Tuesday, October 11, 2011


What a pleasure to get back to my Blog after a week filled with tax declarations and urgent client work.

And what a week it has been, with the World mourning the departure of Steve Jobs, and Jean Claude Trichet mourning his own departure.

 What a contrast, Jobs an adopted child, college dropout, perfectionist, egomaniac and one of the greatest entrepreneurs of our time. He has created thousands of jobs worldwide, revolutionized the computer industry and left behind a vibrant company, which a few months ago had more cash on its balance sheet than the US Government.

Trichet on the other hand is a French apparatchik, a graduate of the ultra elitist ENA the National School for Administration. He had a lucky escape from the French justice system concerning his involvement with the failed bank Credit Lyonnais. These antecedents obviously made him the perfect candidate for the top job at the ECB. His legacy is an ECB on the edge of collapse, with a balance sheet laden with unsaleable debt. In his favor he never worked for Goldman Sachs and resisted money printing. But wait a minute Mr Draghi his successor did work for Goldman Sachs and does believe in money printing. Oh well you can’t win them all.

The next fiasco is without doubt Dexia, subject of an earlier post, the bank that a few short months ago was too good to fail? The French Belgian and Luxembourg Governments have now all rushed in to “help”.

I wonder what Jobs would have said, if in his last days, these same governments had offered to save Apple? Apart from a string of expletives, perhaps something like:


Talking of which, we are now witnessing Mr. & Mrs. Merkozy, in a waltz around how to solve the other sovereign debt problems in the Euro-zone, or more particularly how to dump the malinvestment of the banks on the tax payer. Merkel believes that each country should deal with this internally before resorting to the EFSF and Sarkozy, whose major banks are in a far more parlous situation, obviously believes in spreading the pain around.

It is interesting that Mme LaGarde the new luminary at the IMF, an organization best known for its rapacious activities, both during and outside office hours, seems to have grasped already that the hole is USD 200 Billion.

I would beg to differ and offer you this excellent view of the situation prepared by Reuters.

Applying plausible assumptions, the hole is much, much bigger than the LaGarde USD 200 Billion and only addresses Sovereign debt issues.

Everything else of course is perfectly all right, so look no further.

While congratulating Reuters on their tool, rest assured that the major governments and investment banks have had much more sophisticated analysis at their disposal for years, and are positioning themselves accordingly.

Rather like the Gordian Knot of Greek Mythology, symbolizing an intractable problem cut by a bold strike, the world waits for an outcome.

Curiously enough the only country brave enough to take the axe, is not Germany or France, who are preoccupied with procrastination, worthy of a production of Hamlet, but tiny Slovakia.

May Slovakia’s courage be rewarded and their place in history assured, but most of all may their politicians not be bought off.

Watch this space……….

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