Tag Archives: Germany

Equity Euphoria. Why?

The Markets are in the wrong place. For about two years, I have been suggesting that market sentiment bears absolutely no relation to what is really happening in the real economy.

Yesterday’s Markit manufacturing figures clearly show that Europe’s manufacturing sector is in a mess. At 12% , Eurozone unemployment is at an all time high with further austerity measures to follow.

In spite of all that and with increasing hand-wringing from economists, the markets are buoyant at near-record and record highs, the euro is showing only modest losses and for Bond investors it’s business as usual!

19 million Eurozone unemployed with Germany’s PMI at 49.0,  France’s at  a three-month low of 44.0 ….which is even below Italy’s at 44.5 and Spain’s at 44.2! But the Markets grind on regardless.

What is going on?

One thing that we can see from the manufacturing figures is that there is quite a marked divergence between Germany and the rest. Although manufacturing activity is shrinking to 5-6 month lows, the so-called “financial fragmentation” across the Eurozone has become increasingly obvious. The Eurozone does NOT have a uniform monetary policy which means that Italian and Spanish banks, for instance, pay much higher funding costs than Germany. That means that certain manufacturers are paying much more than German ones for their cash. On the face of it, that seems to be anti-competitive – but that unfortunately is just one of the many anomalies of the Eurozone – in fact of the entire European Union.

The poorer you are, the more you pay for your heating fuel.”

This is the backdrop to a largely blinkered , almost “autistic” equities market where we appear to have reached the stage of self-amplification where , because of the abysmally low bank rates, EQUITIES is the only game in town. Self-amplifying? Yes – as more and more investors pile into stocks – mainly because they don’t want to lose out on a rally which they themselves are now fuelling.

The only cautionary note should be for investors who are only just coming into the market to ask themselves “What is the real likelihood of me making a profit?”

When will it stop? History shows us that rallies such as the current one can stop pretty suddenly!

There will come a point at which traders, especially those with short positions will decide “Enough!” – in spite of the fact that currently, there is no obvious level at which to climb out and possibly take a loss.

Once one jumps, the rest are sure to follow.

Νύχτα των Κρυστάλλων ?

“Greeks are lazy, Greeks are corrupt, Greeks are dishonest, Greeks refuse to obey the rules……”

Are they? Do they?

Hearing that certain countries are already thinking about “doing something” about future Greek immigration sent a shiver down my spine.

The Eurozone  states and their limp politicians are beginning to treat Greeks like pariahs – in the same way that the Nazis treated the Jews in the 1930s.

What will be the the natural conclusion? Make no mistake – it could be tragic.

Is there going to be the modern equivalent of the 1938  Kristallnacht ?

Will Greek-owned shops and businesses all over Europe be vandalised because of negative anti-Greek Eurozone propaganda?

Kristallnacht was the starting point for intense economic and political persecution of Jews – with the end game being played-out during WW2.  No  further reminders needed.

Then,  as now, it all started with an excuse. In 1938, it was the assassination of German diplomat by a Polish Jew.

The 2012 excuse is nothing more than an anticipated refusal of Greece to comply with over-strict German-inspired ” necessary” austerity rules.

Anticipated refusal.

Propaganda is a very powerful device. Let us hope therefore that the gradually amplifying and insidious vilification of the Greek people does not result in yet another European catastrophe.

German Hypocricy knows no bounds – especially in respect of Greece!

Twice during  the 20th Century, Germany left Europe in a mess. Now, in the 21st Century, it is their intransigence rather than their high explosives which may once again create European chaos.

Germany had to pay reparations after WW1. However, after its defeat in WW2, reparation payments were NOT resumed. In addition, there was another outstanding debt comprising of what the German Weimar Republic had been using to pay reparations. They had to borrow to pay.

In 1953, an international conference decided  that Germany could could defer some of the debt until East and West Germany were reunified – although because a reunification was though to be unlikely, this was effectively a debt write-off.

By 1980 West Germany had repaid some of the debt although the remainder (according to the 1953 agreement)  would be serviced for another 20 years.

The final payment was due on 3 October 2010 which was the the 20th anniversary of German reunification.

Over 10% of this debt, about 20 million euros, has never been paid.

So please Germany, remember that Europe has shown you mercy on more than one occasion.

Time to return the compliment and defer the WHOLE of Greece’s existing debt for – what shall we say? 30 years?

….and YOU can pick up ALL  the interest payments.

(THAT, my Greek friends, is how to negotiate with the Germans.)

Merkel: All is not well. Referendum?

BERLIN (Reuters) – A leading figure in Germany’s Free Democrats resigned unexpectedly on Wednesday amid a brewing battle for control of the beleaguered party that shares power with Chancellor Angela Merkel’s conservatives.

Christian Lindner, general secretary of the FDP and long seen as the liberal party’s rising star, quit in a dramatic move that exacerbated the party’s leadership crisis and appeared to be linked to a divisive referendum of party members on euro zone rescue moves.

Coalition sources said Lindner wanted to distance himself from besieged FDP chairman Philipp Roesler by lobbing a farewell grenade at his boss, who is under attack for persistent weakness in opinion polls and poor management of the referendum.

Turmoil in the FDP could cause instability for Merkel’s coalition even though the next election is not due until 2013. Speculation is growing that the FDP will dump Roesler and turn to veteran parliamentary floor leader Rainer Bruederle, 66.

