Spain and Italy done and dusted for this round and however much you feel it’s a fix or manipulation, the results are OK. Also the idea of an expanded EFSF with a greater mandate is picking up steam as a potential panacea for the current European funding problems and headlines such as "*S&P'S SIX SAYS INCREASING EURO FUND IS LIMITED RISK FOR CORE" appear to be on the increase. Peripheral spreads have collapsed and we have seen the start of a healthy Euro FX rebound, but judging by the market chat we are picking up, everyone still appears to be fighting it and waving their bearish factors fervently. More of a short squeeze is certainly on the cards and our trusty old mibometer is backing that view.
Now, whilst we are all focused on auctions, the ECB announcements and EFSF headlines it is actually these headlines pricked our interest:
*GREECE TO BE REPRESENTED ON GERMAN WAR REPARATIONS CASE
*GREEK GOVERNMENT DECIDES REPRESENTATION AT ICJ CASE IN HAGUE
*GREEK PRIME MINISTER PAPANDREOU COMMENTED IN EMAILED STATEMENT
*PAPANDREOU SAYS ICJ CASE RELATES TO DISTOMO WWII MASSACRE
TMM have begun to wonder where this is leading? Is this an alternative to the EFSF rescue package? How convenient it would be if Germany just happened to settle €80 billion in "war reparations" (ahem) to Greece. As such TMM look forward to the following headlines:
For Spain
*Germany agrees to pay Spain €300bio in reparations for their involvement in the Spanish Civil War and for persistently commandeering all the sun-loungers
*France to pay Spain €194 bio in reparations for the damage Napoleon did during the Peninsular War
*China to pay €6bio in "reparations" to Spain for all the Chinese restaurants in Malaga taking UK tourist income from local Spanish establishments
Not quite reparations but equally backdoor:
*France agrees to buy Spanish air traffic control for €100bio to create Europe's largest no-fly zone
For Italy
*Germany agrees to pay Italy €500bio in reparations for the Varian Disaster in the Teutoburg Forest in 9AD
*France agrees to pay Italy €300bio in reparations for Charles VIII of France's invasion of Italy in 1494 AD
*Holland agrees to pay Italy €200bio in reparations for soundly beating them 3-0 in the opening match of Euro 2008
For Portugal
*Germany agrees to pay Portugal €50bio reparations for not taking them seriously in WWII
*France agrees to pay Portugal €20bio in reparations for assisting Spain in stealing oranges in 1801
*Finland to pay Portugal E10bio reparations for thinking it was part of Spain
For Ireland
*Germany to pay backdated rent of €50bio for hire of submarine parking facilities
*France to pay €10bio for constantly going on that Breton culture is actually Celtic
*ECB continues to pay €30bio for their involvement in getting them all into this mess in the first place and allowing them anywhere near the Euro
For Belgium
*The rest of Europe agrees to pay €100bio for using their country as a rugby pitch in every World War
Now, whilst we are all focused on auctions, the ECB announcements and EFSF headlines it is actually these headlines pricked our interest:
*GREECE TO BE REPRESENTED ON GERMAN WAR REPARATIONS CASE
*GREEK GOVERNMENT DECIDES REPRESENTATION AT ICJ CASE IN HAGUE
*GREEK PRIME MINISTER PAPANDREOU COMMENTED IN EMAILED STATEMENT
*PAPANDREOU SAYS ICJ CASE RELATES TO DISTOMO WWII MASSACRE
TMM have begun to wonder where this is leading? Is this an alternative to the EFSF rescue package? How convenient it would be if Germany just happened to settle €80 billion in "war reparations" (ahem) to Greece. As such TMM look forward to the following headlines:
For Spain
*Germany agrees to pay Spain €300bio in reparations for their involvement in the Spanish Civil War and for persistently commandeering all the sun-loungers
*France to pay Spain €194 bio in reparations for the damage Napoleon did during the Peninsular War
*China to pay €6bio in "reparations" to Spain for all the Chinese restaurants in Malaga taking UK tourist income from local Spanish establishments
Not quite reparations but equally backdoor:
*France agrees to buy Spanish air traffic control for €100bio to create Europe's largest no-fly zone
For Italy
*Germany agrees to pay Italy €500bio in reparations for the Varian Disaster in the Teutoburg Forest in 9AD
*France agrees to pay Italy €300bio in reparations for Charles VIII of France's invasion of Italy in 1494 AD
*Holland agrees to pay Italy €200bio in reparations for soundly beating them 3-0 in the opening match of Euro 2008
For Portugal
*Germany agrees to pay Portugal €50bio reparations for not taking them seriously in WWII
*France agrees to pay Portugal €20bio in reparations for assisting Spain in stealing oranges in 1801
*Finland to pay Portugal E10bio reparations for thinking it was part of Spain
For Ireland
*Germany to pay backdated rent of €50bio for hire of submarine parking facilities
*France to pay €10bio for constantly going on that Breton culture is actually Celtic
*ECB continues to pay €30bio for their involvement in getting them all into this mess in the first place and allowing them anywhere near the Euro
For Belgium
*The rest of Europe agrees to pay €100bio for using their country as a rugby pitch in every World War
6 comments
Click here for commentsWhy are they called auctions. As I understand it, the euroland banks buy the stuff and then sell it to the ECB.
ReplySubmarine parking in Ireland? All lies from that dipso Churchill!
ReplyHi MM,
ReplyDefinitely "reparation" day as all the, gulp, shorties got taken to the woodshed yesterday where the Beard was waiting with his stick or was that Socrates; I can't figure it out :).
I reckon there is plenty of more short squeeze to come (hint: short now!!!!) so my chips are off the table for now.
Definitely also interesting to see the good old EUR/USD hit back through the 1.30s ... could be shortlived, but I know a shortsqueeze when I see (erm feel) one ...
Claus
This whole bloody episode would never have taken place if they'd just given Gibraltar back to its rightful owners.
ReplyCold Steel for Claus? Strange day in the US as all the usual correlations broke down, market weakness on a DGDF day with Europe screaming skywards was a very bizarre experience.
ReplyCorrelation breakdown - direction shift, or regime change dead ahead?
I have had better LB ;), but as I noted if the SPY closed above its previous highs I would cover. And so indeed I did ... (oh I did not suffer in the EUR/USD since I have no chips in that market, but it brought back phantom pains :), since I have been there before.)
ReplyClearly, some pink flamingos are ripe for the abbatoir now that the ECB has thrown a wrench in the works by hinting to hint of a rate increase (I don't buy it of course, but stranger things have happended than the ECB raising just before the next downturn, you might even call it a leading indicator I guess).
Gold also seems decisively losing its breath and just keeps on poodling down ever so slowly. What gives here ... just buy the dip?
One thing I am also watching is the sideways(to down) movement in EM (pretty much consensus obviously but still). It would be nice to see a squeeze there so that honest investors such as myself could defend parking some funds there for the long term (i.e. in a non levered account where you actually OWN the stuff you invest in ;)).
Claus