It was a risk-on day Friday as the markets were ostensibly relieved by the exit of Berlusconi in Italy and Papandreou in Greece. The replacement of two European will have little effect on the austerity proposals facing the beleaguered profligate states. Most important for the EU is whether the EUROS will be “FOUND” to backstop the indebted sovereigns so as to be able to aid European banks loaded with “risk-free” sovereign bonds. There are meetings all over the world to find support for a world-wide bailout of Europe as the G-20 meeting revealed the urgency of the situation.
Posts Tagged ‘Papandreou’
Notes From Underground: Was Obama at the G-20? Is Soros daft? Was the G-20 Communique was Drafted By the OWS Scribe?November 6, 2011
In President Obama’s G-20 press conference the mood was somewhat upbeat as he boasted that the economic powerhouses had made progress on the issues of economic growth. The President also was confident that Europe can meet it challenges as leaving Cannes, he felt that a “solid foundation has been built.” It seems that Obama failed to capture the real mood of the FAILED G-20 meeting as the Financial Times had two very morose articles about the G-20 and a solution on the European debt crisis.
The markets initial reaction to the FOMC statement was perplexing as the financial media reported the FED to be hawkish for there was nothing explicit about a potential QE3 program. Readers of this BLOG were well aware that the consensus was for no change from the FED as it would have been difficult to announce any new program with the G-20 meeting this weekend in Cannes. The BRICs have already accused the U.S. of causing havoc in world currency markets by utilizing its monetary policy as a “stealth devaluation” of the U.S. DOLLAR. It seemed though that the FOMC statement was DOVISH because the previous three dissenters all voted with the majority–there was a lone no vote and that came from Chicago FED President Charles Evans.
Another day another crisis in EUROLAND, or the LA LA LAND of Wall Street, which we will know refer to as THE LAND OF MORAL HAZARD. The leaders of the Wall Street establishment have proven again that no risky investment is too big as long it is with OPM (other people’s money). Jon Corzine went all in on a bet on PIIG DEBT in an effort to increase the annual returns at MF GLOBAL. In a ZIRP environment, a clearing house has a difficult time making money because the earnings, which are the overnight float, are so extremely low. In order to generate greater earnings on the FLOAT, greater risks need to be taken so the need to purchase riskier sovereign debt becomes the outlet.