The Merkel-Sarkozy Deal

The details are reported here.

71 replies on “The Merkel-Sarkozy Deal”

NO bazooka.
Just more of the same except for what appears to be no loss sharing with private sector.

Essentially, France and Germany have agreed on a series of reforms to address the sovereign debt crisis that they’ll now take to EU President Herman Van Rompuy on Wednesday.
These reforms include a modified EU treaty, which would ideally apply to all 27 members, but they were also ready to draw up a treaty for just the 17 eurozone members. Here are the main points:
• Automatic sanctions for breaching deficit ceilings of 3pc of GDP.
• Introduction of qualified majority – 85pc – for reforms.
• Monthly meeting of eurozone leaders until crisis ends. Focus to be on growth in Europe.
• Eurozone governments must work towards balanced budgets.
• Speed up implementation of European Stability Mechanism to 2012.
• ECB’s role to remain unchanged – will not be lender of last resort.
• No eurobonds.

So having destroyed the sovereign bond market in Europe all they can come up with is an about face on PSI and changes that will take years to approve and implement.

It would be interesting to have the views of our economist friends on this latest proposal.

So… bondholders kept whole.

Sorry we made that mistake about Greece lads but we’ll quietly brush that one under the carpet and make sure it doesn’t do any real damage. Please don’t smack us again as we now realise who carries the stick around here.

As for the rest of us serfs, let’s get back on our heads (old joke about hell) and get these guys fully repaid. No doubt it will be later in the week/next week that they’ll announce that all future debt rollovers will just transfer what we owe to IMF/Fed/ESM/whatever as long as we take 100% risk away/remove any chance of PSI.

It’s all starting to look very watered down (except for the austerity that individual countries are going to have to continue with). When will Euro crisis II the sequel start?

Might as well start buying Italian debt at 6.5% because it’s better than any rate you’ll find in a local bank deposit account and it’s clearly going to be as safe as houses. Money for old rope.

… and I presume if treaty change requires a referendum in Ireland then we will be told that voting the wrong way this time will mean voting to leave the EZ/EU and Ireland will be damned to hell and Enda had better make sure that the people realise that so they get it right this time… the little upstarts.

There is scant chance I would think of a treaty passing here without significant yielding on Anglo notes. This will become and rightly so a touchstone issue.


Europe is going back to a Agrarian feudalist society.

FRNs will crush the old continent.

Laois or Laos ?……..all those Paddy fields will be bombed from 40,000 feet

So Germany and France are in complete agreement that absolutely no steps will be taken to address the solvency issues of weaker Eurozone members… Well I’m glad that Merkozy got their photo opportunity, while taking concrete steps to prevent a theoretical Eurozone crisis at some non-determined time in the distant future.

In the mean time. Does anyone know if it’s difficult to get a shotgun licence if you live in an urban area? Also, Euro-watchers may be pleased to hear that Superquin has tinned soup on at €1 per can this week.

Germany 1 France 0

“We express our confidence in the ECB,” President Sarkozy said. There will be “no comments, positive or negative, on its actions.”

Private to Public on Irish options re PSI; too soon for local serfs to express any confidence in The ECB in cutting some serious slack on private vichy_banking system debt morphing to sovereign debt; spose a letter of comfort on same is out of the question before Friday?

Did I miss the ‘Our banks are fully funded up to the middle of next year …’?

@PR Guy

“Might as well start buying Italian debt at 6.5% because it’s better than any rate you’ll find in a local bank deposit account and it’s clearly going to be as safe as houses. Money for old rope.”


Or Irish trading at over 9%. Has it moved down yet!!
That is the test as to whether somebody believes that the king is wearing a full suit of clothes.

Doesn’t this deal imply that there will be NO risk difference between holding German bonds or Greek bonds because future bondholders will NOT be

I.e this is a type of Eurobond through the back door?

Fiscal policy in a large diverse monetary union is vitally important. The intrest rate is set for the union as a whole. If that intrest rate is too low for an individual contry (Ireland during the boom) they should be required to run surpluses relative to the degree that the economy is growing in nominal terms over and above the Euro average. Equally if the intrest rate is above what a country needs ( Ireland now ) they need leeway to run deficits above this 3% target taking into account the countries overall debt sustainability.

These overly simple rules are of no use to anybody. Of course it is less harmful to Germany and France as monetary policy will be closer to their needs than that of the periphery.

It’s official: they want something which will require a Constitutional amendment, and hence a referendum, in Ireland.

