Monday May 10 2010
May 10 2010
Thoughts for Monday – A Trillion is the New Billion
Well the hand of this Administration appears to be all over the European Deal, the US is after all the biggest support of the IMF. And this is in line with the idea that as the President said, he will ‘shock’ the economy. The President will be in Europe next week, after being denied the Olympic Games, he is not walking into another let down. Now, a couple of observations…
The first is that the PIGS have been rescued with debt which after all only increase the overall level of debt, the balance sheet debt/equity ratio did not improve. Second, while the IMF voted for it, have the Greek hairdressers voted, the ones that recently retired at age 53? When we hear Maria Doskoppolous, retired cosmetologist, tells Greta von Sustern that she is ashamed for her country (the oldest in Western Europe) to go begging, that she and all her friends are returning to work, returning their pension payouts, planning to work till age 65 as in other countries, and telling Zorba to get off the couch, out of the sidewalk café, and back on the job roles, then we have a deal. Until then, we merely have more debt.
Bill Kristol made another good point on Fox news Sunday. Bear Stearns was said to be a necessary bail out that would prevent a collapse. It happened in March, 2008. Yet Lehman was not rescued, Merrill or was forced into the arms of Bank of America, $700 B was promised, and the markets still crashed that fall. Is history repeating here? We remind you that Dubai was also ‘rescued’ with debt. The oldest remark in Finance is that such stunts are merely ‘rearranging the deck chairs’ on the Titanic in hopes of missing the iceberg.
Slowing Down Machine Trading
The Hoover commission investigated the 1929 meltdown as the Administration is promising to investigate this past Thursday though of course not FNM or FRE or the politicos behind them. But, the conclusion reached about the 1929 crash was the technology had overwhelmed the ability of the exchange to handle orders. So the technology should be throttled back. The suggestion was that telephone orders should not be allowed or suspended at such times. Ah high tech….
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