremely low rates for a period of 12 and 13 months in an effort to prevent any immediate bank run. Also, the ECB announced that it would buy up to 40 billion euro of covered bonds, but that should not be a big deal for covered bonds are the best collateral so many banks will probably not be running for funding posting the highest rated debt.
For all those who have ever been involved with American Youth Soccer Organization (AYSO), it is easy to see the similarity between the EBA‘s “stress tests” and a youth soccer game. Like AYSO, the Euro STRESS TESTS meant that everyone who plays gets a trophy for showing up. The philosophy is that every participant is a WINNER. Also, there is no keeping score for that would be bad sportsmanship. So, the EURO STRESS TESTS are treated in the same light.
Yes, 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: Canada Casts Aside the Liberal Party as Ignatieff Rolled the Dice and Crapped OutMay 3, 2011
The election that never should have happened is in the books and the result proved that personal arrogance masquerading as public policy is a poison unless you live in a totalitarian dictatorship. Michael Ignatieff pursued a no-confidence in the hope of achieving his desire to become prime minister of Canada. His roll of the dice has cost the long esteemed LIBERAL PARTY its position in parliament and brought to the fore a more left-oriented NDP.
Elections are tomorrow in Canada. The polls are tight as the surprise is coming from the gains in the polls for the New Democratic Party (NDP), a party led by Jack Layton and is further left than the Liberal party that moved to start the NO-CONFIDENCE VOTE, which forced the early election. It seems that the TORIES will hold their numbers but the desire by Prime Minister Harper to become an outright majority party will not be realized. The political situation in Canada can become very confused as the LIBERALS/NDP may be able to forge a government if the most current polls are accurate. The markets have paid little attention to the polls as the Canadian Dollar closed the week and month out almost on its recent highs–another statement about the U.S. DOLLAR.
This 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.