Good morning

The headlines:

  1. Nasdaq approves a $40 million plan to cover Facebook losses. Link: But why?

    Wrote about it here.

  2. Mr Draghi says that the ECB is ready to act. Link: Within limits.

    It seems that the ECB is ready to cut interest rates, after an increase in “downside risks”. However, Mario also said that the ECB won’t be engaging in more long-term loans* to banks anytime soon:

    “I don’t think that it would be right for the ECB to fill other institutions’ lack of action.”

    Fair enough. Sometimes it sounds like the “other institutions” are really just fans of throwing money at the problem.

  3. The Germans may relent on the debt sharing. Link: The opposition to the opposition weakens.

    That would be opposition in the German government to the debt-sharing that would be decreasing.

    Apparently, Ange is reconsidering a proposal she rejected last year for a European Redemption Fund. Basically, the idea is that the Euro countries could transfer their debt in excess of 60% of their GDPs into the fund, which would then be backed by the Eurozone’s collective gold reserves, and for which the Eurozone members would be jointly and severally liable**. It was originally rejected on the grounds of “sheer size”.

    But I can’t help thinking that somewhere in all of this, Europe needs to decide whether it’s Europe, or whether its a collection of bureaucrats that “share common ground”. If Europe is going to be Europe, it needs to swallow the jagged little pill and deal with Greece in the same way that the US deals with Detroit. There is federal funding and state funding. Federal funding needs federal institutions with federal rules. State funding can do the rest.

    Baseline support for the essentials can come from the Federal Government, which collects federal taxes. Then there are the state-funded programs which are financed by state borrowing and state taxes.

    I hate to hold the USA up as a poster child for fiscal and monetary union – but that is what it is, is it not?

  4. Linkedin looking into reports of stolen passwords. Link: Wait – what?!

    Nothing like an “unconfirmed security breach” in a professional networking site to really hit that share price.

    So this would really be the key moment to lie on your professional networking CV, chalk it up to “hackers”, and tell anyone that asks that your CV is “unconfirmed” until they decide to take it further.

    Observation: we really do have an obsession with virtual businesses. The Linkedin share price has doubled since it listed. Why? I have a Linkedin account and a Linkedin app on my phone but I NEVER check it unless someone emails me a request to connect.

    I just think that we forget that history is not on the side of success. We remember Google, and forget the rest: Yahoo, Hi5, Myspace, MSN***… Why bet on success when the empirical record is a festival of short-lived success followed by enduring failure?

  5. PetroSA applies to Nigeria for fuel. Link: US sanctions against Iran be irritating.

    But the fun bit here is that the Democratic Alliance (SA’s main opposition party) is accusing everyone and the government of irregularity.

    PetroSA is state-owned, and applied for oil from the Nigeria National Petroleum Corporation (NNPC). But apparently, protocol dictates that the application come through the government directly, not through the parastatal.

    Whatever. The point is that SA needs the fuel to come from somewhere. Protocol be damned for votes – it’ll be far worse if the petrol pumps stop pumping come the beginning of July.

    DA. Pipe down. Pun intended.

  6. Gold bear streak continues. Link: Although, in fairness, it hardly looks bearish in retrospect.

    Seven months ago, the analysts were expecting the gold price to hit $2000 an ounce, way back when the price was floating at around $1891 an ounce. As of this morning, $1623 – so not really hitting that all-time high.

    However, some of the big names are buying up gold (like George Soros), everyone keeps talking about gold being “the currency of last resort”, and the general comment is that “the case of rising gold prices is still strong”.

    When you look back on it, gold really would have been a good thing to buy right at the beginning of all this trouble. It’s made annual gains for 11 years in a row, and looks to be heading for its 12th.

    But conceptually, I just disagree with “gold as a currency of last resort”. Because empirically, it isn’t. Just look at the economies that have been through currency debasement recently (like Zimbabwe). Did they return to trading in gold? Not even remotely. They started trading in petrol coupons.

    Black gold is the new black.

That’s all for now.
Have a good day.
*ie. longer than 3 months. 
***Let me put it this way: even my grandfather, who used to have a hotmail account, doesn’t use it any more.