@ Kevin O’Rourke

That’s a strong statement, Kevin. Could you expand a bit? Is it this bit: from the FT?

“Both leaders want a so-called “golden rule” to be written into the constitutions of all 17 eurozone member states, obliging governments to balance their budgets ” ?

Industry returning from Asia will bypass the European continent as there will be no local demand with no money nor credit – they will go straight to the Anglo world……..maybe thats the plan ?
To reverse the industrialisation dynamic while leaving Europe a curious mix of early 20th century Austrian / Hungarian decline and extractive French Asian colony.
If they manage to hold the entropy together it should be a good place for a holiday but if not…………

We’ve got to get out of this place.

It sounds like they are goin got impose the procyclical policies which would not have prevented this crisis and which may well make it worse. Is this correct?

It also sounds like it will be easier for core states to breach budget deficit rules because exceptions will be allowed based on QMV/

They are aslo ruling out wealth transfers through private sector involvement.

I am not impressed by this so far. We should await more detail and the outcome of the summit. In the meantime, I am ready to campaign against any referendum on these terms.

@ Kevin

the thing is, a treaty, from start to full finish, would likely take the a minimum of year to enact. Maybe if they really sped it up, 9 months, but hardly suggests the markets are gonna get the answers and certainty they are looking for.

They want something alright, but excluding the present situation and dependencies we find ourselves suffering, HOW in the long run is this of any benefit to us as a country? We have found out how important we are in the machine.
Where is Eammon Ryan. We need to have that conversation about leaving the euro!

“The huge public debt of Italy isn’t the fault of Europe, it’s the fault of Italians,” Monti –> Italian 10-years are now below 6%, Spanish close to 5,

Kenda “You are not responsible for the crisis.” Ireland up to 8.2%

It wounds like all this stuff about golden rules is just to allow Germany to sell transfers to its public. There is no reason to think this will halp anything. The German Govt is trapped in its own narrow perspective on the economy and its mistaken belief that it has an model which should/can be reproduced across Europe/the World. The French Govt is being opportunistic and mercenary.

It will be interesting to see how other Governments and countries react. Anyone who speaks out against the plan unilaterally will be pilloried. Accordingly, it is unlikely we will hear any negative comments in public for th emoment. One wonders what (if any) other less publicised plans are in train as between other countries.

@ Gavin


Looks like the markets are giving it a thumbs up. Wonder is Mr. Bond in the vicinity to elaborate on this. The message to the markets seems to be: “everybody will be responsible and we’ll make sure of it”. Sarkozy gets his fig-leaf with use of QMV in the Council. No further PSI, no use of heavy artillery or even small fire to batter recalcitrant markets into submission. Trust being regained, etc. Banks won’t be touched, at least until both leaders are re-elected – if even then. Focus on growth is good because it will mean proper attention paid to dysfunctional laggards and is another key element of economic governance. Plus it recognises that if you can’t export your way out of the mess, and with limited or no population growth, improvements in productivity and efficiency are the only answer.

But a treaty change, probably required to reassure bond investors, sets the cat among the pigeons in Ireland. Opportunity for a bit of revenge blackmail on the pro-notes and ELA?

And the UK will be out in the cold. If it forces the pace, the treaty change wil apply only to the ‘ins’ with the ‘outs’ who have committed to join eventually signing up voluntarily. Tough.

@ Zhou
The black and white notion of fiscal chastity vs. fiscal promiscuous needs to be challenged also. Sometimes one has to be fiscally casually too!

if we thought that the rerun of the Lisbon two referendum was ugly we really have seen nothing yet.
I really hope that the government have thought this through. The idea of trying to go to the people, in the spring, as the budget cuts bite, as the drumbeat of unsecured un guaranteed bondholders continues to be repaid, as we move towards the March 31 deadline for the repayment of the first tranche of promissory notes, it would be a brave, perhaps even courageous, backbench TD that would stand up and say that this was the only game in town.
I think we must give credit however to the Taoiseach, firstly for deciding the referendum route is needed and also for speaking last night.

@ Paul Hunt

they were already higher, and this seems like enough big talking to keep that trend going on for the evening. But its a lot of position squaring/covering though to be honest, not one is getting ‘long’ risk ahead of EU Summitapalooza, lot of guys just short or underweight Spain and Italy and now being forced to buy back in. As you note, the requirement for a Treaty change in this country, and potentially just plain old ‘No’ from some others, mean that the markets will be definitely be coming back to this issue again at a later date.

The performance of Italian bonds in the last week has been nothing short of miraculous, btw.


