Tuesday 21 August 2012 Tuesday 21 August 2012 Tuesday 21 August 2012 Tuesday 21 August 2012
Investment: go for the CRAP
BRICs are out and we are supposed to get excited about Mexico, Indonesia, South Korea and Turkey, producing the acronym MIST. In German, however, this means "manure", or more loosely, "crap". At least then, unlike the euro, it has the merit of being (relatively) honest.
But then, one could take the view that, where there's muck, there's brass, in which case, the BRIC country India should be one of the richest in the world.
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Richard North 21/08/2012 Eurocrash: dishonesty from the Sun
When he was defence editor, Newton Dunn was a dishonest reporter, and now that he is political editor for this Murdoch rag, his old habits carry through to his current job.
Despite that, there is a particular value to this article. This rag has a circulation of 2.5 million, so one knows how badly those of the readership who bothered to read Newton Dunn's garbage will be ill-informed. If the Sun persists in calling itself a newspaper, though, it should be referred to trading standards.
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Richard North 21/08/2012 Eurocrash: no turning point yet
According to this legend, Jörg Asmussen, Germany's director at the European Central Bank has thrown his weight behind mass purchases of Spanish and Italian debt to prevent the disintegration of the euro, "marking a crucial turning point in the eurozone debt crisis".
With such an epoch-making event, one might have thought that it would be all over the German press. But there is narry a sign. In fact, Handelsblatt doesn't even have a front-page euro story today. Its business digest, however, tells us: "central bankers lose composure", while the story refers us to Süddeutsche Zeitung, which has: "unlimited bond purchases divide Germany and the ECB".
The reason why we are supposed to believe this is so important, though, is because Asmussen has friends in high places. He counts as his patrons both Merkel and Schäuble, despite being a member of the opposition Social Democrats. This certainly convinces Ambrose that the ECB is on the ascendancy.
To support this case, Ambrose cites Raoul Ruparel from the europlastics at Open Europe, who tells us that this is a "significant turning point". Asmussen, says Ruparel, "was hand-picked for the role by Merkel. It means that Draghi has managed to crack what seemed like a solid German wall".
Actually, it has been evident for some time that Asmussen has "gone native". The battle lines were drawn in late May, when Süddeutsche Zeitung (amongst others) was reporting a clear split between Merkel, in the national camp, and Asmussen, who was pushing the fiscal union line.
Despite Ruparel's words of wisdom, nothing has changed recently to indicate that Merkel has warmed to the ECB "camp". Nor has anything changed since March, when Asmussen suffered a sharp rebuke from the Bundestag over his enthusiasm for European bailouts.
The lack of anything significant having happened is reinforced by an article on Zerohedge which reminds that that the ECB is firing blanks – it doesn't have the money for large-scale bond purchases.
The real turning point could be, of course, the Karlruhe judgement on 12 September, but, says ZH, even if the court rules in favour of the ESM, the issue still remains that Germany will not permit the ESM to get a banking license, which means the ESM cannot buy banking bonds.
The point to note, though - perhaps the killer point - is that Asmussen is responsible for the ECB's international and European relations, so he is bound to be talking up the Bank's line, supporting publicly anything that Draghi has to offer. PR is Asmussen's job. We have a PR man for the ECB, supporting the ECB line - shock!
Thus to regard his public advocacy for bond purchases as evidence of a fundamental shift in German policy might be going a little too far. Nevertheless, it is good enough for the children on the foreign exchanges. The euro has climbed to its highest level against the dollar in two weeks, nudging $1.241 for the first time since 7 August.
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Richard North 21/08/2012 Eurocrash: a problematic day
The bank was "considering" setting yield targets on the bonds of eurozone countries and, when interest rates exceed those levels, the ECB would intervene by buying up their debt.
This was the "Bazooka" or "Big Bertha" that the child-like commentators were expecting, and such is the faith of traders in the magical properties of the ECB that this was enough to fuel a short-term rally on the currency and other markets.
The story didn't run long before it was brutally terminated by the ECB itself. A spokesman snarled: "It is absolutely misleading to report on decisions, which have not yet been taken and also on individual views, which have not yet been discussed by the ECB's governing council".
Spiegel should have known better. In an earlier piece, Süddeutsche Zeitung had already spelled out 6 September as the date when the governing council met. This was when a decision was expected on buying bonds. So far, the issue had only been discussed in the two permanent ECB working groups. No formal decision had been made on whether to pursue the idea.
Predictably, with Spiegel being slapped down, the euro slipped back, ending down on the day. This predicament was made worse by the Bundesbank (and others) putting the boot in, repeating that it had concerns about ECB bond-buying which it said, posed "considerable risks to stability".
In its monthly report, its statement read: "The Bundesbank remains critical of the purchase of euro system sovereign bonds, which comes with considerable risks for stability". Firmly putting the ECB in its place, it added: "Decisions about a possible broader mutualisation of solvency risks should be ... with the governments and parliaments, and should not occur via central bank balances". The turf war continues.
This gets more interesting as the feud intensifies between Jörg Asmussen, the German director at the ECB, and Bundesbank chief Jens Weidmann - with blood on the floor and no clear victor - yet.
Meanwhile, a number of hacks have been trawling over the bones of the Finland story, but the story for this day is about euro-burn-out. The poor little darlings in the ECB are complaining about overwork, and lack of staff.
It looks as if the member states will have the last laugh here. The size of the ECB is strictly limited by them, and only 40 more staff have been authorised to carry out its grandiose plans. In this case, it seems, not only is the flesh weak, the spirit isn't even willing.
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Richard North 21/08/2012
Tuesday, 21 August 2012
Ambrose Evans-Pritchard's stunt on Finland appeared in the Failygraph on Friday last. However, now lifting (and distorting even further) the words of Finnish foreign minister Erkki Tuomioja from that story, Sun political editor Tom Newton Dunn moves the timeline to "yesterday".
The Failygraph story is being credited for causing the rise, says The Guardian, and is "another sign of market optimism that the European Central Bank will make mass purchases of Spanish and Italian debt". And this we should rely on?
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