Don't talk about it.

"The market in a way is rewarding this round of austerity with lower borrowing costs, the ten year yield is close to six and a half percent. The last time the Spanish voters got together nationally, the centre right folks took the baton over from the centre left. But as recently as March in a regional election, things were not as good. Voters and citizens are impatient, because a job lost today means lost revenue tomorrow."

Jozi, Jozi. 26^o 12' 16" S, 28^o 2' 44" E. Oh no, not another day like yesterday, was the punch line to a wise crack (you can't use the j word in email folks) I used to tell, but yesterday the markets felt strangely like that too. Same old issues, Spain, lack of clarity about European responses to the sovereign debt issues, the US fiscal cliff, US presidential elections, slowing Chinese economy, these are all the same old issues that we have to deal with day in and day out. And yes of course they do have a proper impact on peoples decision making, if you read the headlines and mainstream and then base your business decision on that basis, then I am guessing you are likely to err on the side of caution right now.

The Jozi all share index closed down 276 points, or 0.81 percent to close up shop at 33722. The new JSE trading systems mean that there are still a number of issues with regards to SENS (the format looks average, still working it out), and the software providers trying to work it out. There must be many frustrated high frequency trading types who are still waiting to unleash their programs, waiting for the trading platform to settle somewhat. I must put my feelers out and ask the trader types what their experience has been so far, because for the time being it seems pretty quiet. Resource stocks sank a percent and a quarter, I think that tomorrow morning early, if you suffer from insomnia, make sure that you tune into business TV to get the Chinese numbers fresh. I am not a short termer, but I think that this is important, these numbers can either put paid to the anxiety levels, or hasten the idea that policy response should be swifter, more on that later actually.

Spain are starting to enter the zone in which all of the austerity measures are becoming increasingly unpopular at a general public level, and we are seeing the violence escalate a little. In a sense this may be comparable to Greece, but the size and scale of the Spanish economy relative to the overall zone makes it a much more important cog. As the Spanish prime minister said, Spain is not Uganda. Whatever that means, and however you want to interpret that, you will find that is a personal thing. I dislike using the word "thing", it should only be reserved for the hand from the Addams family. Is that right? Yes, Addams is with two d's.

So what do all of the cut backs mean for the people on the ground in Spain? Not only are there cut backs, but there are also tax increases too, perhaps the most visible being a hiking of the VAT rate from 18 to 21 percent. Coal subsidies are set to be cut, meaning that coal miners very livelihoods are at stake here, the FT pointed out, the state funding will be reduced by 20 percent, which would have a direct impact on the profitability of the mines. Mineworkers had journeyed nearly 500 km to Madrid from their workplaces and there were heated arguments with the police. Rubber bullets and the like. This is hard, but this happens when you spend too much and don't collect enough.

This ALSO happens when you promise too much. The market will lend you money, but at a worse rate than the one you were used to. Plus of course the labour laws in Spain are the most restrictive in the zone, which makes it hard to be a flexible business. All I am saying is that you get what you create. If you overpromise, of course people will vote for you, but when the money dries up, you had better watch out, because then the very people you tried to appease and attract over the years quickly turn into your enemy. But different countries have different economic models that either work or not. The market in a way is rewarding this round of austerity with lower borrowing costs, the ten year yield is close to six and a half percent. The last time the Spanish voters got together nationally, the centre right folks took the baton over from the centre left. But as recently as March in a regional election, things were not as good. Voters and citizens are impatient, because a job lost today means lost revenue tomorrow. Down here we could learn a lot from what we have seen in Europe, but my sense is that the same mistakes are repeated time and again.

New York, New York. 40^o 43' 0" N, 74^o 0' 0" W. I am not too sure whether the Fed minutes from the prior meeting should be the most important thing to focus on, but I guess the fact that members of the FOMC are open to stimulus (if the economy starts looking worse) means that perhaps the recovery continues to look weaker. Strangely the US Treasury can continue to get debt away at record low yields, this is a golden era for government issuances. Markets bounced around again, but ended in the red, the broader market S&P 500 nearly managed to eke out a gain. But not quite, the S&P 500 lost a mere 0.02 points to close at 1341.45 points. The nerds of NASDAQ lost half a percent, whilst the Dow fell by 48 and a half points to end the day at 12604. It was close to 13 thousand just a while back.