“The huge public debt of Italy isn’t the fault of Europe, it’s the fault of Italians,” Monti –> Italian 10-years are now below 6%, Spanish close to 5,

Kenda “You are not responsible for the crisis.” Ireland up to 8.2%

Certainly investment bankers might feel that Italy is both more of a pawn of Merkels and has had its democracy more thoroughly subverted by financial capitalism than Ireland, and that is hopeful for us.

For the Italians, not so much. That was your point, right?

“golden rule”

That was the cornerstone of Gordon Brown’s days at number eleven. Somehow I doubt Nicky and Ange listened to as many of his budget speaches as me – either that or they are trying to be funny.

Some readers might like to look up the way the “golden rule” was met at times by tinkering about with the definition of the cycle.

@Paul Hunt
Not so sure the markets are giving it the thumbs up. Italian and Spanish had moved significantly before the press conference ..Italian were in 70 bp in early trading and Spanish also had major moves. Methinks the ECB went in with all guns blazing am in order to get ahead of the curve.
Germany got 6 month money this morning at 0.0005%…. So risk aversion is still out there. Effectively free money.

The treaty changes will undoubtly set the cat amongst the pigeons. If you are correct in your previous post that a hard core of 30% naysayers exist then it is not going to be that difficult to bring along another 20.001%.


“all this stuff about golden rules is just to allow Germany to sell transfers to its public”

I could have sworn one of them did say towards the end of the press conference something along the lines of: “..if we are going to have to pay the bills of weaker countries….” I don’t know which one said it though as I was listening to the one guy translating both M and S and he was constantly a couple of sentences behind.

Or should that be S and M?

Yee guys are missing the big picture – The credit labour cycle thingy – the fruit of the looms of this world must come back to the Donegals given that credit is dead.

But EU monetory policey is actively fighting this tide – the Euro ship is going down because too many powerful people there have skin in the game of slave arbitrage.
But you cannot halt the tide – the best you can do is Channel it.

We should be training people to make stuff again , not sell some financial product to credit junkies.
They will be building ships on the Clyde again withen 10 years – are we going to be tied to this modern Austrian Hungarian nightmare while Britain reindustrializes ?

@Mr. Bond,

Thank you. You were on the case while I was writing. Apart from the ‘disaster capitalists’, vultures, hedgies and shorters, I sense there are lots of people with ‘good money’ looking for a safe home. They need to have an almost absolute assurance of recovery though.

It’s almost as if they’re asking “give us a good reason to believe”.

When it comes to referenda, as it almost certianly will in Ireland and probably in a number of others, minds will be concentrated wonderfully when the EU ‘powers-that-be’ outline the institutional and procedural arrangements that will be put in place to deal with the possibility of any or some member-states exercising their sovereign right to say ‘no’.

@Philip II

“I think we must give credit however to the Taoiseach, firstly for deciding the referendum route is needed and also for speaking last night.”



Any referendum result will not affect our membership of the European Union. 🙂

@ Phillip II/Livonian

whats interesting is that, apparently, a full six month consultation is required to actually draft the treaty, and then the process of enacting it tends to take another 6-12 months. So June would seem to be the earliest we could expect a referendum, and other EZ nations probably wont ratify it until the Autumn. Still a lot of time for the markets to have another few sorties at this.

@Le Dork du Cork

“we going to be tied to this modern Austrian Hungarian nightmare while Britain reindustrializes ”

Show me some evidence that Britain is going to industrialize… they’ve lost the necessary skillset and the inclination! Young Brits will not go to work in factories when there’s a chance they could get on X-factor instead.

Anyway we won’t be tied to it. We will vote ourselves out in the referendum and go back to ploughing the land, knitting chunky jumpers, dancing at the crossroads, etc.

@ Kevin O’Rourke / Philip II

What makes you think that a referendum will be needed? Doesn’t the framing of this mean that Ireland will retain all of its budgeting powers, it will just have an extra ‘golden rule[/handcuff]’ that the government will enact of its own ‘free will’? The ECJ will thus just rule on whether or not we have hit our target (with associated torture for non-compliance), but we would still theoretically retain our sovereignty?

Here are a couple of though-provoking posts on the subject:

From a Marxist perspective the force that controls government policy comes from the economic dynamic within the superstructure and not from the ‘vision’ or ideas, or even the pragmatism of individual politicians involved in an oh so difficult balancing act between the interests of the capitalist economy and those of ordinary citizens. But while we know this, power still is usually able to hide how it works. The benefit of crisis therefore is that it reveals how real power is exercised.

