Over the last few weeks we have had a series of anonymous "EU officials" making statements to the press that have gone on the wires about 1 hour before the New York markets close. On each occasion the effect has been to ramp the markets as brainless headline-scanning algorithms and brainless headline-scanning traders rush out to buy, buy buy. And on each occasion it has subsequently become clear that these "EU officials" were talking garbage. You financial journalist chaps need to ask yourselves one question before printing this sort of un attributed rumor: Why exactly are you being given a story that if published at 7.30pm EST will cause the New York markets to go from -100 on the day to +200 in a matter of minutes? What is the agenda? Whoever is doing this will know that you can't keep ramping the markets on late-afternoon rumours. Giving the markets its daily rush will require evolving techniques of spin and innuendo. Any market that moves so sharply on an un attributed comment is clearly hopelessly, disastrously dysfunctional.EFSF could be leveraged to any level I suppose 2trn, 3 - 100trn etc. It would be more debt, probably owed by - us and our children. It would be surprising if France and Germany agreed a deal, though. But they will have to appear to make up something. They want to see what happens in Greece first. They play it by ear and stall for time. There is no real plan apart from that. Leaking stories of decisive action is a part of the plan, but if you think about it the kind of things they can do are not going to work in the end anyway, and they must know it. It has become farcical. If you read the Greek press it gives a more realistic picture, by necessity. " The European Commission has raided several banks, on suspicion that they may have been operating a cartel in relation to complex derivatives". Well its a start if they need any further information on who to target next I'm sure Max Keiser would be more than happy to help them out. At least there's one person we can turn to for getting the true facts about what is happening. And if you're interested in speaking out about something closer to home which is just as important in its own way, make a comment.
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Thought it funny that yesterday someone being interviewed on News 24 were stating how exasperated many were over the B of E's insistance two years ago that Inflation would never rise above 2%. Makes you wonder what could have changed in that intervening periotd to prove that solid prediction so wrong. Oh look its that nice Mr Osbourne......In the same way in March 2010 the OECD was predicting that growth in Britain would rise at a faster pace than Germany and again the rest is sadly history.
Violence erupts as Greece strike begins - in pictures
Anger over new austerity measures and layoffs erupts into clashes outside parliament as two-day general strike begins
Stock markets rallied last night on this paper's report that France and Germany have reached agreement on boosting the European financial stability facility by turning the fund into an insurer. The big idea is to use the EFSF to offer first-loss guarantees of 20% to bondholders. In this way, it is hoped, the fund's €440bn of guarantees can be magicked into firepower of €2tn or so.
The trouble is, almost nobody seems to share eurozone officials' faith that the wheeze will work. The City is awash today with expert commentary on why the EFSF-as-insurer plan is a bad idea. "Wizard of Oz, smokes and mirrors," says Evolution's Gary Jenkins. He's right: the insurance scheme is too circular to provide much faith that the polices would pay out in a proper crisis.
But surely some hope of insurance is better than none, an optimist might respond. Maybe not. Royal Bank of Scotland's chief European economist, Jacques Cailloux, today offered an 11-point critique of why we should fear a scheme to turn the EFSF into a bond insurer. Point six is alarming
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