TARP, PIIGS, STUPID, Time to GASP
The only thing missing from the weekend’s $1 trillion rescue package for Europe is a good acronym, Timothy Scala, a macro strategist at hedge fund Sophis Investments told CNBC.com Wednesday.
“TARP. TALF, etc. … all seem to lack the specificity required from an effort of this magnitude,” Scala said.
And he respectfully submits Gargantuan Attempt to Stabilize the Planet (GASP).
"The package generated exactly such a reaction from financial markets across the world,” he said.
Amazed by the u-turn by European Central Bank President Jean-Claude Trichet, who just last Thursday told a press conference that the central bank had not even discussed buying bonds on the open market, Scala said the rescue package appears to have worked, for the time being.
“For the moment at least markets seem to be making positive noises, the euro has surged along with equity markets throughout the world, indicating that the crisis, at least for the time being, has passed,” he said.
"I Didn't Agree to This!"
But there is a big problem with the rescue package, according to Scala
“People who took these actions did so without representation from the main players, namely ordinary citizens, and perhaps more importantly, their unions,” he said.
There “are considerable strings attached to this deal and they all have the word austerity written all over them," Scala added. "We can’t help but wonder whether the citizens and their union reps will graciously accept the terms imposed upon them by such an august decision-making body.”
The world saw pictures from riots in Greece last week and more trouble is expected in Athens Wednesday and Scala said he believes there could be more problems ahead.
“Until such time as citizens and their unions sign off on the austerity packages imposed upon them, GASP amounts to kicking the can a bit further down the road until the next social crisis kicks it back," he said.
"Let’s hope that the proceeds generated from the sale of these bonds go toward better purposes than purchasing additional riot helmets and shields for their respective police forces.”