That man from The Treasury in town shortly …. (h/t a tentacle)

Eoin Bond
Between Jan 1 – March 31 next year we will pay over 4b to unsecured creditors of a dead bank, at the behest of the Troika in effect. Thats another austerity budget in magnitude. I think we all agree that in fact another would be economically preferable to that waste. Now, some PR will be needed to get that referendum over the line….

@PR Guy
Yes , well maybe just their monetory policey is shifting towards this goal as they never did the French thingy of keeping core industrial units via fiscal measures to spring back into life when monetory conditions really do change.

But given the transnational nature of corporations if Sterling continues to weaken against a strong but brittle euro currency I cannot but not see how reindustrialisation will not happen to a certain degree.
Their achilles heal is of course their energy policey although Germany is not much better in that regard – the French are planning to export more cheap electricity across the channel anyhow , so that might help in the short term.
As for skill sets well they move to the work – many English guys work in Toulouse these days.

Well, I am going by the reports that they want ‘golden fiscal rules’ written into countries’ constitutions. That would obviously require a referendum.

Merkozy to Irish voters. ” if u dare vote no, you are out of the euro, no longer the responsibility of the ECB and without the support of the EFSF.” Much the same as they said to Greeks. As Harry Callahan said “do u feel lucky punk”.

Irish Voters
“without some sort of feckign sweetner we vote no and then the whole dreary crisis comes round again in spades”

I’m broadly in favour of the fiscal controls they are proposing -implemented in national laws, overseen by national courts and only monitored by the ECJ. I don’t know who could be against this -I think the word fiscal union is bandied around rather loosely given this is little more than an enforcement mechanism for the existing Stability and Growth Pact which could hardly be called a fiscal union.

However, despite thinking this is all broadly positive, I do not think it will do anything to actually fix the situation. The Eurozone is vulnerable to asymmetric shocks. Ireland and Spain have had dramatic problems in recent years, even though their fiscal management was far superior to the so called core in the years prior to the crisis. It is a bit much to be listening to France and Germany telling us to balance our budgets, when we ran consistent exchequer surpluses during the period when the problem was gathering and France hasn’t balanced a budget since Boney M!

These rules will help treat one of the symptoms of the crisis, i.e. sovereign profligacy in Greece and Italy, but ti doesn’t solve the basic problem that our economies and fiscal policies are doing different things in the same monetary environment. It’s a structural problem, not just a deficit problem.

I would think the markets are rallying because all this r rubbish from Merkozy is enough to get the ECB onto the pitch to force down long term rates either on its own or throgh a third party. You don’t think bond markets vigilantes actually believe a treaty will ever be inked. That said, let us see what the ECB does. It appears they have been quiet lately.

On Wednesday, Mr Sarkozy will meet in Paris US treasury secretary Timothy Geithner, whose fourth trip to Europe since early September reflects US concern about the euro zone.

Mr Geithner visits Germany tomorrow to meet Mr Draghi and German officials. Later in the week he joins EU leaders at a political congress in the French city of Marseille due to be dominated by euro crisis talks and then heads to Milan to meet Mr Monti.

Hopefully, he might pop into Shannon for a little refueling, where the present Shannon Front Row might present the lord lieutenant of the tentacles cds. with a little U-owe_US promissory note – with interest, think €30 billion will cover it for the mo …

MatrixsQuid rules OK. What banking crisis?

@ Kevin O’Rourke

I hope that’s right, though I suspect Sarkozy may have been generalizing and Ireland will be viewed as a ‘special case’ that won’t require constitutional enshrinement in the short/medium term.

Agree with you. Make sure though your deposits are outside the euro first, just in case.

@ All

The situation is far from clear, except for confirmation of what has been trailed for some time with regard to PSI, and to which I have repeatedly drawn attention. (It is this, and nothing else, that explains the positive reaction of the markets).

Some basic facts are worth repeating. The requirement for a referendum in Ireland depends on the nature of the amendments to the EU treaties (the writing of an additional EU treaty being out of the question) and nothing else. It does not apply to any other international agreements to which the State might wish to adhere.

The one amendment to the EU treaties that Ireland has already agreed to – that in respect of Article 136 to allow Germany sign up to the ESM treaty – is being dealt with under the simplified revision procedure in Article 48.6 TEU and the government has already indicated that no referendum is required given the fact that it considers that the amendment does not go beyond the scope and objectives of the existing treaties. Indeed, Article 48.6 stipulates that any decision under it “shall not increase the competences conferred on the Union in the Treaties”.

