Can’t Quite Understand

Greek Prime Minister Lucas Papademos will hold a meeting with three of political party leaders today after postponing it yesterday for the second time as the government and international creditors disputed over the clauses demanded to secure a second bailout worth 130 billion euros announced in October. Papademos, instead, conducted unscheduled talks yesterday with the so-called troika on details of the spending cuts needed to become eligible for receiving the aid package. The Greek Prime Minister managed to reach a tentative agreement with three of political party leaders after talks over the weekend, where they agreed to make further budget-cutting measures equal to 1.5% of GDP, yet they will continue talks today to flesh out details as well as other to discuss measures demanded by ...

Greece remains under the spotlight on concerns political leaders may not reach consensus regarding the further spending cuts needed to receive a second bailout worth 130 billion euros announced in October, thus tumbling into default as early as March as the government has to repay 14.5 billion euros of debt maturing. Greek Prime Minister Lucas Papademos managed to reach a tentative agreement with three of political party leaders after talks over the weekend. Yesterday, Papademos and political leaders of three parties agreed to make further budget-cutting measures equal to 1.5% of GDP, yet they will continue talks today to flesh out details as well as other to discuss measures demanded by international lenders to grant Greece a second aid fund; specifically, bank recapitalization ...

Oh my, the young man accused of killing 93 people in Norway, isn’t the man Homeland Security and the Pentagon hoped for. But we’ll come back to that…first the world of finance. Republicans and Democrats are under pressure. They need to keep up appearances. Both sides want to make a debt deal – so as to give the impression that US authorities know what they are doing and are in control of the situation. Undoubtedly, it will be like the European deal…too little and too late to make any real difference. Meanwhile, stocks fell 43 points on the Dow on Friday; no big deal, in other words. Bonds went up – showing that investors aren’t particularly concerned about the debt ceiling problem. And gold rose back over $1,600. So, let’s move on…back to the future of the US empire. As an empire ...

It’s a new decade. Time for a new thought. A new idea. A new theme. When did we have our last new idea? Was it in this century? We can’t remember. Fortunately, in the world of money the fewer ideas you have the better. Ideas are usually wrong. They are like mutations. Most are sterile. Dead ends. Most ideas are dead ends too. Because they are necessarily stupid. At any given time, both in past, present, and future, there are an infinite number of things going on. An idea is merely a way of understanding a little bit of them. You try to capture a part of what is going on…an important part, you hope, in a single metaphor. And you hope others will say: “Oh, that’s what’s going on!” But in order to put it into a containable, bounded thought…you have to ignore everything else. All the ...

Chris did a great job last week, keeping me up to date on what was going on… I thought he described it quite well, with the trading desks cut down to junior traders, and no one wanting to go far out on the limb with positions this close to end-of-the-year position squaring… I truly suspect that will be the case but only magnified to even slower movements and smaller volumes… But that doesn’t mean I won’t have anything to talk about! The Eurozone periphery country debt crisis still hangs over the euro (EUR) like the Sword of Damocles, which also means that the other non-euro countries of Europe, get some of the hangover from the Eurozone… Countries like Norway, Sweden, Denmark, and even Switzerland, aren’t allowed to freely trade on their own fundamentals during times like this… But, in ...

Although we are somewhat agnostic with respect to the theory of global warming, we nevertheless find it a useful metaphor for understanding what is happening at present in financial markets. Imagine an apparently safe, productive city with many factories belching “debt” from their smokestacks. This debt subsequently “rains” down into the seas, which represent the credit risk of that debt. But some of the debt remains unseen, high up in the atmosphere, where it holds in the heat, contributing to a dangerously rising sea of debt, which one day, suddenly swamps the city. What appeared to be safe, productive and sustainable is shown to have been a mirage. Now of course astute observers might have noticed years in advance that the sea was rising. Some of them might have tried to warn the ...

Watch out today at noon, Eastern Standard Time… That’s when the Fed/Cartel, is going to post on its website, just who were the recipients of $3.3 trillion in emergency aid back in 2008, during the financial crisis… The Cartel (or “Bernank”) has fought to hide this information, but one of the items in the financial overhaul regulations makes the “Bernank” comply with the demand to disclose the recipients… I find this to be interesting… But two years later? Wouldn’t it have been “real news” to know two years ago? But then, that’s just me… I don’t like being told two years later, that a certain corporation was about to collapse, but that the “Bernank” saved them… UGH! OK… Well… It looks as if we’re seeing a “relief rally” if you will in the currencies. The euro (EUR) is back to 1.31 this ...

On precisely the same weekend in November as the Republican victory parties in and around Washington, the Fed celebrated its centennial far away from its DC home at Jekyll Island, Georgia. One hundred years ago, seven US Congressmen and bankers gathered together in secret at this highly remote location to lay the political foundations for what would become, in 1913, the Federal Reserve Act. The ostensible purpose of creating the Federal Reserve was to provide for greater financial stability in the wake of the US banking panic of 1907. So how has the Fed fared in this role? Well the Fed has come a long way in its first hundred years, to be sure. Let’s consider for a moment this summary of the first eighty of those, by quoting G. Edward Griffin, historian and author of The Creature from ...

The Fed’s announcement that it will buy approximately $600 billion of US Treasury securities or more in the coming months has, for the first time, provoked the ire of conservatives such as Sarah Palin. Monetary policy has not been a political concern for maybe a century, when William Jennings Bryan lost his presidential bid but made history with his “Cross of Gold” speech in 1896. It is refreshing to hear someone pick up the baton somewhere near where he left off. But now as then, neither the public nor policy makers may understand modern monetary mechanics enough to advocate a coherent solution to our economic malaise. Quantitative easing or not, we will still experience economic headwinds from the aftermath of the housing bubble, as well as from our wanton fiscal policy. And it will ...