...so what changed this week-end?

The risk here is to jump to too big conclusions on a Monday where repositioning is the name of the game - but as can be seen by the Bloomberg overview taken this morning - the market is on the roll - having 5-15% gains across the board led by french banks - which also underlines that this deal was primarily a deal to safe the European bank system.

The 2008 crisis saw the bank being bailed-out by the local governments, now the all of the G-30 / IMF is securing what remains of the european major banks - the reason being the national governments needs someone to facilitate their huge deficits. Expect the same banks to see massive increase in regulations as they are OWNED by the governments. Ironic that the EU sees this as fight vs. the banking system - as the banking system is built on the types of deals done this week-end:

Creating more debt to pay for old debt....
Floating the market with liquidity to keep rates artificially low
Backing away from the spirit of EU and certainly that of the Bundesbank

The key take-away from 10.000 feet this morning:

1. ECB has lost all credibility as independent authority - this has been a gradual process which has been cemented by Mr. Trichet, the ultimate bureaucrat. Greenspan II as he is called in this office.
2. Bundesbank founding fathers must be turning in their graves observing how the founding principle of clear line between monetary- and fiscal policies came down today.
3. ECB can not buy directly in the government market, but feel validated in buying in the secondary?   So buying a used car, instead of a new car, is not buying a car ? Or? Please explain to me.
4. The lack of ANY STRUCTURAL REFORM or RESTRUCTURING OF DEBT - scares me 3-6 month down the line.......

This morning is not the true picture of the reaction - as the market was life-time short the EUR and probably heavily short all risk sectors - clearly this buys the market some time, but it does not improve EU's competitiveness, it does not address the unemployment, the north-south dividide in Europe, it actually reminds me of relieve AID for Africa - the more money we send down there, the poorer they get!

We had the luck of being perfect square on the closing Friday night,  and we are trying not to be too negative on this rally, it will last 3-4 hours, days, weeks or months, but it is not a lasting solution - for now liquidity is flowing into banks, which again turns around and buys more EU debt, US debt and the circle starts again.

I have bought small down-side in stoxx50 this a.m and will buy some more every day this week .... the reversal of the peak of todat could be fast and furious or not........for now everyone got what they wanted...........but my final question remains:

Who is paying for this party?

You tell me?