A good deal of politicking is going on with the UK being left holding the baby at this juncture. Cameron cannot block the 17 – or, indeed, a lesser or greater number of countries – from proceeding on their own but this can only be by means of a treaty outside the existing treaties as they cannot either alter or add a new treaty that applies to the EU qua organisation. Decisions under the new treaty would decide by super QMV – 85% was mentioned – with the ECJ being asked to take on certain powers of review (as has been agreed in the case of the ESM).

Like every compromise struck between totally opposing positions, it is not a pretty sight, especially viewed from the position of the UK and one wonders if it can really hold.

From an Irish point of view, isolation of the UK in this manner is not desirable. But the situation has, to a large extent, been created by the Conservatives themselves especially in the recently adopted legislation requiring a referendum in the UK in the event of a transfer of additional competences to the EU.

@ All

Correction. I see from the Der Spiegel report that the 85% QMV rule will apply to the ESM.

I can’t see how you could be in favour of it !
The use of defecits is misleading – its just money production.

These rules will further increase the power of the financial sector by sustaining their extreme leverage and thus power to destroy the social & industrial fabric – if you want to reduce public debt long term you can produce interest free or near interet free money.

Despite the inherent superioty of Europes remaining industry I am turning very bearish for Europe , the Euro and even Gold.
This is Millar / $$$$$$$$$$$$$$ time.

“France hasn’t balanced a budget since Boney M!”
Of course not – France is the Rothschilds playground – do you think they would be stupid enough to soil their nest ?

@ All

There is one intriguing aspect to the situation which has just occurred to me; the UK must agree to the amendment to Article 136 TEU (a stick of Merkel’s own making!).

@DOCM London Calling …

Blocking Tactics
UK Infuriating Partners by Obstructing EU Foreign Policy

The British government is trying to obstruct the establishment of a common EU foreign and security policy. The formation of an autonomous military headquarters failed last week after Britain alone resisted the move. The government of Conservative Prime Minister David Cameron has also been preventing the EU from issuing joint statements in international organizations.,1518,801756,00.html#ref=nlint

The principle seems to be “If you can’t make forward progress, take something that already exists and pretend that is forward progress”. The “golden rule” already exists – here’s what was agreed at last March’s summit:

Euro area Member States commit to translating EU fiscal rules as set out in the Stability and Growth Pact into national legislation. Member States will retain the choice of the specific national legal vehicle to be used, but will make sure that it has a sufficiently strong binding and durable nature (e.g. constitution or framework law). The exact formulation of the rule will also be decided by each country (e.g. it could take the form of a “debt brake”, rule related to the primary balance or an expenditure rule), but it should ensure fiscal discipline at both national and sub-national levels. The Commission will have the opportunity, in full respect of the prerogatives of national parliaments, to be consulted on the precise fiscal rule before its adoption so as to ensure it is compatible with, and supportive of, the EU rules.

The main difference I see is that the ECJ now has a role in assessing whether the rule is good enough, in some way, but it has no powers of enforcement over any actual national budgets or specific measures in them (which some of the leaked German papers proposed). Although it is too soon to draw any conclusions, since the exact wording must be seen for that, given that a referendum wasn’t needed last March when Ireland agreed it would introduce a debt brake, why would one be needed now?

Also automatic sanctions already exist, that can only be undone with a reverse majority. Here’s what was agreed in October:

To strengthen the corrective arm of the Stability and Growth Pact, a new set of financial sanctions are introduced for euro-area member states; these will apply earlier on in the excessive deficit procedure, and using a graduated approach. A non-interest-bearing deposit amounting to 0.2% of GDP will apply once a decision has been taken to subject a country to the excessive deficit procedure, if an interest-bearing deposit has already been
imposed under the preventive arm of the pact or if serious non-compliance is identified. The deposit will be converted into a fine of 0.2% of GDP if the Council’s initial recommendation for correcting the deficit has not been followed. Further non-compliance will result in the sanction being stepped up, in line with the existing provisions of article 126(11) of the EU treaty (maximum fine: 0.5% of GDP). To trigger the sanctions more automatically than at present, a so-called reverse majority rule is introduced, whereby the Commission’s proposal for imposing sanctions related to non-compliance with the Pact will be considered adopted unless the Council turns it down by qualified majority.

Maybe there will some small changes at the margins, but how are these “new” rules, substantively different to the old ones?

