Farrell: The Information You Need

As I have said before, just read the newspaper to get most of the information you need. Treasury Secretary Geithner was quoted in the paper Tuesday as saying "Listen less to those whose judgments brought us to this crisis. Listen less to those who told us they were the masters of noble financial innovation and sophisticated risk management. Listen less to those who complain about the burdens of living with smarter regulation or who oppose having to pay a fee for the costs of this...crisis." Cousin Timmy has lost the scared in the headlight look and has become more forceful. His statement would be a tough one to refute and Wall Street would serve themselves better by trying to go along with the pols on this one. It looks like both Democrats and Republicans are somewhat open to compromise on financial reform regulation. The Republicans are a bit on their heels and the Democrats would rather avoid having to struggle for 60 vote majorities with November elections coming. Senators Dodd (Dem. Ct.) and Shelby (Rep. Ala.) are chatting and Blankfein and Dimon should get in the conversation.

You have to love the debate over the Greek debt situation. Greece wants a European solution to the crisis. Finance Minister George Papaconstantinou said he expects positive results from a European summit March 25 and 26. Angela Merkel, the German version of Maggie Thatcher the "Iron Lady", said there is no need to discuss an aid mechanism at the summit since Athens has not sought aid. She added, "Greece is not going to the EU summit as a beggar. There must be a political mechanism to ensure the stability of the euro zone." The ECB's Jean Claude Trichet took a jab at Germany and said "I would prefer that different institutions (read: Germany) think first and then express their opinions as clearly as possible." Well, okay, said Chancellor Merkel. She said, "I say this very explicitly, in my opinion the IMF is a subject we need to consider." In other words, you aren't getting the money from us, and she said it very clearly Mr. Trichet.

The aforementioned Greek Finance Minister said Greece is able to keep borrowing in the capital markets and can service its debts. Analysts at the French Bank, Paribas, however, said Greece is funded till the end of March (what's that - seven days?!) but "not until the end of April." The deputy Prime Minister of Greece has accused Germany of being reluctant to help Greece because its exporters and banks are profiting from the debt crisis. Germany's Foreign Minister strongly disagreed and I wouldn't think this was a way to pave the road to massive loans. The European Central Bank's Trichet suggested Greece could receive loans from Euro members but I don't think he has checked with Angela Merkel.

Italy's Berlusconi strongly advocates support for Greece. But since Italy may well be next in the docket he has a very real ax to grind and should be ignored. The back up in Greek bond yields and the widening spread between Greek and German ten year bonds tell us the crisis is far from over and may even be reheating. A major currency in a crisis is not good.

Turning to the Chinese/American currency spat, Chinese Premier Wen Jiabao offered a bit of an olive branch Monday when he made some softer remarks that China did not want a "trade and currency" war with the United States. There is a May meeting between the two nations that could help defuse the issue. Wen alleged that China's trade surplus is narrowing and that might take some pressure off. Economist Martin Feldstein suggested we all calm down. He said, "If the US Congress and the Treasury don't talk about the Chinese manipulating their currency, if the US can be quiet for two months, then I think the Chinese will be able to say that because of the great strength of the Chinese economy, they are unilaterally raising the value of the renmimbi." It would be helpful if Feldstein sent his comments to the 130 Congressmen that have petitioned to have China labeled a currency manipulator.