While the EU/IMF/ECB continuing to work towards an agreement on Greece, my thoughts turn to the voting that will occur next week in Germany. As most know, the German voter is not happy with having to support Greek pensions that start 2 years before Germans can retire. This is why PM Merkel wanted to delay voting on a debt plan until after the May 9th North Rhine-Westphalia state elections. She also didn’t want to have voters confront the issue that Germany has not reduced their own spending as she promised. As a matter of fact, the German government in March … …READ MORE
Monthly Archives: April 2010
FRR: The Dam Breaks!
After three entire days, the Republicans finally relented Wednesday after reducing bailout language in the current Dodd bill, but the debate and amendment process is just beginning. Sen. Shelby said, “Chairman Dodd has assured me that he will address a number of concerns I have expressed with respect to ending bailouts. We have been unable, however, to make any meaningful progress on other important components of the legislation. It is now my belief that further negotiations will not produce additional results.”
The major points of contention for Shelby and the Republicans remain the following:
• The consumer protection bureau. “This … …READ MORE
Three Week Euro Scenario
There are two known dates and one unknown date that will cause volatility and uncertainty surrounding the Euro. All three will likely occur in the next three weeks.
May 9th is the election date in the most populous German state Rhine-Westphalia. This mandates that German PM Merkel drag her feet on a bailout of Greece. A bailout is very unpopular and Merkel will lose important seats in the Bundestag if she strongly supports the bailout.
May 16th is the date when E8.5 billion of Greek debt needs to be rolled over. With Greek 2yr notes yielding 14.5%, Greece can’t afford … …READ MORE
FRR Extend or Pretend
Senate Majority leader Harry Reid announced a motion to proceed for April 26th which will need 60 votes to bring cloture and begin debate. Like the health care bill, the Democrats will need one Republican to cross over to their side for this to happen. While the two sides are moving closer and closer, there is tremendous pressure being brought to bear on the Republicans from President Obama’s frequent appearances and speeches to Sen. Dodd’s appearances on CNBC and on NBC Meet the Press this weekend. One major issue I’d like to see David Gregory discuss is bailout authority. Dodd … …READ MORE
Greece Downgraded Again
09:26 22Apr10 RTRS-GREECE MAY GET SHORT TERM BRIDGE LOAN BEFORE MECHANISM IS ACTIVATED- SENIOR GOVT SOURCE
09:27 22Apr10 RTRS-SHORT-TERM LOAN IS A THEORETICAL OPTION, NO NEED FOR IT YET- SENIOR GOVT SOURCE
Euro rallies 50 pts and then sells back down……amazing. Don’t think they have the legal framework to do it….
09:32 22Apr10 RTRS-MOODY’S DOWNGRADES GREECE’S SOVEREIGN RATINGS TO A3; ON REVIEW FOR FURTHER POSSIBLE DOWNGRADE… …READ MORE
Media Appearance
Today at 12:10 PM CT, I’ll be appearing on WBBM Radio 780’s Noon Business Hour discussing US financial regulatory reform.… …READ MORE
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FRR a Negative for Equities
Tomorrow, President Obama appropriately pivots from nuclear terrorism to financial regulatory reform. The President set a deadline date for this bill to come to the floor and be finished by Memorial Day. Unlike health care, there are areas of agreement between Democrats and Republicans that would lead one to believe that this aggressive timeline may be met. However, this is now a populist driven event with the Main St. vs Wall St. theme applied to the legislation with the subsequent negative effect on the bill. As Politico puts it, “Unions, consumer groups, party activists and liberals on Capitol Hill see … …READ MORE
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Greece Bailed Out! Seriously, We Mean It This Time……We Think:
Over the weekend, the EU and IMF announced a support package for Greece that appeared initially to mollify German constitutional concerns. As I predicted on Friday, the first reaction to the news was a big rally in the Euro and it soared above 1.3600. The 45 billion Euro deal would have 30 billion from the EU states and 15 billion from the IMF supplied at a 5% rate to Greece. The rate is a compromise between where Germany borrows in the market (10 yr 3.19%) and where Greece can borrow (above 7% on Friday, now 6.62%).
On the news, Greek … …READ MORE
Greece Stains:
Today at 4:30 PM ET, I’ll be appearing on CNBC’s the Closing Bell with Maria Bartiromo discussing the potential for a Greek rescue package this weekend.
All the stories yesterday on Greek banks were very ugly. They appear to be losing repo counterparties analogous to what occurred with Bear Stearns in 2008. Greek banks have seen an outflow of E10 billion in the first two months of 2010. Moody’s downgraded all four major banks in Greece last week by one notch and these banks dropped about 4% yesterday. Oddly enough, Greek banks are the largest holders of Greek government debt.… …READ MORE
China…..Ntg Yet!
Here’s the US Treasury’s terse statement on the Geithner visit to Beijing:
This evening in Beijing, U.S. Treasury Secretary Tim Geithner, President Barack Obama’s special representative, met with his counterpart Vice Premier Wang Qishan of the State Council and special representative of Chinese President Hu Jintao.
The two sides exchanged views on U.S.-China economic relations, the global economic situation and issues relating to the upcoming economic track dialogue of the second U.S.-China Strategic and Economic Dialogue, to be held in Beijing in late May.
Here are my major takeaways:
US Treasury Tim Geithner met with Vice Premier Wang Qishan and … …READ MORE
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