The main change is dropping the PSI clauses from the ESM. But apparently the CACs in newly issued bonds remain. However it seems that no matter how unsustainable sovereign debt becomes, the bondholders will be made whole courtesy of the taxpayer. Since this goes against the rules that the IMF must follow (e.g. requiring PSI in Greece’s case as a condition for distribution of the next tranche) this could lead to a diminishing role for the IMF. Not a good day for the EU taxpayer.

@David O’Donnell

From that same Der Speigel article, pot calling wok black department.

Volker Kauder, the powerful parliamentary group leader of the conserveatives, told the party’s annual congress: “Just looking for their own advantage and not being prepared to contribute — that cannot be the message we accept from the British.”

Though the Tories are callous monsters it does no harm for them to stymie the CSFP ambitions of the EU until there is some form of popular democratic control over our new would be unelected executive. Imagine the mess the EU could be in if Merkozy had been in power in the run up to the invasion of Iraq.

@Shay Begorrah

Nikki’s Malvinas moment was bad enough – result a massive rise in weaponry of all types across north africa .. decrease in religious tolerance and secularism under serious threat.. doubt somehow that he will be called to The Hague to explain himself – and probably no truth in the rumour spread by the wallsstreetchimes that he is timmy’s b1tch.

The IMF, The Fed, and the ECB …. serfs beware.

At times, it is useful to have an English Tory onside ….

@PR Guy

With the seeming demise of the PSI provisions, more bank liabilities have now been shifted to the sovereigns, and in practice that means the AAA sovereigns. As a result their ratings have nowhere to go but down. It is basically the bank guarantee all over again.

@ PR Guy

As you almost certainly know already, the world, and especially the financial world, is not peopled by innocents.

In this instance, S & P has blown its cover.

You mean they got the ‘nod’ from ‘timmy’ to keep the pressure on the tips of the tentacles!

Georg R. Baumann says:
December 5, 2011 at 9:04 pm
Welcome to the United States of Germany

The Insanity goes deep, they keep raising taxes and cut spending, and this is exactly the prussian policy dictate that causes deficits to grow!

Funding is conditional on prussian austerity demands that is intensifying, despite recession to hit again all countries.

The suggestion to boost and strengthen the IMF can be understood from the perspective of the ‘Golden-Rule’ that Merkel speaks of, only, it is a very different rule in deed as those who hold the Gold will rule.

Technically, the ECB would find it very difficult to impose collateral demands against lending facilities, the IMF is an entirely different story, this is what they do throughout history, this is what the banking mafia was setup for in the first place, to steal peoples assets a penny on the dollar.

Goldman Sachs banker Draghi accepts the prussian politics and will insist on even greater fiscal austerity, devastatingly deflating European economies further and create what? That’s right, higher public debts.

The only way to stop this is for the public to revolt, revolt on a large scale, and civil disobedience is only the first name and a rather harmless way of standing up against this enslavement, and it will not be enough. Only a full scale revolt will stop them in their tracks. They are fanatics and they will follow through.

The intellectuals of each country are required to combine their efforts, the time of serious dissent is now, or never.

The face of Italy’s Welfare Minister says it all ….

The measures are meant to slash the cost of government, combat tax evasion and step up economic growth, so the country can eliminate its budget deficit by 2013. Mr. Monti took the steps in an emergency decree, which means they will take effect before he presents them to Parliament for formal approval.


the standard quid pro quo for a “golden rule” is one golden goose. I’m not seeing any goose action.


“As you almost certainly know already, the world, and especially the financial world, is not peopled by innocents.”

With the exception of my clients of course: who are as pure as driven snow 😉

Not sure what to make of this morning. Risk is off… but only a little bit off which suggests we are all waiting for the ‘big announcement’ – a couple of weeks ago, that S&P statement would have caused a 100+ points drop.

The big announcement will come and it probably involves various central banks, countries, Fed, etc. all giving presents to the IMF. Got to give the meerkats a rally before Christmas.

What has gone off the radar though is a fuming Silvio, hell bent on revenge. He hasn’t gone away you know….. he’s out there, planning and scheming. A bird keeps whispering in my ear that he is planning to pull some sort of stunt soon. You heard it here first.

@ All

This commentary by Buttonwood of The Economist on the S & P move is of interest.

Notably the comment;

“This blog has consistently argued that we have created too many claims on wealth in the form of debt that cannot be satisfied. These debts will thus be defaulted on, or inflated away; choose your poison”.

It could hardly be put better!

@ Ceterisparibus

You read it here first!

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