Death Star Economics



War of the roses: IMF vs EU

There won’t be a news brief tomorrow, Wednesday, 14 November 2012.

Everything seems a bit unsettled today: the EU and the IMF had there biggest falling out yet, Swiss banks face more fraud investigations now that Switzerland is opening up more and more to bi-lateral data sharing agreements, the investigation of ex-CIA head David Patraeus‘ private affairs are getting increasingly confusing, adding more people to what started as a simple affair (as simple as an affair with the head of the CIA can be…), and the FSA is investigating the potential manipulation of prices in the British gas market. It’s messy, that’s what it is.

“Just this time, we’ll let you get away with it, you hear me?”

That is what EU finance ministers decided to tell Greece yesterday. What’s one concession when everything else is working according to plan? So Greece got a two-year extension to balance its budget. Except, that’s not what the IMF wanted to hear them say. Lagarde insists to stick with the 2020 target for Greece to decrease the deficit to 120%. The decision about further rescue funding is postponed to November 20, when all parties step back into the ring. While Eurogroup chairman Jean-Claude Juncker, who has admitted to lie to the press at times, indeed wants an extension of the deadline for Greece, Lagarde is in favor of another haircut, to help the country meet its targets. In Germany, Angela Merkel is worried about these developments; she has an election coming up in September 2013 and big losses for the German taxpayers would be ill-timed. read article

Also in Germany, 50 clients of struggling Swiss bank UBS are being investigated for tax fraud. The personal details of clients were obtained on CDs with information of Swiss bank accounts held by German citizens, which were purchased by German tax authorities in 2010. Last week, the same authorities started an investigation of UBS employees for aiding said tax fraud. Switzerland is just not what it used to be anymore.

Meanwhile, the New York stock exchange has to suspend trading of 216 companies due to a technical fuckup, and the UK inflation exceeded expectations by 0.2% for October, hitting 2.7% due to an increase in tuition fees and food prices.

In post-election AmericaGlenn Hubbardeconomist and dean of the Columbia University Graduate School of Business, said the US could make significant steps away from the January fiscal cliff by increasing taxes on high income earners. The crux: Hubbard was one of Mitt Romney‘s led economic advisors throughout his presidential campaign. Awkward.

So long.


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Can we please talk about something else?

Reuters’ headline this morning: “EU wants Greece in euro, but plans for possible exit.” It might as well have read “EU wants to have its cake and eat it too.”

I don’t know why everyone (today it’s MarketBeat once again) is still saying that it is likely to get worse in Europe before it gets better… Likely? Isn’t it already getting worse by the week/day/minute?

The six-hour (not -course) dinner of EU leaders resulted in the typical EU soft talk of plans to make everything better, this time in form of keeping Greece in the euro. But just in case nobody believes them or they don’t believe themselves (…) plans how to manage the exit will be put in place. This might be worth talking about again when there are more tangible statements to work with. Having said that, I do hope they all enjoyed their food last night.

The euro slumped to its lowest value against the dollar in 22 months and remember, this charade is going to continue for at least another month, when Greece is taking another stab at electing a government.

The Facebook situation has turned into a fight of the titans NYSE and NASDAQ: apparently, Zuckerberg & CO are in talks with NYSE to switch exchanges. All parties involved declined to commentread article

I’m so tired of this, let’s talk about something else.

For example, how the British government is historically bad at managing its budgetno matter if labor or conservative (read article), or how Europe’s borders meandered on during the past 1000 years (watch video), or maybe income inequality, economic growth and fairness under the Obama administration (read article). Anything, really.

So long.

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