Thursday, October 27, 2011

Euro sticking plaster. So what is new then?

Flag © archbishop-cranmer.

News comments:
Hurrah! The EU has a solution.

Well not really. So they are to increase the Euro-TARP fund, force banks and the ECB to take haircuts on Greek debt and increase Tier 1 capital requirements.

Sounds like a plan (similar to last weeks in fact). What is happening in front of our eyes is the "Save France at all costs" plan. With BNP and SocGen heavily exposed to Greece (oops and Italy but that is for next weeks Euro meeting), they will be forced down the rights issue route (unless they can dump their toxic crap onto the ECB) and we don't want that do we?

I have to hand it to Sarkozy - a great job indeed. He wins and the Euro tax payer looses heavily. This "bank A lends to the ECB which buys sovereign debt to keep France's AAA and ensure Bank A's Tier 1 capital is AAA" model is bizarre indeed.

It is a house of cards. Anyway, good news for a few days. The Greeks got to keep 50% of the bail out fund for free and the rest of us pay.

Today's shorts:
French Banks (bloomberg)

French corruption (dailymail)

Today's longs:
Long live the Euro (marketwatch)

Italy to default on its austerity package.