EU Money

The euro just hit a pothole, dropping from 1.278 to 1.271 in a few minutes. I presume there’s some news, but whatever it is won’t make it to the published channels that I get for some time. It doesn’t matter, I’m not a daytrader and my position is bearish. I just can’t see how Christine Lagarde thinks that Europe will escape recession. Even Germany had a negative fourth quarter, in GDP growth terms. The euro system has forced Europe into a degree of fiscal discipline that is slamming the brakes on their economies. Long term, this is healthy. Short term, it will be painful and it will affect the rest of the world. That’s my story and I’m sticking to it.

I’ve seen too much – first hand – of how the “EU money” has been spent.

On the western shores of Madeira, waves crash onto the walls of the Marina do Lugar de Baixo, sending white spray into the air above the dock built for 291 of the world’s finest yachts. All the berths are empty eight years after the boat landing opened.

Knocking on 1.2700 now. Heading for… 0.70? 0.80?

As this piece so aptly puts it:

From a contrarian’s perspective – you could not ask for a better sentiment and economic backdrop if you are expecting the markets to now trade away from the rising conventional wisdom that now tangibly sees the economy improving in metrics from employment to rail traffic. It will be yet another tragedy of the financial crisis that just when Bernanke could see the light at the end of the tunnel – the tunnel collapses because of forces beyond his reach.

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Comments

  • Tyro  On January 11, 2012 at 12:41 pm

    Madeira is run by Alberto Joao Jardim, the 68-year-old president of the semi-autonomous government since 1978, who said in an interview last month that hiding Madeira’s debt was necessary to develop the island.

    “Madeira today is completely different,” said Jardim, speaking Dec. 6 on the sidelines of a parliamentary session in Madeira to discuss the region’s 2012 budget. “If I hadn’t done things during this period, they would never get done.”

    Asked if he had any regrets about the state of Madeira’s finances, he said: “none.”

    You think he has an MBA?

  • reality  On January 11, 2012 at 12:48 pm

    Yes. Well a degree in “management,” close enough. Per wikipedia: “É licenciado em Direito pela Universidade de Coimbra”

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