Category: Europe

Hedge Fund Schadenfreude

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Well, something interesting happened today; for a few hours today, Volkswagen had the largest market capitalization in the world, exceeding that of Exxon-Mobil.

It appears that what happened is that Porsche, which had previously held 42.6% of VW shares, cut a deal to increase this to 74%, and just announced it.

Combined with the German state of Lower Saxony’s slightly more than 20% share in the auto maker, this meant that only 5% of the shares were available, and there were a bunch of short sellers who bid up the stock, because there was not enough out there to cover their short sales.

My take is that the hedge funds can go Cheney themselves. Their stock in trade is to make money from just such of a lack of transparency, they call it “market asymmetry,” and they just lost money on a lack of transparency.

Hoist by their own petard….Heh.

There is going to be an German regulators looking into this though.

My guess is that Porsche did this in this way because they wanted to punish the short sellers.

They succeeded, but I’m not sure if all is in accord with German securities law.

Economics Update

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While it’s generally known that the Fed will cut rates, it is news when European Central Bank President Jean-Claude Trichet says that it’s likely that they will do the same, it is a bit of a surprise.

In terms of interest rate spreads, it’s not looking good, with the spreads for Fannie Mae and Freddie Mac hitting the highest level since March.

In real estate we have Journalistic bullsh%$ good news, with reports that new home sales increased in September, but as Barry Ritholtz of the The Big Picture notes, these are bad numbers:

One other thing to note: Note the monthly 2.7% increase was based in part on last month’s being revised downwards, making the differential look bigger (this month is also likely to be revised downwards). Annualized sales for the month was 464k; Actual unadjusted monthly new home sales are about 35-45k, down from 100-120k (before they get annualized).

Year over year, house sales fell by 33%, and prices fell by 9%.

Meanwhile, it looks like the tax payers have already sent a significant chunk of change to the banks $63 billion to 15 banks:

  • PNC Financial Services ($7.7 billion)
  • Capital One Financial ($3.55 billion)
  • Regions Financial ($3.5 billion)
  • SunTrust Banks ($3.5 billion)
  • KeyCorp ($2.5 billion)
  • Comerica ($2.25 billion)
  • State Street ($2 billion)
  • Northern Trust ($1.5 billion)
  • Huntington Bancshares ($1.4 billion)
  • First Horizon National ($866 million)
  • City National ($395 million)
  • Valley National Bancorp ($330 million)
  • UCBH Holdings ($298 million)
  • Washington Federal ($200 million)

Oh…me bad…I forgot that BB&T is in for $3.1 billion too.

Well, at least gas prices and oil prices are continuing to fall.

In currency, we have
the dollar and yen pounding the Euro and Pound to the degree that the bank of Japan is considering an intervention to keep the Yen form spiking too high.

It also looks like the Australian dollar is at serious risk of falling off a cliff, see here and here.

Eurocrats Looking at Massive Propaganda Campaign in Ireland

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It looks like they are looking for another bite at the apple after the Irish referendum on the Lisbon Treaty went down in flames.

So, now we are seeing EU propoganda minister communication commissioner Margot Wallstrom suggesting what is needed is a major education campaign, but remember, don’t actually talk about the treaty that is at issue:

“Whatever you do, you won’t have in the end everybody reading a 400-page document,” she said. “That’s what MEPs are being paid for.”

Better yet, don’t have a 400 page constitution. The original constitution of the United States, including all amendments, is less than 15 pages.

You had people vote on a byzantinely complex document where no one, not even your vaunted MEPs understand the complete document.

That’s enough reason to vote against it, because who knows what mischief, corruption, and self dealing lives in those pages.

Just How Dirty Was Tony Blair?

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Because we already know that Prince Bandar bin Sultan bin Abdul Aziz Al Saudr, known as “Bandar Bush” for his close ties to the Bush Crime Family, is unbelievably dirty. He took around £1 billion in commissions to “facilitate” the military sales in question.

