Juggling Dynamite

Thomas Hoenig, FDIC director and former Federal Reserve Bank of Kansas president, explains why he supports a plan to break up the big banks. Here is a direct link.

ECB’s Mario Draghi disappointed risk addicts this morning with more strong promises about the Euro being “irreversible” but no concrete acts. Rates are already at the zero bound. Central Banks of the world have already gutted strength in their balance sheets to absorb toxic bonds. The bailout cult has run its course. Reality begins to dawn. Austerity and defaults is the only practical plan from here. And yes Virgina, as every child comes to learn eventually, there is no tooth fairy.

Last week while Germany’s gate-keeper Angela Merkel was off line for the day hiking with hubby, the ECB’s Mario Draghi seized the opportunity to elate algo traders everywhere with bold pledges of support (aka blank German cheques): the ECB would do everything within its mandate to save the Euro. Since then the Bundesbank and other German representatives have issued a series of statements in the “nein” line as they continue to assert that insolvency problems facing some states are fiscal and that these problems should be addressed by government efforts to rein in deficits not further monetary injections. Here is a direct link.