Good morning

The headlines:
  1. So the IMF is $480 billion richer this week. But it’s short of the $600 billion that Christine Lagarde was hoping for (the US decided not to offer anything – wisely, as where would their money have come from?). In her speech, she used a great metaphor about needing an umbrella if the clouds (presumably Spain and Italy) break into a “nasty rain”. Amused – because that sounds like both a metaphor and a euphemism. Some economists suggest that the IMF money would just buy those economies breathing space – “two years tops”, being the general idea. But we need to be asking ourselves whether the objective in these scenarios is saving the country or preserving the order of the World’s Financial System. Because I think that the answer is the second – the banking institutions need time to close out their positions and limit their exposure. With Greece that took about what – two years? Christine Lagarde (and the banks) – you win. At the same time, the funding came with some explicit conditions from the donating countries. Methinks that the emerging markets that were contributing have made some headway on gaining a bit more of a voting voice. Emerging markets – you win as well. Win-win situations – the financial unicorn. 
  2. Sarkozy and Hollande are through to the next round of the French Presidential Elections. Hollande won 28.5% of the vote, with Sarkozy taking 27.1%. Extreme right candidate Marine Le Pen came third with 18.1% – and her voters are the expected swing vote. I watched communist-backed Jean-Luc Melenchon, who came fourth with 11.1%, call on all of his supporters to go and remove Sarkozy from power by voting in François Hollande. I then watching Hollande make a victory speech about his real opponent being the World of Finance. Frankly, on the face of it, I’d say that the French Banks are in for a tough time. But Hollande declaring a War on Finance is likely to earn Sarkozy a tsunami of election-funding from the rich. I just think that we must be real here. Elections are elections – but power is a purse-string.
  3. ECB President Mario Draghi has rejected calls from the IMF and US Treasury Secretary Timothy Geithner for more monetary measures to solve the Eurozone Debt Crisis. Good man. Draghi and the other Euro bankers say that they have done enough by lowering interest rates and issuing the banks more long-term loans. Some would say more than enough – as those long-term loans, and the bond repurchase programs, already have long-term economic consequences that are yet to be fully realised. Either way, I think that the world forgets that independence of Central Banks is key to maintaining an economy. Without it, you have monetary authorities that have become fiscal authorities – which is the dangerous path to hyperinflation. And anyway, as Bundesbank President Jens Weidmann points out, “the problems in Europe can’t be solved by monetary policy measures”. Agreed. 
That’s all for now.

Have a good Monday.