Tony Blair shut down the investigations into bribes around the Al-Yamamah arms sales to the house of Saud in response to threats from that nation, and now the OECD has released a blistering critique of the behavior of the British government at that time for Blair’s shutting down that investigation.

Maybe Bush and Blair can share a cell.

Sarkozy Opposes Rule of Law With Regard to IP

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Apparently, it appears that Mr. Congeniality has sent a letter to the European Commission demanding that authorities be able to cut off people accused of violations of IP laws without judicial review.

It seems that a bill going through the European parliment has the following language:

No restriction may be imposed on the fundamental rights and freedoms of end-users without a prior ruling by the judicial authorities.

It also appears that Sarkozy thinks that this is too much of an imposition on the IP dependent industry.

The European commission told him to go pound sand.

Viktor Yushchenko Calls Snap Elections in Ukraine

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Fissures in the “Orange Revolution”.

The short story is that Ukranian President Yushchenko and Prime Minister Yulia Tymoshenko are on different sides of the ideological divide.

Yushchenko thinks that they should do everything possible to piss off the Russians, so that they will attack, and Tymoshenko looks at Georgia, and though she hates Russia too, she saw what happened in Georgia, and thinks that needlessly tweaking their nose, and overt hostility to the large Russian ethnic minority in Ukraine is stupid, and will not be to the benefit of the country.

Basically, Tymoshenko is saying that she is not opposed to wars, “just stupid ones,” to quote the next President of the United States and Yushchenko is approaching the issue with the calm demeanor of the current President of the United States.

Speaking from experience here, let me advise the Ukrainian people that having a leader with a messiah complex is a double plus bad thing.

See hrere, here, and here.

Dassault Gets to Pitch Rafale to the Swiss

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Truth be told, I think that it’s too much plane for an F-5 replacement, though if the Swiss get a good deal out of French desperation for an export sale, more power to them.

Same applies to the Eurofighter Typhoon, only more so, though, since the Swiss already operate F/A-18 Hornets, the jump to the Super Bug would not be so big.

My money though, is still on the Gripen, it’s a lot cheaper all along the life cycle, and the Swiss don’t really need the additional range of the larger aircraft.

UK MoD Looking at Creating Own Satellite Reconnaissance Capability

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The British Defence Ministry is looking at fielding its own satellite reconnaissance assets.

Up to now, it has been using either US military assets or civilian assets for its space imaging needs. It looks like Surrey Satellite Technology Ltd. (currently in the process of being taken over by EADS Astrium) is the most likely candidate for the program with its SSTL-200 (pictured), which currently has a 2.5m resolution, though improvements to sub-meter resolution are thought to be possible.

As always, the problem is funding, with a price tag starting at £100M, which would have to come from elsewhere in the defense (defence) budget, particularly given the budgetary needs caused by the financial meltdown.

Iceland® a Wholly Owned Subsidiary of Russia

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Well, it looks as if as bad as the US has been hit, tiny Iceland has been absolutely destroyed by the financial crisis.

Despite regulatory actions intended to shore up Icelandic banks, Icelandic banks have all failed, and they are in talks with the Russians about a €4 billion loan…..For a country with just over 300,000 people….That’s a bit under $20,000 per resident.

It also looks like there may be some action from the IMF, which raises an interesting question, how will Europeans feel when one of their own is told to gut labor protections, reduce union rights, end free health care, and make payments for primary education mandatory?

That is, after all what the IMF demands of dark skinned folks.

Of course, no crisis is complete without one complete pratt making things worse, and (not surprisingly) this role is assumed by British PM Gordon Brown, who is upset that the Icelandic guarantees only apply to domestic account holders, so he, “has used powers granted under anti-terrorism laws to freeze British assets of Landsbanki until the standoff is resolved.”

I think that once the Icelanders find out what the IMF is demanding, and if they are true to form, it will be the complete dismantling of their social safety net, they will run to Russia for their loan, which will come with its own strings, probably a naval base, and possibly an air base.