Yesterday Paul Krugman appeared on CNBC Squawkbox, and it almost seemed as if Joe Kernen had something personal about this particular interview. Krugman, who is outspoken, and everyone knows that he is a liberal. In fact his very New York Times platform is called The Conscience of a Liberal, if you had any illusions as to what his political persuasions are/were, then just follow the blog for a while. Now on that specific CNBC show there is the very colourful and outspoken Joe Kernen, who makes the Republican case well known with every single opportunity that he is given. Everything big government is bad in Joe's opinion. As you can see from this posting by Krugman Zombies on CNBC, he objected to the badgering from Kernen. I am pretty sure that this will be the very last interview that he has on that platform. The expectation from Krugman was that he was going to talk about his book.

If you want to, you can watch the full interview via the "interwebs" (which my eldest daughter was confused with, just the other evening, I had to tell her, they are the same thing) then you can follow the following link, but I warn you that you need good bandwidth: Krugman on How to End This Depression.

Possibly the biggest issue to deal with to tackle the US deficit is the one that is the biggest hot potato. Healthcare. As we said yesterday, everyone wants access to better healthcare and is willing to pay for the expensive therapies. But the cost of healthcare in the US is way too high. You might have heard people say, the average American family is only one medical disaster away from bankruptcy. This is what Krugman had to say about costs associated with healthcare: "If we could suddenly have French health care costs instead of American health care costs, our budget problems would be solved forever. So it is about the very high costs of the U.S. health care system and can you not resolve our budget problem without resolving that. And if you do resolve that, then this whole thing becomes a whole lot easier."

And now you can see, from the US pie chart what he actually means by this:

The source of this fine pie graph is taken from the following place usgovernmentspending. If you fast forward to the 2017 expected budget, healthcare then becomes the most expensive item on the list. Then Krugman is right, how come Canada, Norway, France and Germany manage to cope with a smaller allocation of their budget to healthcare? Is it just a numbers thing? The US has a massive population when compared to these other countries. And perhaps the space and administration of a public healthcare sector is not for everyone. And what about the levels of obesity? The world health organisation (WHO) term this "globesity", as it is not just an American problem, but a global problem. But the US and Mexico top the list, check it out: Obesity (most recent) by country. Europe seems to be much lower than the average, which is a function of their lifestyles in general. That is the hottest of all potatoes, tackling obesity, although Mayor Bloomberg in New York seems to want to make a serious go of it.

This article Mayor Bloomberg and the Real Path To Obesity goes to the core of the issue. Choices. I do not necessarily agree with the conclusion, but the fact that the medical insurance companies are/might be involved soon, seems to suggest to me that lifestyle choices should be monetary. Find an insurance program that rewards you for healthy choices, that sounds strangely like Discovery's vitality program. And if you needed reminding, they have a business in the US, Destiny.

Currencies and commodities corner. Dr. Copper is lower, last at 339 US cents per pound, the gold price is also lower, last at 1562 Dollars per fine ounce. The platinum price is also lower, last at 1406 Dollars per fine ounce. The oil price is 84.85 Dollars per barrel, lower on the day, the whole commodities complex is lower with all the anxiety around. The Rand is weaker (of course), last at 8.34 to the US Dollar, 12.89 to the Pound Sterling and 10.17 to the Euro. We are lower here today, but there is a small buffer that has been built in by way of the weaker Rand. Tomorrow is the big one. It really is, almost as important as the US jobs number last week.

Sasha Naryshkine and Byron Lotter

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Forget the yields, check the goals!

" Accountability is key for shareholders, lawmakers, employees and Joe public alike. So whilst I think that this is a step in the right direction, I am not too sure what it means about the culture of the bank itself and the perception by politicians at large."