Lindner, 32, and Roesler, 38, made brief statements on Wednesday to journalists in Berlin and did not take any questions. There have been rumours of behind-the-scenes tensions between the FDP’s two youthful leaders.

Merkel faced further turbulence from a growing scandal engulfing President Christian Wulff, an ally she nominated for the largely ceremonial post last year. Wulff has denied accusations he misled a regional parliament over a private loan.

Merkel’s spokesman said she had full confidence in Wulff and has no reason to doubt his comments about a private 500,000-euro loan for his house. Bild newspaper reported Wulff obtained the loan from a businessman friend at favourable interest rates.

Wulff told the regional parliament last year when he was state premier he had no business dealings with the friend. Bild said the businessman’s wife had lent him the 500,000 euros. German editorials attacked Wulff for being less than forthright.

“Merkel has full confidence in the person and conduct of Mr. Wulff,” said spokesman Steffen Seibert. “He’s a good president.”

‘BAMBI’ LINDNER LOST HIS NERVE

The Lindner resignation exposed deep splits in the party over whether to support Merkel’s efforts to bolster weak euro zone members. If they widen, it could destabilise her coalition.

“He lost his nerve,” a senior FDP official told Reuters when asked about Lindner’s move.

But a former senior leader in the conservative party said Lindner was attacking Roesler while saving his own skin.

“Roesler’s in over his head and Lindner wanted to get out before it was too late,” he said. “The whole country is fed up with these too-smooth, lightweight amateurs who have run the FDP into the ground. They need someone with experience.”

Lindner had responsibility for organising the referendum which was forced upon the party leadership by a group of eurosceptics within the FDP. Lindner was given the unflattering nickname “Bambi” by a FDP leader years ago and it stuck to the photogenic young man with the baby face.

His departure is the latest setback for the FDP, a pro-business party whose support has fallen to just 3 percent in opinion polls after it won a record 14.6 percent in the 2009 election, helping Merkel secure a second term.

“It’s possible that Lindner wanted to abandon ship before it was too late,” said Gero Neugebauer, political scientist at Berlin’s Free University. “In any event it will exacerbate the FDP’s crisis. The FDP has lost touch with its grass roots.”

The normally loquacious Lindner made a short, terse statement to journalists at FDP headquarters in Berlin, but then left without taking questions, saying only “Auf Wiedersehen.”

“There comes a time when you have to make room to allow for a new dynamic,” said Lindner, a polished speaker who previously worked in the advertising industry. “The events in recent weeks and days have strengthened my belief that this is the case.”

Angry that the FDP leadership was backing Merkel’s euro rescue moves, eurosceptics led by lawmaker Frank Schaeffler led a campaign in recent months to collect signatures within the party for the referendum, which is non-binding.

Their idea was send a signal to the leadership by showing them that grass-roots FDP members opposed euro rescue moves.

The referendum, whose results are expected to be published on Friday, may not pass because Roesler said the required quorum of FDP members is not expected to be reached. Of the 64,000 members of the party, 21,000 needed to take part for it to be valid.

Roesler said in an interview on Sunday the quorum would not be reached and said that was a victory for him. After that thousands of FDP members cast their ballots, FDP officials said.

Lindner married a newspaper reporter in August. He also obtained a license to drive racing cars two years ago.

(Additional reporting by Thorsten Severin, Andreas Rinke and Madeline Chambers, writing by Erik Kirschbaum; editing by Noah Barkin and Alistair Lyon)

Inglaterra to win?

“I make you da offer you can understand”

John Terry gave the game away after the full-time whistle was blown when he and his team-mates were putting together their staged “let’s form a team circle” stunt.

They were celebrating a  1-0 defeat of the Slovenians who are from a tiny country with a population  2 million  and a first division of ten teams, formed as recently as 1991. 

Did you notice Terry (who seems to have forgotten that he has been relieved of the England captaincy) formed a small huddle with several other players and was waving at others to join the circle in a show of  “ersatz” camaraderie and “teamship”.

During the game, commentators appeared to be creaming themselves and breaking open the hyperboles at machine gun speed whilst their grammar deteriorated back to normal. The footie-hysteria had well and truly returned and the country once again lost touch with reality.

Meanwhile, Defoe scored after a cross bounced off his shin at point-blank range,  “captain” Gerrard carried the jolly air of an undertaker’s apprentice with Aids, Terry made too many mistakes and Rooney looked lumbering and unfit with  a face like a trodden-on anaemic blood orange.

“Postman Pat” Capello strutted the line gurning in Italian and treating us to a show of arm-waving which looked like Roman semaphore – probably the best way for him to communicate.  Who recorded his Linguaphone lessons? Chico Marx?  “To winner yew needa da goal.”

Profound.

This is from the Marx Brothers Duck Soup. Is this where Capello found his “inpiratione”?

 Wednesday we went to the ball game, he fool us and no show up.
Thursday he go to the ball game, but we fool him and we no show up.
Friday it was a double header, nobody show up.

Let’s hope everyone shows up on Sunday. We need you for the penalties.

 

…..and with profound apologies: 

Stuart Pearce:  “That kind of play we should eliminate.”
Fabio:  “Atsa fine. I’ll have a nice cold glassa liminate.”