Some thoughts on Mr Hollande by Spiegel.
On the night of his victory, France’s new president seemed tired and overwhelmed by the magnitude of his new office as he pushed his way through the crowd towards the stage in Tulle, his electoral district in southwestern France.
The setting for his victory speech could hardly have been better. He stood before more than a thousand people packed into the cathedral square basked in late evening light, a picture postcard view of a rural France where everything was still right. But Hollande looked exhausted and gave a bland speech in which he repeated a few election promises. He pledged to make France a fairer place, and to help the youth. “I take the measure of the honor that’s been granted me and the challenge that awaits me,” he said.
In the weeks leading up to his victory, something had glowed in him, and it was noticeable in his television debate against Nicolas Sarkozy, where he seemed elevated by the prospect of winning. But on the evening of his triumph, the presidential aura seemed to have evaporated.
In Tulle on Sunday night, Hollande looked deadly serious and suddenly seemed small again. Like someone who has just become aware of the size of the task before him.
The president of France is, after all, an elected king. He sits on a throne above the nation. Tremendous symbolic importance is attached to his office, and it initially dwarfs everyone charged with filling it. The man about whom former president Jacques Chirac said long ago, “More people have heard of Mitterrands’ Labrador than of François Hollande,” now stands in a line with Louis XIV, Napoleon and General de Gaulle. (Full article here).
While Greece is receiving all the attention, Sarkozy is desperately trying to improve his chances of winning the elections. Merkel too, also in France. The question is, what would a non Sarkozy France mean for Germany? Merkel is doing everything it takes to obtain the merkozy relationship. From Spiegel.
It looked almost as if it could have been a wedding when German Chancellor Angela Merkel and French President Nicolas Sarkozy walked into the conference hall of the European Council building in Brussels last Monday. They nodded at each other and exchanged pecks on the cheek, the other heads of state and government moved aside.
The two, of course, were not in Brussels to be betrothed. Rather, they were the main characters at yet another European Union summit. This time, they were seeking support for their fiscal pact, which together they had hammered out in the hopes that it could contribute to saving the EU and its common currency.
This week is about:
1. PSI in Greece – forced “voluntary deal” or CDS event? Creditors do not want to play ball despite Papademos telling us compromise near…
2. Massive ECB intervention to keep credit- and bond market flowing. There is only one lender, one buyer of credit and fixed income = ECB! The balance sheet will explode in Q1-Q2.
3. Sarkozy starting to lose power. Already the January 20th meeting with Germany cancelled due to “French political issues” – my call for Marie Le Pen to potentially upset everyone in round 1 is now in full play in even mentioned by mainstream media like CNBC! (Point: She is ANTI-EU and establishment – this is major blow for French “confidence” and self-image – watch this happen live all week)
4. The Merkel comment on further “intervention” in capital flow mentioned this weekend this is MAJOR news.
Full Stress Indicators.
As people soon will realize, the Italian bond auction is not a success, as rates again trade above 7% and very close to record levels, let’s take a look back at what actually happened to Europe. What caused the mess, and who are the people trying to get us out of this mess. Europe is geting more “de united” by the day, or do you want to pay for the stupidity?From WSJ;
Greece, the country that triggered the euro-zone debt crisis, would need a much bigger bailout than planned, Mr. Strauss-Kahn said. Unless Europe coughed up extra cash, the IMF, which a year earlier had agreed to share the burden with European countries, wouldn’t release any more aid for Athens.
The warning prompted a split among the euro zone’s representatives over who should pay to save Greece from the biggest sovereign bankruptcy in history. European taxpayers alone? Or should the banks that had lent Greece too much during the global credit bubble also suffer?
The IMF didn’t mind how Europe proceeded, as long as there was clarity by summer. “We need a decision,” said Mr. Strauss-Kahn.
MERKEL SAYS CHANGES OPEN FOR 17 EURO STATES, OTHERS CAN JOIN IN.
SARKOZY SAYS `PERFECTLY READY’ TO HAVE TREATY FOR EURO NATIONS
MERKEL SAYS EURO AREA WILL MOVE AHEAD ALONE IF NEEDED – BBG
“Greece is the only exception into EMU”
etc…We only ask ourselves, if Greece is the only exception, what are Portugal, Spain, Ireland and the others? This could be the false break out attempt we have been waiting for. Let’s see the action develop.
