Tag Archives: SPANISH BANK RECAPITALIZATION

pate a pain

Now you know…

For those following the mind-numbing weirdness of the European sovereign debt saga, you now know what it’s like to live here.

  • It’s not what you say it’s how you say it.
  • As long as someone is following you, any lie is a truth.
  • There’s every reason to ignore anyone following you, because they are.
  • Failure is always someone elses fault.
  • Somehow things always work-out.

(That also sounds like Twitter.)

In any case, it struck me this afternoon as the headlines continue to spin out Spanish confusion.

This weekend we had the distinct impression that the EU was bailing out Spain in some new and creative way, sovereign bondholders wouldn’t be at risk (subordination). Slowly, as the details started to emerge, classic european dissonance was everywhere:

  • SPANISH BANK RECAPITALIZATION LIKELY TO BE IN EFSF BONDS, SIMILAR TO GREEK RECAPITALIZATION
  • Spanish CDS above 600bps
  • EURUSD lower than yesterday
  • IMPOSING BORDER CHECKS, LIMITING ATM WITHDRAWALS ALSO PART OF WORST-CASE SCENARIO PLANNING – Surreal Capital Controls

Here’s an example from real life and a good place to stop reading, if you don’t like my rambling.

pate a painI often buy pâte à pain from a local boulangerie for pizza or my own bread; a boulangerie is a microcosm of the French culture so I sincerely appreciate them. But pâte à pain is rarely purchased, and it sets the normal routine a bit out of sync, especially when ordered by a foreigner. Pâte à pain is nothing more than a baguette before it goes in the oven. They have hundreds of these 250g dough balls lined up in the refrigerator, at all hours. This is not a normal request, admittedly, therefore procuration takes a délicatesse that most American expats lack, yet most of the French possess genetically. Anything that steps outside the routine can cause intense consternation. I have no problem buying pâte à pain at my local boulangerie here in Paris, it took a few years, but the routine fell into place. Outside of Paris a virgin boulangerie, is a different story.

I recently was rebuffed at a foreign boulangerie, with blank faces, and a confident explanation that ‘we don’t sell pâte à pain’. No moral support and a feigned incomprehension from the 4 customers behind me, “but I’d bought pâte à pain from this particular (semi-virgin) boulangerie on atleast one other occasion, what could have changed?” Again blank faces all around, and a confident rejection that my request had never been heard of in that corner of the world. Calm, calm. D’accord… I’ll come back later with a charming French female and we’ll see…

Sure enough, 3 hours later they sell me my pâte à pain without much of an explanation or even a slightly honest excuse.  Things had changed. They weren’t in any way lieing, and it wasn’t their fault because blah, blah (another lie which I was forced to believe). “I’m glad things have worked out let us know how the pizza was!’

This type of thing happens all the time. What struck me while watching the wires this morning was that something between that boulangerie experience and this neverending sovereign debt saga reminds me of my own professional experience; easily motivating half-truths dispersed (sold) by management, clients, and suppliers. It’s known as bonne volonté, and unfortunately, false bonne volonté is hard to distinguish from outright deception. Within an organisation you don’t really know who’s deceiving who and if you’re lucky enough to know, you’d better be smart enough to propogate the lie, or you won’t get your pâte à pain.

Europe is playing the exact same game as the deux dames at that boulangerie or the president of a european bank: “we don’t have a problem, no never had a problem”, etc. etc. You get the picture.

Good Trading.