Jozi, Jozi. 26^o 12' 16" S, 28^o 2' 44" E. The stuff online, on twitter, on the box, that I saw on Friday, ranged from this is very good, "the Europeans had gone a long way to solving their integration issues", all the way through to the usual "this solves nothing". Question, is Greece still in the Euro zone? The answer is yes. The decision by the Europeans to not lend the money to Spain, but rather directly to Spanish banks sent the borrowing costs of Spain and Italy markedly lower on the day, but had the opposite effect for Germany, their borrowing costs climbed, but admittedly we are not really that far off record low levels for the German Bund. So, I am guessing that it is fair to say that bond investors in Europe were either scrambling to cover their tracks, or genuinely believe that the Europeans were closer to a banking union, which is the first full step towards fiscal integration. I think that it is important that the Europeans have a central banking authority. If not Euro Bonds immediately, because the statistics (and Angela Merkel's not in my lifetime comment) leads me to believe that we should see these late 2036. By which time most of us will have forgotten this crisis. But I am pretty sure that we might be able to recall the wonderful football of Euro 2012, poor Italy last evening, but Spain were just too majestic. Now time for the tour de France.

Friday we had stocks rocking, resource stocks benefited from a lift off in commodity prices, the copper price, the oil price, the precious metal prices all steamed ahead in a rally alongside the equity market, and alongside falling sovereign yields for the peripheral bonds. At the end of the session resource stocks had rallied a whopping 2.54 percent, it could have been more if it were not for a surge in the Rand to almost all the major currencies. It was a clear sign of risk back on again. The Jozi all share index closed at 33708, up 455 points on the day, or a gain of 1.37 percent. Gold stocks slipped, but that probably was the currency, the Rand which had been trading at 8.40 plus the US Dollar earlier in the week, traded at the best level in weeks, down to 8.19 to the US Dollar. Mr. Risk-on was shooing Mr. Risk-off away from Mr. Markets house. There were a couple of downgrades, from the day prior where ABSA and FirstRand were both given the 'unlike' button, with a ratings change from buy to hold. Not that I care too much about 12 month target prices and estimates, because our time frames are a lot longer than that, but they matter.

When a scandal rocks, you expect someone to take the fall, not so? Accountability is very important in the way the world works, saying sorry is a hard but necessary part of life. In South Africa I get the sense that we are not good at this. The story that I am referring to is the Barclays Chairman having resigned overnight. He said sorry. And then he went his own way. No wait! He is staying until the company finds a replacement.

Is it a good thing that Marcus Agius took the fall? I reckon yes. According to the Barclays CORPORATE GOVERNANCE document that I dredged up: "The Chairman's main responsibility is to lead and manage the work of the Board to ensure that it operates effectively and fully discharges its legal and regulatory responsibilities. The Chairman will lead the Board to ensure its effectiveness in all aspects of its role, including setting its agenda to ensure that adequate time is available for substantive discussion on strategy, performance and key value issues."

Accountability is key for shareholders, lawmakers, employees and Joe public alike. So whilst I think that this is a step in the right direction, I am not too sure what it means about the culture of the bank itself and the perception by politicians at large. Only bad things for the bank. In CEO Bob Diamond's letter to a Member of Parliament Andrew Tyrie (who is also the Chairman of the Treasury Select committee) he makes it clear that this sort of behaviour is out of line: "The first issue is that Barclays traders attempted to influence the bank's submissions in order to try to benefit their own desks' trading position. This is, of course, wholly inappropriate behaviour. Barclays submissions should reflect the cost of interbank borrowing rather than individual traders' positions."

And then Diamond says something even more interesting, that will leave you saying a multitude of things, these days expressed through short hand in text messages and social media: "It is also important to note that these traders had no way of knowing whether or not their actions would ultimately benefit or detriment Barclays overall. They were operating purely for their own benefit. This inappropriate conduct was limited to a small number of people relative to the size of Barclays trading operations, and the authorities found no evidence that anyone more senior than the immediate desk supervisors was aware of the requests by traders, at the time that they were made. Nonetheless, it is clear that the control systems in place at the time were not strong enough and should have been much better."

