Macroeconomics FX
In the last thirty years and until a few years ago, emerging countries leaders, quite heavily indebted and pretty much depending on Wall Street and Washington’s money, have perfectly learnt markets’ language, up to the point of being able to soothe them. The most r e s o u n d i n g example
is
coming from the
‘trade
unionist’ Lula, a real ‘maestro’ in the art of
speaking
gently to both t r a b a lhador e s and bankers and being loved from both of them. Mrs. Merkel does not have this skill. In all likelihood she does not love the finance world, but many of recent declarations of her government, stinging and ulcerative for markets, are meant to do good. From abroad, it is commonly thought that German public opinion opposition to pro-Euro measures is originated from the right wing: a sort of rich people selfishness who do not want to help the irresponsible Club Med. Mrs. Merkel is indeed facing a strong opposition from the left wing both in the country and in the Parliament.
The story of a Germany worried from devaluation and inflation which is getting ready to exit the Euro is everyday word from dozens of managers, analysts, gurus based in New York, London or California.
and government bonds is of the first kind. These are defense (with some sense) precautions. The second group regards a miscellaneous of Tobin Tax and attacks to hedge and private equity funds. They are concessions in order to get other, more c omp l i c a t e d , approvals
in
P a r l i a m e n t . Bundestag will be requested to approve a potential expense of 140 billion Euro (German pro-quota of the European package),
a German youth march for peace. 1951.
Unfortunately among the 82 millions of Germans who live in Germany it is impossible to find a voice with some sort of authority or consensus asking for Euroland dissolution or a Euro exit. There are plenty of people, on the contrary, asking for finance to pay as high a price as possible. These days
the German
government is taking or asking ( in a quite harsh way) for three types of measures. The short ban on European banks stocks
huge 5% of GDP, while SPD, Linke, Green party would all like
to have much more than the above mentioned miscellanea in exchange. The third kind of action, the most contentious and tricky in our view, is the request of implementing a default procedure for countries at the European level. Markets took it in the worst way, inferring that defaults will happen and will be numerous. The aim is actually the opposite: to scare fiscally irresponsible nations in order to make them responsible not to
FX TRADER MAGAZINE July - September 2010 27
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