Good morning

The headlines:

1. Greece.

   Link: what she needs VS what she’s getting.

   

   And what is she getting? Nothing, at this point. The EU and the IMF are continuing to wrangle over what Greece should be paid and when, despite political affirmations that this would all be solved yesterday. And there are still Parliaments that need to weigh in – giving us plenty of time to reflect on the fact that a major exacerbator of this crisis is the time it has taken for any decisive action to be taken. And they’re adjourned until Monday.

   Meanwhile, Greece continues to borrow more short-term money to “plug” the financing shortfall created by the promised bail-out money that hasn’t arrived – which is, you know, compounding debt with debt. Does that sound like a policy that’s going to result in the sustainability of Greece’s debt?

   In contrast, I am a fan of this opinion piece, because it sounds reasonable. We all know that the debt is not sustainable. We’re already back up to the debt being 190% of GDP – and it’s not going to go down with austerity. Or debt-fuelled growth. The desperate need here is debt forgiveness.

   And if Europe is going to offer debt-forgiveness, then it should do so with the same conditionality that it is doing with the bailout packages:

   “Dear Greece. We hereby commit to forgiving 50% of your debt over the next 5 years, whatever that debt might be. But we will do it if, and only if, you achieve the following reforms… <insert reforms here that remove protectionism>. Don’t worry about any more cuts. We’re done with those. What we want you to worry about are the structural issues.”

   As the authors point out: the debt is not going to be repaid, so you may as well put it to good use. And having a discussion about the fiscal discipline that the Greeks ought to have is about as useful as asking Karl Marx to recant from the grave. Practical realities need to be acknowledged, and austere punishment for fiscal indiscipline needs to be tempered with more compassion.

   Because we need to remember a time when something similar happened in Europe. After World War 1. When the Allies forced unsustainable reparation payments on Germany. And Germany responded by embracing extremism in the form of Hitler. Which gave us World War 2.

   I’m just saying.

    

2. Hewlett-Packard.

   Link: the price you pay for Autonomy.

   So HP bought Autonomy for $10.3 billion last year, and this year wrote it down by $8.8 billion (over 85%!). Which is fully awkward for everyone involved, including the auditors and the not-very-diligent due diligencers. Especially as HP is saying that $5 billion of that write-down is accounting-impropriety related – which is a euphemistic yet-thoroughly-legal way of saying “we’re alleging fraud”.

   According to their website and a statement by Goldman Sachs*, Autonomy is “the leader in meaning-based computer technology”. Something about trawling your emails, facebook posts and phone-calls to “extract meaning”.

   Which sounds great but mythical. With my fully-fledged biological complex intelligence, I am barely able to understand what the Kardashians are talking about. Or why. But Automony is suggesting that they’ve used the biological complex intelligences of some computer programmers** to design a systematic automated mathematical algorithm that “extracts meaning”?

   And you can argue “Google algorithm” at me all you like. What I know is that I often can’t find what I’m looking for, I usually have to try a few times with different search terms, and sometimes I give up in disgust. And that’s with the benefit of my interaction with the algorithm.

   But the alternative is that the product actually works. In which case, HP should have run it on Autonomy’s accounts.

   *Autonomy’s Investment Bank Advisor in the HP buyout.

   **Those behavioural experts.

3. Xstrata has voted.

   Link: and Glasenberg won.

   

   It’s all over. Sure – Glencore paid more than it wanted to. On the other hand, Mr Glasenberg has emerged in control. So maybe it paid as much as Mr Glasenberg wanted it to?

   Regulatory approval is pending but anticipated.

   And onto the next big acquisition, the suggestion is that Glenstrata will GlenstrAnglo America?

That’s all for now.

Have a good day.