Full translated conference, courtesy Al Jazeera.
With majority of investors chasing the tail, markets are showing huge volatility. Last week we saw many new “smart” shorts entering the doomsday scenario trade. After the market put in the worst Thanks giving week since 1932, many were thrown into shorting everything. The same guys are now chasing shorts desperately. With HFT dominating, and front running every order, big shorts are finding themselves in a rather desperate situation. The Stoxx 50 is up +4%, so some of the new shorts are losing a whole years performance in a day. With liquidity at poor levels, many risk getting the Santa Rally completely wrong. This is from our Friday evening post;
Yes, it was an interesting session today, but the move up earlier today was probably telling us to cover the shorts. Despite our bearishness, we believe the market is reaching levels where the reward of shorting further is limited.
Although the squeeze is on, the Eurozone problems are still there. We are seeing the credit and equity markets dislocate today, so don’t get too carried away. Spiegel reports on the Continent staring into the Abyss;
Nothing works in Europe without Merkel. And the German chancellor isn’t just opposed to euro bonds. She also refuses to accept a move by the European Central Bank (ECB), backed by the French in particular, to buy up the bonds of ailing euro-zone countries on a much larger scale than it has done to date, in order to bring down the yields on those bonds. But that was not an official topic in Strasbourg, where Sarkozy assured his fellow leaders that France respected the independence of the ECB.
“Something is going to go ‘bang’ soon,” fears Alexander Graf Lambsdorff, 45, a member of the European Parliament for Germany’s business-friendly Free Democratic Party (FDP). Then the lights will go out in Brussels.
The power outage would be the consequence of a serious breakdown in European democracy, a downing of the power lines connecting Brussels and Europe’s citizens. If Brussels no longer had the confidence of citizens, or what the Treaty on European Union refers to as the “peoples of Europe,” the European Parliament, Council and Commission would be operating without the basis of legitimacy. The idea of peace, freedom and prosperity would be out of juice.
Markets are once again under siege by the political elite of Europe. This “calm” week is soon turning out to be the one of the wildest weeks of the year. After the fiasco bond auction out of Germany yesterday, markets tried rallying this morning, but as a clock work, the politicians once again kill the false bull. One shouldn’t be surprised though, as the leaders have absolutely no clue what to do about the failed euro project. At least they know one thing, they know what they don’t want. They don’t want Eurobonds, nor the leveraged EFSF, nor Unity….From Bloomberg;
German Chancellor Angela Merkel again ruled out joint euro-area borrowing and an expanded role for the European Central Bank in fighting the debt crisis.
Euro bonds are “not needed and not appropriate,” Merkel said today at a press conference with Italian Prime Minister Mario Monti and French President Nicolas Sarkozy in Strasbourg, France. She said euro bonds would “level the difference” in euro-region interest rates. “It would be a completely wrong signal to ignore those diverging interest rates because they’re an indicator of where work still needs to be done.”
Another must read Hmmm report;
The mathematics behind the much vaunted 50% reduction in Greece ’s debt is far more curious than the headlines would have us believe and, the ultimate writedown on the total amount actually turns out to be a far less conclusive 16%. How so, I hear you ask? Well, let’s take a look at the numbers:
Greece’s debt is roughly €350 billion. Of that, approximately €150 billion is held by the ‘Troika’ (including the €75 billion held by the European Central Bank) and this €150 billion is NOT subject to the haircut imposed on private holders of the debt. So that leaves us with roughly €200 billion. Greek banks and pension funds account for (give or take a billion or two) another €85 billion and, though many number-crunchers apply the haircut to this slice of the debt pie, my own feeling is that it is untouchable as, if they are NOT ring-fenced these holders will be bust should they be forced to take the proposed haircut. By my calculations, that leaves €115 billion needing to be ‘forgiven’. Apply the haircut to that number and you are left with a reduction in Greek debt of €57.5 billion – or 16%.
Suddenly, that 50% haircut and the subsequent reduced debt burden doesn’t seem quite so drastic after all, does it?
Full must read Hmmm October 30 2011