Tuesday, July 3, 2012

Presenting: The Keystone Cops and Harry Hedgefund

The deal last Friday meant that insolvent governments in the eurozone could shift the stinking pile of bank debt from their books to the books of the variously named bailout funds to be soon available.

This to bring down the cost of sovereign bonds, allowing governments to borrow more to pay off past debt and to continue funding their political ambitions.

So up goes the appetite for risk, a small window of opportunity for high-frequency algorithms, rulers of the markets, to allow Harry Hedgefund to make a quick buck or two.

Which he will, for now. Because this meeting number 19 of eurozone leaders, hasn't achieved anything but put off for another day, the inevitable fact that all this debt must be extinguished somehow, sometime.

I have some accounting background and know that placing liabilities outside your books in a 'bad bank' type company, doesn't make problems go away. In the end if you don't have the ways and means to pay your bills with cash earned through profits, you are dead in the water.

This plan looks rosy as you gaze into its eyes across the dim light of an expensive restaurant table. But wait till morning when the makeup has worn off.

The fateful day has been simply pushed out further. How much further we don't know. However, the meetings seem to be coming in shorter intervals and the 'great plans' coming in ever desperate times. How long will this latest wee foray into madness last? Probably less than last time and maybe a week or too before the next eurozone panic meeting.

All rather Keystone Cops really.

But at least it gives you and I the chance to restructure our wealth and lives to be ready for the big debt pop.

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