The trouble with Scotland is that it's full of Scots…

Mint – Bill Blain’s St Andrew’s Day Morning Porridge  November 30 2012

Late porridge this morning, so I’ll keep it short. Republicans laughing at the Democrats’ opening fiscal cliff gambit, and vice versa. The process has further to run and it’s likely to slow the holiday season markets. Name calling and little of substance to the debate yet.

Bank stocks interesting this morning with UK’s bad boys all lower on Merv’s comments on them needing €50bn in extra capital. But also intriguing that Bankia (just got a massive EU capital bailout) and BPE (just completed rights issue), are also among the worst opening performers.

But on the other hand.. we’ve got Europe’s great and good glad-handing on European Integration. Lagarde saying banking union is a critical need, while Draghi says we’ll get Euro growth by H2 2013. (Can I have a quarter of whatever he has been smoking please?) Even as Draghi prepares us for growth, he’s also saying “Don’t worry, we stand prepared to do anything needed to maintain the Euro”.

In Germany they are approving the Greek bailout package/solution thingy today. But don’t think that really matters. The critical points are the IMF won’t pony up its contribution if the debt buyback doesn’t work. And I can think of no reason why Greek private debt holders shouldn’t holdout for much higher prices – because it’s so obvious Europe will do whatever is required. Oops… Go square that circle. This could all still get very messy.

Otherwise… everything fine and dandy?

How could I have been so wrong about Europe? Everything is apparently fantastic, fine and dandy. Here was I just a few days ago thinking Ireland was still a housing nightmare, that Portugal was gallantly trying to keep its head above water even as the economic tide overwhelmed it, that Italy is a political and economic mess beyond understanding, and that Spain was going to win the Bad Pants economy award 2012 without any real competition.

But this morning’s shock news; the discovery Madrid’s Retiro Park is built upon the richest gold reserves yet found on the planet, and that a silly mistake in the employment data office has been misreporting youth unemployment of 0.5% as 50% is going to help. The fact all these employed Spanish youth have superbly well paid jobs in Spain’s solid financial sector, or are running their own construction companies, is great news as the country’s housing glut is effectively solved. The only economic problem facing the country seems to be finding more workers for the country’s highly competitive and productive manufacturing sector. No wonder Spanish bonds were so much tighter yesterday.

Of course only the last sentence above is true. Beats me why?

This is not going to end well..

Out of time and have a great weekend..

BB

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