Friday, June 29, 2012

Merkel is the bully

merkel © getty

News comments:
The markets believe Merkel was bullied by two arrogant men to get free cash.

Up they go. The reality is somewhat different. Merkel is no patsy and has effectively given the EU control of Spain and Italy's banks and indirectly their governments. Yes the technocrats wanted share debt and pain with bailout cash but she said not over her dead body. So the compromise is for Spain and Italy to have banks given cash for the purpose of keeping them alive.

Banks as we have seen already can never have enough cash. Now they have some more, they will be forced to buy debt from their sovereign countries since over time noone else will and the debt/gdp ratios will just keep on rising. Banks don't want to lend and they wont. Upshot is capital full banks (and bigger bonuses) and negative GDP.

Eurobonds aint happening this month. But they may well happen in July (fintag).

But this is dull.

Now this is the best idea I have heard of all week. A rich Greek setting up a distressed debt fund that buys greek debt and cancels it (sort of) in an attempt to push the price up and the yields down. (despielgel)

Today's shorts:
RBS get ready for huge Libor fine (telegraph)

Today's longs:
Bobby Gezzer just doesn't get it (guardian)

Mervyn King to become chairman of Barclays and make an even bigger mess of it.


Anonymous said...

I couldnt agree more. I think Merkel has bullied the hell out of the EU until she got her way. I can only hope the Spanish market bounces back to have the last laugh!!