Fx Commentary EUR/USD March 12, 2012
Welcome to Bizarro World. The place where everything is the opposite of what we know as normal. Maybe I am showing may age here again but as I read through some of my favorite news sources I just cant help but think how bizarre things are these days.
For those that dont know what Bizzaro World is. When I was a child there was a Saturday morning cartoon we always watched called The Superfriends. It had all the people with super powers that got together to fight evil. There was Superman, Wonder Woman, Batman, Spiderman, The Green Lantern, and several more. Well several episodes over the years involved the Superman from Bizarro World and he was a bad guy. As matter of fact all the Superfriends from Bizarro World were bad guys. Ever since then anybody from that generation would use the term bizarro when referring to things that were the opposite of what they should. The comedy show Seinfeld also has some reference to it also. The younger generations may remember that one LOL.
Over the weekend in the weekly wrap up I posted. I figured people will be asking the question of whats next. As Im sure many of you are and in a short summary I gave my opinion along with a writer I agree with. So today as Im reading quotes from politicians and banker cronies of the past I realized that all we have to do is listen to these boneheads and what ever comes out of their mouth you can be rather sure that the opposite is going to happen. Here are a few good ones.
“There is no bailout and no “plan B” for the Greek economy because there is no risk it will default on its debt” – European monetary affairs commissioner, Joaquin Almunia,
“I’ve always said publicly that a Greek default is out of the question.” At the time ECB president Jean Claude Trichet. April 2010
“There will be no [Greek] default.” – Economic and Monetary Affairs Commissioner Olli Rehn, April 2010
“Restructuring is not going to happen. there are much broader implications for the Euro Zone should Greece have to restructure its debt. People fail to see the costs to both Greece and the Euro Zone of a restructuring: the costs to its citizens, the cost to its access to the markets. If Greece restructures, why on earth would people invest in other peripheral economies? It would be a fundamental break to the unity of the Euro Zone” -George Papaconstantinou, Former Greek finance minister September 2012
And the one I love the best.
So here is what we can just about guarantee considering these recent quotes.
Wolfgang Schaeuble, the German finance minister, says the ISDA decison of Greek CDS won’t affect aid. He has also ruled out another restructuring like Greece, which will be worrying for Portugal, Italy and Spain.
So this means be ready for most likely Portugal restructuring.
Nicholas Sarkozy, I would like to say how happy I am that a solution to the Greek crisis, which has weighed on the economic and financial situation in Europe and the world for months, has been found. Today the problem is solved. A page in the financial crisis is turning.
And this means there has been NO solution has and the problem is only just beginning. There may well have been a page turned but this is still the first chapter and there are 10 more chapters to this book.
With that said I will leave you with a bite from an article published Saturday where Liam Halligan explained the level of confidence of the people who matter in this situation. The bond buyers.
(UK Daily Telegraph): A couple of weeks ago, I sat on the speakers’ podium during the opening panel of the Euromoney Bond Investors’ Congress in London. Together with leading industry experts, including senior ratings agencies’ officials, we engaged in a detailed discussion of the contentious aspects of the Greek debt debacle and the fate of the eurozone.
The audience was “top drawer; the room packed with 500 of the world’s biggest bond market participants; the combined assets under management measured in the trillion of dollars.
“Who thinks the upcoming Greek bail-out will be the last, drawing a line under the eurozone’s sovereign debt crisis?” asked the senior Euromoney staffer chairing the panel. “Put your hands up”. Delivered with a serious demeanour, this was exactly the right question. So deadly was the inquiry, and so germane, that the mood in the room grew uneasy, barely camouflaged by an outbreak of coughing. Scanning this ultra-influential audience, I saw rows of delegates cowed, keeping their eyes locked forwards but staring down slightly, not daring to look elsewhere. Not a single hand was raised. Not a single hand among hundreds of the world’s leading bond market practitioners was stirred to support a debt swap now presented as the key to the world economy shaking off the post sub-prime torpor and taking us into the sun-lit uplands of sustainable global growth.
As for the charts I am sticking to my original assessment in the weekly review from Saturday. Nothing has changed that abruptly in the last couple days to convince me otherwise.