By MICHAEL GRAY
News out of Europe will not come from the G20.
The ECB cutting its lending rate to 1.25% in order to stem growing unemployment in the Euro zone will overshadow anything coming out of the London economic meeting.
French President Nicolas Sarkozy and German Chancellor Angela Merkel are looking for blood out of the G20. Each are said to want a global regulatory agency to monitor and react to systemic risk.
Sarkozy has threatened to walk out of the meeting if his agenda is not adopted.
The idea that Sarkozy and Merkel need to address the Euro zone monetary constriction is rebuffed as not important in their respective socialist countries because of the large safety nets France and Germany have for the newly unemployed.
Yet everyday we see news coming out of France about business CEOs and bosses being taken hostage or continuing rioting in the streets over job cuts.
This is what happens when countries do not control their own currency. The leaders need to find a villain to hang in the village square. Sarkozy’s plan is to demonize hedge funds, private equity funds and other derivative salesmen.
As an aside the ECB sold 35+ tons of gold yesterday, with no price or counterparty information released.
Mark to maybe
Tomorrow FASB will release a new accounting rule regarding market-to-market.
The timing of this accounting change may signify that Tim Geithner and Treasury are having trouble with its public private partnership. Why else would you muddy the waters of pricing the toxic paper with the rule, when price discovery on the paper has been moving forward for two weeks.
The Financial Accounting Standards Board will propose significant changes to its mark-to-market rules, allowing banks to set their own values for certain hard-to-value troubled mortgages, corporate loans and consumer loans.
The new proposal is to assist banks after bankers complained current mark-to-market accounting rules forced them to undervalue their assets, by setting prices at deeply discounted, fire-sale values.
For more on Wall and Washington and the cratering economy see: http://mgray12.wordpress.com