Undoubtedly the way that Libor functions now is kind of silly, as John Cleese in a Monty Python act might say. It is rather silly. How can the banks send their rates to Thomson Reuters, who then aggregate and slice and dice and then come to a number. Surely the process itself, of which hundreds of trillions of Dollars globally depend on a rate, should be refined. The WSJ (in an article titled Barclays's Agius Is Stepping Down) puts the silliness into perspective, or perhaps it is just me: "Libor - or the London interbank offered rate benchmark - is supposed to measure the interest rates at which banks borrow from each other. It is based on data reported daily by a 16-bank panel."

And then the reason why I think it is silly appears in the next part of the explanation of how Libor is set: "By 11:10 a.m. London time, the banks on the Libor panels submit to Thomson Reuters, as an agent for the British Bankers' Association, their estimated borrowing rates. Thomson Reuters discards the highest and lowest submissions. The remaining 50% of the submitted quotes are averaged to work out the Libor rate. By about 11:30 a.m. London time, Libor rates are published."

Discards the high and the low rate? And then averages? What is the point, if the importance is for tens of trillions in swaps, securities and loans depend on a few reported bank rates and then the aggregating by Thomson Reuters, is the only benchmark. That has to change. And no doubt will. Expect Bob Diamond to appear in front of the politicians.

Byron's beats covers a pretty poor trading update from Angloplats and shifting PMI.

This morning we had a very disappointing trading update from Anglo Platinum. This industry cannot catch a break with the biggest global producer announcing a more than 20% decrease in earnings compared to the 6 month period ending June 2011. The stock is down 2.7% while the whole index is down 1.7%.

"Anglo American Platinum's earnings for the period is expected to decrease by more than 20% from that reported in the six month period ended 30 June 2011. However, in view of volatility in exchange rates and metal prices, Anglo American Platinum cannot, with reasonable certainty, quantify the extent of the decrease in expected earnings other than that the decrease is expected to be more than 20%. The expected decrease in earnings is primarily as a result of lower sales volumes and lower metal prices achieved compared to the comparative period."

So not much info given but I can tell you now that reasons include lower production due to labour issues, increasing costs due to electricity tariff and wage increases. The Platinum price, as we spoke about a while ago is not actually that cheap when you compare it to oil. I wouldn't say that is an excuse for a 20% decrease in earnings. Last year the company made 1236c per share for the period. Assuming best case scenario, earnings are down only 20%, the company will make 988c. At R468 the company looks pricey for an industry that is struggling. I can't say in decline because I do feel the platinum price will pick up. We will await the full release on the 23 July for all the explanation.

In other news we had a whole lot of PMI numbers released today which paints an interesting picture. For the record PMI measures activity in the Manufacturing sector. Any number above 50 shows expansion. Any number below 50 shows a contraction. As expected the average for the Eurozone was not good, 45.1. But, there is light at the end of this tunnel. Ireland which was one of the first countries to be bailed out and have had a torrid time showed their best improvement in manufacturing for the last 12 months. The read came in at 53.1. The Irish are still being funded by bailout money but the yields on their bonds have decreased exceptionally. If they can do it, so can the rest.

Elsewhere India showed their best month on month increase since August 2011 with a healthy looking read of 55 while locally we had a negative read of 48.2. China also came in with a read of 48.2 as their economy shifts to one of higher wages and stronger consumers. I am not trying to sugar coat this read. It is not good that Chinese exports are decreasing. Lower demand from Europe is taking its toll on both our economy and the Chinese. No one said it would be easy.

New York, New York. 40^o 43' 0" N, 74^o 0' 0" W. Lift off. Stocks surged through the session, closing at the highs, with the nerds of NASDAQ rising a whole three percent on the optimism that the Europeans had finally done something concrete, or moved in the right direction. Forward is a good direction to move. The broader market S&P 500 added two and a half percent to 1362, whilst the Dow Jones added a more modest (relatively speaking) 277 points or 2.2 percent to close at 12880. This was the single biggest rally and day for markets since last October, so I guess it is worth a serious mention then.

