Tuesday, January 17, 2012

The Unpredictable French

The French always seem to have a flamboyance that no other culture can match. Except perhaps the Italians with their flare for style. The French have a knack for the unexpected.

Just when you thought, rightly so, that the credit downgrade of France last Friday was a negative indicator for French bond prices, in comes a surprise showing overnight for a French bond sale. Instead of the interest rates going up, like they did for the PIIGS when they were downgraded, the yield rate actually fell.

Well hit me with with a feather. But wait, what is that which wafts towards my financial nose? Smells like a rat.

And a rat it is, in the form of the ECB. Yes, the very same ECB that promised never to print money or buy the bonds of a sovereign european nation. Lo and behold, last night they did that very thing. And I bet the Germans didn't like it, but that's another story. France is too big to fail and this print-up is the latest attempt to hold it all together, especially for the US markets which open tomorrow (today is a holiday in the US). This ruse is especially important considering Greece has dispatched a posse of technocrats to Fort Fed to tell them of the coming Greek default - unless of course you print some of you bucks for us; seems the  ECB will only print them for France.

So up went the euro stock market by 1% and down went the French bond yield from 0.45% to 0.40% on demand from the ECB.

So we have no demand except the demand from the infinite money machine. Honestly, this is getting ridiculous, but then I'm not a purveyor of flamboyance.

Gold in New Zealand dollars: $2071.89 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $37.80 per oz
Previous all-time high: $59.19
per oz (30 Apr, 2011)

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