About Me

Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Tuesday, December 06, 2011

Eurozone: So, What's It Going To Be?

My view since I started looking more earnestly at the EZ problems was that it would take well over
$1 tril. of hard capital to stabilize the situation and give the broad EU a shot at survival in its
current configuration. Early this week we heard of a prospective new treaty deal which would
incorporate a new fiscal policy monitoring mechanism with substantive enforcement powers (Merkel
and her close allies). Now there are stories circulating of an additional large fund to compliment the
current ESFS, which, when both are at full strength, would total around $1.25 tril. An additional
kicker could come from an ECB infusion to the IMF ( Sarkozy and the rest of 'em).

Well, the ECB is expected to cut its rate tomorrow and then we have the big summit when the top
poobahs are to gather Dec. 8-9 to hash out the deal. The new fiscal authority looks primarily like
a way to chase countries out of the EZ as it might make a range of leaders lose their tempers. But,
if there is substance to the idea of a new and much enlarged $ stabilization authority, the summit
might not be another bust. After all, any bureaucrat worth his salt will find ways to finagle and
finesse a new fiscal directorate, even one with Germany's shadow imprimatur.

For a little more background, see the 10/18 post: EU -- How Big The Jitters? (I still think G-20
and China in particular should have done more to help out.)

IEV and $SPX chart

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