The rally was pretty broad based and across all sectors, energy, materials conglomerates all clocking huge gains, only one stock went backwards in the Dow Jones Industrial Average (out of 30), and that was JP Morgan. The size and scale of their hedge gone bad is just being predicted at this point. The London Whale finds his position at a parish called Kemble, the source of the Thames River. I beg your pardon, the River Thames is the correct way to name the river. If you are interested the FT has a whole lot of articles on how and why the London Whale trades have not yet all been unwound, meaning what, I am not too sure. So, JP Morgan still have serious problems on their hands.

Currencies and commodities corner. Dr. Copper was last at 346 US cents per pound, the gold price is slightly lower at 1592 Dollars per fine ounce. The platinum price is also slightly lower at 1434 Dollars per fine ounce. The oil price is also lower at 83.66 Dollars per barrel, but had a huge rally late last week from prices that we have not seen for the last 18 months. The Rand is firmer at 8.17 to the US Dollar, 12.79 to the Pound Sterling and 10.37 to the Euro. We are firmer here today, just a little bit, after having been lower initially.

Currencies and commodities corner. Dr. Copper was last at 346 US cents per pound, the gold price is slightly lower at 1592 Dollars per fine ounce. The platinum price is also slightly lower at 1434 Dollars per fine ounce. The oil price is also lower at 83.66 Dollars per barrel, but had a huge rally late last week from prices that we have not seen for the last 18 months. The Rand is firmer at 8.17 to the US Dollar, 12.79 to the Pound Sterling and 10.37 to the Euro. We are firmer here today, just a little bit, after having been lower initially.

Sasha Naryshkine and Byron Lotter

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Greased up and ready to go

"I am of the opinion that if Greece "goes", which I still think has the lowest odds, then there might be some relief of sorts. Equally if the base case applies and Greece stays in the Euro zone, then there could equally be a rally. Worst case scenario would be if there were another stalemate."

Jozi, Jozi. 26^o 12' 16" S, 28^o 2' 44" E. Not the best day ever, the same old anxieties come back time and again. It feels like trying to start exercising again, and being hurt by a niggling injury that just won't go away. And that niggling injury is Europe and their sovereign debt issues. We feel your pain, but at the end of the day these are rich people problems, just this morning I saw that 91 day Kenyan T-bills are yielding 10.537 percent, according to an interview done on CNBC Africa. The comparable rate in the US is 0.1 percent. Portuguese ten year debt currently yields 10.65 percent. So, whatever you think in terms of whether one economy is finished or not, that is what people are prepared to pay.

So, I often suggest that the problems of Europe are rich people problems, because to borrow the Spanish Prime Ministers text message, Portugal is not Kenya. Portugal has an economy roughly the size of the Nigerians, and seven times the size of the Kenyan economy. Kenya, according to Wiki, has a population of 42.7 million versus Portugal of 10.5 million. Don't take this the wrong way, but if you had to ask 10.5 million Portuguese and an equal number of Kenyans where they would like to live and adopt the relative lifestyles, what do you think the answer would be? And Portugal have Nani and Ronaldo, Pepe and Meireles. Kenya has McDonald Mariga. Have I missed anyone? I still maintain that the "problems" in Europe are rich people problems. And they have the resources to deal with them, if not now, then sooner than we think.

The Jozi all share index closed down 211 points to 33826, a loss of 0.62 percent on the day, there were a few spots of green across the board, Sasol, the platinum shares and general retailers all closed a little higher, in the negative column there was the broader sector resources down three quarters of a percent, banks off nearly a percent. Not too much from a companies or earnings point of view yesterday, Sentula released results which saw their price higher on the day, but that said, the stock is trading near the five year lows, and over that same time frame are down a whopping 91 percent. Yech. Numbers of shares in issue at Sentula are up four and a half fold over 9 years. Not good. Although it is a different business of course now, than it was then, but having said that, turnover is down 16 percent from 2009. Perhaps they have turned the corner. But there is still a small matter of a civil judgement(s) against the former CEO and CFO, that hangs over the business like a bad smell. The NPA and the FSB sniffed around and raised numerous red flags (danger, communism I guess, or perhaps the athletics usage applies) that have been dealt with. Phew, too much baggage.

