Friday, March 09, 2012

Well, it went down to the wire, of course, and while the Greek government (and, inevitably, M. Sarkozy) are in exultation mode, it seems things aren't yet done and dusted. The German Ministry of Finance has said that the troika of the European Commission, European Central Bank and International Monetary Fund will assess whether the result meets the requirements of the Eurogroup of ministers of the eurozone. And then there's the bondholders - including 6 Greek pension companies - who refused to participate in a bond swap described as about as 'voluntary' as a confession during the Spanish Inquisition. And the comment from someone in a major Japanese bank - “There’s still a lot of nerves about the details of the deal. We don’t know much about the timing and the nitty-gritty technicalities of how the CACs are triggered.” So, as ever, the devil is in the detail and it'll be while yet before we can agree with Madame Lagarde that "Spring is in the air". Though my guess is that she's right to feel a little more relaxed now that Greece can concentrate on swallowing more austerity pills. Side effects and all.

Responding to M. Sarkozy's customary exaggeration, one banker retorted:- "To suggest the crisis is over is wildly optimistic. And no one believes the deal will lead to growth."

I have a couple of questions on all this:-

1. The ECB has given (very) cheap loans to EU banks amounting to one trillion euros in total. A little of this has been invested in Spanish sovereign bonds but where's the rest of the loot? Are the banks lending to each other? Are they lending to businesses? Does anyone know?

2. If every country is to internally devalue and then export themselves out of their depression, what will this do to German exports? Will the Germans change their stance when austerity ceases to be in vogue?

Life is like that . . .
- It's alleged the Americans were tipped off as to the whereabout of Bin Laden by one of his wives, annoyed that he'd brought a new one into the house. Women!
- The UK government is bringing in a law against "street harassment". The purpose is to protect women from such things as wolf whistling. Where next?
- A muslim woman in London was approaching the end of her pregnancy and was more worried about having to remove her face-covering niqab than anything else. When asked "You mean you don't mind the doctor seeing your vagina but you don't want him to see your nose?, she replied, "Yes, that's right."
- The EU General Tribunal has refused to register a Spanish trademark - for a liquor - which contains the word Hijoputa, or Whoreson. There'll be total consternation in Spain, where this word is possibly as common as the definite article.
- The UK's urban foxes are increasing in size. Currently capable of making off with your cat, they're forecast to be able to take your dog in a decade or two. As a foretaste of things to come, this week a fox stalked a large chap leaving a supermarket and then circled him until thrown a loaf of garlic bread. Which won't have done much for his breath, I fear.


Midnight Golfer said...

I have been followed by a fox here in the outskirts of Madrid. It smelled awful, and got distracted by some cats by a trash dumpster, where it stopped following me.

Do they use the adjective, bitchin' , where you're from?

Alfred B. Mittington said...

The 1 Trillion Draghi Bazooka is a marvellous example of how to help your friends as you pretend to aid your victims. Naturally, this super-injection of soft credit to the private banks was loudly heralded as a measure to ‘stimulate credit to families and businesses’. Except that the banks do not use it for that. They neither lend it to each other nor to citizens or small businesses. They took out the loans from the BCE against 1 % interest. Next, they parked record amounts (over 700 billion last week Friday) with… the BCE! Where it is safe and generates interest. I do not know what rate they receive from BCE, but why is it I feel it might be higher than the original 1 % (the European taxpayer making up the difference)?

The rest of the dough is used to buy up Spanish and Italian bonds, which generate some 4 or 5 % interest at present. Which explains the recent surprising success of large bond-issues by the southern countries at the same time that the rating agencies keep lowering the credit status of those countries.

I am no great lover of big banks, but I cannot possibly blame them for such logical behaviour if the Beurocrats give them the chance. Some time in the future, it may all take a positive turn of course. But not until the banks perceive the possibility of growth in the Eurozone, which nobody at present expects, and which is highly unlikely as long as we keep budget-cutting ourselves into prosperity.

Colin said...

@MG. Eerie experience. No, bitchin' is not a word with which I'm familiar.

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