NOTES FROM UNDERGROUND has been banging on the table for Axel Weber to become the president of the ECB but my desires were dashed as Herr Weber resigned his presidency of the BUNDESBANK last week and announced that he wished not to be considered for the ECB job. Axel broke our hearts as he would have been the strong voice for the BAVARIAN BURGHERS. Alas, Axel did not enjoy being thrown under the bus by Chancellor Merkel to placate the French who were opposed to the ECB being run by a “hard money man.”
In tomorrow’s Financial Times, Herr Weber has an op-ed piece titled, “Europe’s Reforms May Come At A High Price.” The Bundesbank president was opposed to the ECB sovereign bond purchases to support debt-stressed nations because he saw it as a backdoor effort to make the EU a TRANSFER UNION, which meant that the Germans would be the banker of last resort for the Profligate PIIGS. This was the deal breaker for the Weber to attain the Presidency of the ECB–he became expendable. It would have been fine if he had gone quietly back to the ivory tower of academia but with Frau Merkel in political trouble, Weber seems to want to stir the pot. The Eurocrats in Brussels want to spin the German elections as a mere local affair but I would caution against that even though an editorial in the FT takes that view.
Sunday’s election in Hamburg was a disaster for the CDU and with another big election at the end of March, it will be easy for the highly respected Weber to be a disruptive force. If Weber’s voice attracts the disenchanted voters, it will force Merkel to adopt a much firmer stance about the ECB leadership. This will not play well with Sarkozy, who is looking to enhance his stature in France by casting a large shadow on the European and International scene. Remember, Wagnerian operas are very long, drawn out affairs.
The Middle-East heated up today as Libya employed great force in an attempt to crush the anti-Qaddafi demonstrations. The dictator’s son warned that the demonstrators would cause rivers of blood to run if they didn’t stop their action and head to the “table” for talks. Libyan brutality has led to fears that political forces in Bahrain will ramp up their anti-regime demonstrations forcing the Saudis to come to the aid of its neighbor. The fear of unrest spreading throughout the GULF led to the OIL prices being bid as well as the last great safe haven–GOLD.
This being a market holiday in the U.S., it was very thin and hard to determine the real market impact as the S&Ps were also well offered as whatever traders were around ran to remove risk until more information was coming out of Libya and Bahrain. To add even more uncertainty, New Zealand was hit by a 6.3 Earthquake tonight sending the KIWI lower as the markets await damage assessments. All in all, tomorrow sets up to be a very volatile trading day as the market has taken on a great deal of risk as the FED has forced a reweighting via the “PORTFOLIO BALANCE CHANNEL.” Our model says 2+2=5.
Tags: Angela Merkel, Axel Weber, Bundesbank, CDU, ECB, EU, Fed, Gold, Kiwi, New Zealand, oil, PIIGS, SPS
November 25, 2011 at 9:15 am |
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