It is back! The Mooi River Index went missing for a while, Byron actually knows the fellow who compiles them, I think he was just very busy moving up to Joburg from Mooi River. But the reading is back, thanks to the settling of the compiler of this very important piece of our puzzle. What is it? Well, the Mooi River Index was thought up by a logistics chap by the name of Adam Kethro. He thought that heavy trucks, those with five axles or more, travelling on the national highway between Jozi and Durbs would be a good measure of state of the economy. The more traffic means that the wheels of the economy are moving faster than anticipated.

Strangely however, we are not too sure if this is as a result of the Transnet numbers falling. I have heard from several sources that Transnet is struggling, on the railways side, and in fact I was told yesterday that the last month's coal volumes through to Richards Bay was NOT GOOD, not because the demand was not there, but because of derailments and poor performance from the supplier of rail services. Which is a business that is 100 percent owned by government, so effectively, you and I, the people of the country that we live in, own this asset.

But that is another piece of the puzzle, something that I do not have access to unfortunately. If I did, I would put it all together and get a sense of whether this explosion in road traffic is as a direct result of a worsening in rail services. Here goes the Mooi River Index, for the last six years, since the beginning of 2007.

As you can see, the year on year improvement is slight, 1.6 percent better. I decided to take a leaf out of the cement stats book and introduce two sets of extra data to this, the moving annual total (MAT) and compare that to the prior twelve months and then of course the year to date statistics, and see how that is going. First, moving annual total, which will compare the second half of the last 24 months, to the first half. So, for the last 12 months the volumes of five axle trucks through Mooi River toll plaza has totalled 1,784,710. Or roughly 4889 trucks a day, 203 an hour! The 12 months prior to that, June 2010 to May 2011, registered 1,502,634 heavy trucks, or roughly 4116 a day, 171 an hour. That increase is a pretty remarkable 18 percent. Moving annual total. Now, onto the year to date numbers! 702,038 heavy vehicles went through the Mooi River toll plaza from Jan 1 to May 31 2012. The number for the year 2011, fitting the exact same dates were 687,115 heavy vehicles.

So, that is an increase of just over two percent so far this year. And I guess it tells you something, that whilst we have recovered to pre crisis levels, the going lately has been fairly stodgy. Europe, slower growth rates in China, fairly ropey local looking economy, it all adds up I guess. There is cause for being optimistic, this is the BEST May ever, for the data that goes back to 2004, and in fact over 80 percent better than in 2004. That tells you that there is a lot more trucks on the road now, than there was then.

Byron's beats today must be a yearning for his youth, when he built structures with Lego. Sigh, we were all engineers back then!

I often talk about a YouTube clip I saw which shows a 15 storey hotel being built in six days. This of course takes place in China and is a great tribute to their work ethic and efficiency.

This WSJ article has indicated that the company which made this viral video has made more clips and is now using it as a fantastic marketing tool. Good on them.

The next clip they made is one where a 30 storey hotel is built in 15 days. Here it is. I strongly urge you to watch it. It is absolutely fascinating, starting from the foundations to the installation to the interior. I am far from an engineer so this kind of thing is almost mind blowing for me. When I walk through any CBD around the world and look up at the buildings I am astounded and dumbstruck by these structures. Yes Joburg that includes you. How we as humans manage to put up such an amazing structure with such precision is phenomenal. To do it in 30 days is even more impressive.

The next step for this company is plans to build the tallest building in the world in 9 months. The building will be a whopping 838m high, 10m higher than the current tallest building, the Burk Khalifa in Dubai and nearly double the height of The Empire State Building. That is whole lot of iron ore, copper, cement, labour and many many more inputs.

