Notes From Underground: The Irish “AYES” lead to “NOES” for FIANNA FAIL

The elections in Ireland went as expected but not as some hoped. A coalition will have to be formed as the FINE GAEL failed to win an outright majority. It appears as if FINE GAEL will have to coalesce with the Labor Party. What remains to be determined will be the effort to renegotiate the borrowing rates previously established with the European Fianancial Stability Facility (EFSF). Fianna Fail was so badly trounced from its economic policies and its bending to the desires of the large European Banks.

The Irish citizens showed their disdain for terms of the “bailout” and let all politicians know that they didn’t want Euro banks to receive full reimbursement while the Irish Polity absorbs all the cost of negligent lenders. Today, with the Irish 10-year note reaching its highest yields, the air of uncertainty hangs over the European debt markets. Where will this lead for the PIIGS? Evidently it’s too early to know as the Euro currency sloughed off the uncertainty  and continued its recent rally. I would suggest it is no time for complacency. Continue to take what the market will give but do not settle in to a one-way directional investment.

In Tuesday’s Financial Times, there is a story that will lend further confusion to the global investment picture. The U.S. Treasury reported that China owns $1.16 TRILLION of U.S. debt instruments. Two weeks ago the same Treasury reported that China had holdings of $892 BILLION. These numbers are so badly skewed that they render the unemployment data accurate. This is only a miss of 25 percent, which renders this information less than worthless and probably dangerous to any type of real analysis for trading purposes.

The same article goes on to report that the U.K. holdings of U.S. treasuries fell from $541 billion to $272 billion, a 50 percent decline, which leads one to conclude that global trading entities are playing games in disclosing their holdings. At NOTES FROM UNDERGROUND, I keep asking, WHAT ENTITY IS SELLING THE HUGE AMOUNT OF DEBT TO THE FEDERAL RESERVE? To support QE2, the FED has to buy the paper from some groups and if China is increasing its purchases, who in London is doing all the selling? Maybe this is the riddle to the DOLLAR selloff? I don’t care what the MODELS say, in this situation 2+2=5 is definitely the correct answer.

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4 Responses to “Notes From Underground: The Irish “AYES” lead to “NOES” for FIANNA FAIL”

  1. Michael Greenberg Says:

    Just a guess, but if I were a Middle Eastern potentate, I’d be stashing my money in London.

  2. Arthur Says:

    Yra, any comment about Warren Buffett Annual Letter?

  3. yra Says:

    Arthur–my attitude is always to let Warren be Warren.when it comes to global macro i prefer the wit and wisdom of Charlie Munger.Warren is a genius financier and insurance dude but is knowledege and views on the world writ large are always weak—bottom up analysis ther is none better then Warren

  4. Arthur Says:

    Thanks a lot I absolutely agree with you.

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