I Still Think that the Dutch are Sandbagging SAAB over their F-16 Repladement

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But they are certainly making it look like a real competition. The Swedes needed extra time to get approvals for data release from the US, and the Dutch MoD extended the deadline on the bid to 30 September.

I still do not believe that the Dutch are serious about considering an alternative to the Lockheed-Martin JSF, they simply have invested too much time and effort, but they are doing their best to look fair about the process.

Your Regular Georgia Update

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There are rumblings in the Council of Europe about ejecting both Russia and Georgia, which just goes to show what memberships in the Council of Europe are actually worth, seeing as how this was shortly followed by Russia signing treaties with South Ossetia and Abkhazia guaranteeing protection in the event of an attack.

Still Jaap de Hoop Scheffer, the NATO secretary general, has declared that Russia cannot block Georgiaan membership in NATO, which implies that Jaap de Hoop Scheffer has not read the NATO charter, which states that there can be no extant border disputes for a nation to be brought into NATO.

The only way for Georgia to get into NATO at this point would be to recognize the independence of South Ossetia and Abkhazia, and somehow come to a consensus on what the borders were.

Ukrainian Government Coalition Collapses

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It appears that President Viktor Yushchenko and Prime Minister Yulia Tymoshenko* have a major difference of opinion regarding foreign policy.

It appears Yushchenko is natavist Ukrainian nationalist bellicose nut, and Tymoshenko merely hates the Russians with a white hot passion, so she doesn’t want to start shooting at Russians today, so the President thinks the PM is some sort of traitor.

*Why can’t news happen in places where I can spell the damn names.

What the War Nerd Said

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Gary Brecher makes a very good point, that the Neocons who are suggesting that Georgia needs to be reorganized along the lines of Hezbollah do not have the best interest of the Georgians at heart.

Rather, as the War Nerd so eloquently puts it, “America’s chickenhawks are ready to turn Georgia into a nation of missing-relative-seeking refugees.”:

I’m pretty sure if you asked any Georgians, they’d screech, “Agh! No! We don’t want to live like Hezbollah, cowering in our huts under constant bombardment, raising kids with no prospects but martyrdom!” But then the neocons haven’t asked anybody in Georgia. Safe in their living rooms, they think it’d be a great idea for Georgia, a very unwarlike little middle-class country, to try to imitate the Lebanese Shia who make up Hezbollah’s suicide squads.

Norwegian and Dutch Fighter Competitions, SAAB Ups Gripen Ante

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Honestly, I think that both countries have alredy sunk so much money into the JSF, that it’s a lost cause, but you have to admire the dedication of the SAAB sales force.

First, SAAB is offering an “all inclusive” bid, including, “the 85 Gripen NGs, training, spares, simulators and support,” in addition to industrial offsets.

Additionally, they are claiming that the Gripen will will be billions cheaper over the life of the aircraft, which is likely true, as it weighs half as much.

Additionally, with the emphasis on remote austere basing, the Gripen probably wins in a COIN scenario like Iraq and Afghanistan.

This is actually their strongest case, that the US DoD and Lockheed-Martin will be nickel and diming the JSF customers throughout the program, in addition to still not having a hard and fast price or delivery schedule.

We also have some of the PowerPoint slides from L-M and SAAB:


LM Range Chart


SAAB Chart

Which appears to indicate that the Gripen has more range than the JSF, though I think that this is not an apples to apples comparison, as the Gripen is likely carrying external tanks for this.

In the meantime, it appears that reports of the Typhoon reentering the competition were greatly exaggerated, they still see it as a sucker’s game, though Boeing, and US Navy are offering the Super Hoenet with the APG-79 Active Electronically Scanned Array (AESA) radar.

One interesting monkey wrench thrown into the JSF’s path is that the Dutch Economics Ministry appears to be trying to extract more money from the Dutch industrial JSF partners, which would serve to raise costs of the aircraft to non-cloggie air forces.