Where am I going with this? We are getting more efficient which means we consume things faster and therefore more of it. That's how humans work. Look at the iPhone. Because it works better and quicker than all the others the average iPhone consumes 3 times more data than any other smartphone. That is why innovation is so important for economic growth. And the more we innovate the more room is made to innovate, if you get my just. Because I can use my iPad and the internet to get so much information across to you so quickly I have more time to do other productive things. So basically the more efficient we get, the more efficient we get. And the more efficient we get the more we consume. McDonalds, Starbucks, Wal-Mart, Visa, Amazon and many other great companies are good examples of this.

So you see why I love stories like this and why I get frustrated that we sit and watch negativity on our TV's all day. I guess bad news is what sells and for some reason by sounding bearish you seem very clever. It is in our nature to be cautious but if you ask any successful person, breaking out of your comfort zone is key.

New York, New York. 40^o 43' 0" N, 74^o 0' 0" W. Stocks benefitted late from the rumour mill running at full tilt again, this time on the whiff that central banks are ready to act in full force against any uncertainty. And that announcement could come Monday, or so it is thought, that was what the rumour mill was doing. Session end the Dow Jones closed a whole percent and a quarter higher.

Currencies and commodities corner. Dr. Copper last traded at 339 US cents per pound, slightly higher on the day, but noticeably higher than yesterday. The gold price is about flat on the day, last at 1623 Dollars per fine ounce. The platinum price is creeping up, the last traded price is 1489 Dollars per fine ounce. 84.69 Dollars per barrel is where the oil price last traded, that is for WTI as per the last NYMEX quote. The Rand is slightly firmer today, 8.36 to the US Dollar, 13.01 to the Pound Sterling and 10.61 to the Euro. We wait for the Greek elections on Sunday, I do think that the distraction of the Euro 2012 is much better for my health. Because, whilst I do not really have any allegiance, the French are who I am backing there!

Parting shot. I am not too sure why people are fascinated with the worst case scenario, and why people who are bearish always get more attention. I guess it is the same morbid fascination of how someone met their demise. Probably. I am just saying how I see it. Those who bring bad news are revered, because they somehow know something that we don't. I remember seeing a tweet from a journalist friend in which he said coming back from a Nouriel Roubini talk that he was going to put his money under his mattress. Make no mistake, I have heard this from many people who have heard Roubini talk, they all say that he is very smart and very compelling, and as such sucks you in. And in fairness, thus far he has been right about the European debt issues. But is it completely awful? Spanish yields might have topped 7 percent yesterday, but it was much worse in the 90's, in the pre Euro common currency era, so I guess there is a whole lot of room for great concern. And clearly the banks creaking and requiring more money (and the unsold properties which top 1 million) in order to shore up reserves, are a huge issue. Are these problems insurmountable? Can Spanish and Italian debt issues be solved?

Well, you can take a quick scan through this, you will be left being completely deflated: The End of the World as We Know It. And the comments on the side are full of praise for such an insightful piece, what insight, these predictions.

Last evenings rally in the US was founded on a rumour that globally central banks are setting up a coordinated manoeuvre post the Greek elections. So, what to expect on Monday? Well, I found via the eFX, the scenarios from Bofa Merrill Lynch:

"Base case (high probability): election result allows Greece to form a pro-EU government; limited European policy response

Bull case (low probability): election result means Greece does not form a pro-EU government; substantial ECB & European policy response

Bear case (low to medium probability): election result means Greece does not form a pro-EU government; limited ECB/ European policy response"

Thanks for that, I am of the opinion that if Greece "goes", which I still think has the lowest odds, then there might be some relief of sorts. Equally if the base case applies and Greece stays in the Euro zone, then there could equally be a rally. Worst case scenario would be if there were another stalemate. Do not count that out. Do I care about the inventors of democracy struggling to form a government, because the political landscape is so fragmented? Perhaps not. In the ultra short term, I do, in the long term, I don't.

Sasha Naryshkine and Byron Lotter

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