This
is an interesting piece about Vlad Vlad Pooh-Bah of Russia, (the Lord High
Everything Else) and his Ko-Ko San (Lord High Executioner), who has been
elevated from Chief Head Cracker of Moscow to Chief Head Cracker of All the
Russias. Vlad’s standing is under serious pressure with the middle class and
intelligentsia. (The oligarchs of course remain loyal – Mikhail Khodorkovsky is
still in the Gulag to keep them in line). It’s a story to take your mind off
the relentless ranting of the Euro-Lunatics (who as Gauleiters of the
Euro-Asylum are nominally in charge) running all over the Continent making ever
more desperate statements about Greece. Mario 1 Monti, with an assist from
Mario 2 Draghi, is in full cry now with Hollande and Rajoy on the red herring
issue of “Eurobonds”; which have become the Euro-Panacea del giorno. Krugman
pretends to give them Nobel quality intellectual cover (see below). The € is
now trading at around US$1.25 – so nothing is new. Still massively over-valued
for Club Med and massively under-valued for Club NordSee/Baltic. Of course
“austerity” is not the only remedy – but without discipline and arbeit on
structural reforms in the labour markets and welfare systems of Club Med; all
else is window dressing les boutiques on the Titanic. Their “more of the same”
remedy – which Mario2 seems to advocate - is ipso facto Boris’ pedal
to the metal when confronted with a brick wall. That’s probably unfair to
Draghi but he has to show some solidarity with Mario 1.
Poor
Sn Rajoy cannot catch a break. His utterances get ever more desperate and
pleading. Bankia and now Catalonia with begging bowls out in Madrid and the ten
year yield rocketing above 6% again. (It’s an interesting question as to why
Euro-Kant says that 6 – 7% bond yields are the danger zone and worse. When RR
came to the White House after the exciting Carter years, I recall long dated
Treasuries trading nearer 15% and Primes at 20% plus. Which heralded one of the
greatest of all US recoveries). Where is Paul Volcker when we need him at the
ECB? Good German name should reassure Berlin. In Euro-Fantasyland we have the
Van Rumply-Barroso vaudeville, tap dancing, Uriah Heep act.
The
latest Athens bulletin is that tax receipts in May are running 20% down yoy
(2011 was no picnic). One imagines that citizens with €’s are a) not paying
their taxes (no change – keep your powder dry), b) moving them to higher
ground. All funded by Mario 2. This is utterly logical behaviour for Greeks.
When/if the Drachma rises like a Phoenix aus der Aschen, the flow will reverse
rapidly once the market finds a level.
Meanwhile
the Swiss (not members of the EU, the Eurozone or other Marx Brothers style
clubs) but surrounded by mayhem, sail serenely on.
A
very happy Memorial Day to you all.
Simon
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