Pater Tenebrarum's Blog

We already remarked on Monday on Tim Geithner's recent speech to the Economic Club of New York, on which occasion he promised that while 'long term fiscal consolidation' was certainly a priority, unfortunately, the weak short term economic conditions demanded more deficit spending in the here and now.

It is well known that Spain's economy is in a depression, and we do not use this term lightly. With the official unemployment rate at about 23% and youth unemployment close to 50% it is not an exaggeration to speak of a depression.

The current speculative positioning in energy futures has become more extreme over the past several weeks, this is to say, speculators now hold very large net long positions in crude oil and gasoline futures.

As long time readers know, we have often compared the parsing of the statements issued by the Federal Reserve to the now defunct job of 'Kremlinology'. This was a quite similar exercise during the cold war era, when knowledgeable journalists and observers of geopolitics used to parse every phrase emanating from the Moscow politbureau in the Kremlin to discover the hidden meaning in its often obscure statements.

We would note to this that it is not possible to know when the US might 'turn into Greece'. Greek interest rates suggested that there would be no trouble whatsoever for many years – until they didn't anymore. Granted, the US is unlikely to be beset by similar problems in the near future.

The fact that Newt Gingrich has picked up the gold standard issue in his quest for the nomination has provoked a bit of a reaction. You can safely ignore the 'unelectable' guy after all, but Gingrich is apparently still (wrongly, we believe) thought of as a contender.

The ECB is coming increasingly under fire for refusing to be part of the 'haircut' – party in favor of Greece. As many observers argue, the Greek bonds the ECB has purchased in the course of the SMP ('securities market program') bond market manipulation scheme have been bought at a big discount to par.

Sometimes the truth slips out of the mouth of a politician, either by mistake or because he thinks he can afford to be truthful. In the case we're discussing here, it seems to be the latter. Luxembourg's foreign minister Jean Asselborn has just given an interview to the German news magazine 'Der Spiegel' and was rather frank in his assessment of the so-called 'fiscal compact'.

As most of our readers are probably aware, the ongoing FBI investigations into insider trading at prominent hedge and mutual funds has just yielded another batch of arrests and indictments. This seems to be still the same investigation that ensnared the founder of Galleon, Raj Rajaratnam, a little while ago. Apparently the investigation has been going on for four years running.

German lawmakers of the ruling CDU/CSU parties are apparently content with letting Greece default and pushing it out of the euro area. Michael Meister (leader of the CDU's parliamentary caucus and its finance spokesman) and Micheal Fuchs (a deputy CDU floor leader) opined yesterday that it is time for Greece to go.