Are the Germans and the French cuddling up to the Russians behind our backs, or are they just playing FTSE?

The NYT reports, “Recently, Mr. Hollande joined Chancellor Angela Merkel of Germany on a phone call with Mr. Putin. . . Mr. Hollande’s scheduled meeting with the Russian president now constitutes the French president’s most prominent diplomatic foray into the Ukrainian crisis since it began. It follows France’s announcement that it would honor a deal worth 1.2 billion euros, or $1.6 billion, to deliver two Mistral-class warships to Russia even after its land grab in Ukraine, a decision that displeased France’s Western allies.”

And we ask ourselves why the banks aren’t lending, or “the beatings will continue until morale improves.”

CEO Moynihan of Bank of America said at a conference yesterday that they have just one big legal settlement left: one with the Department of Justice, which is estimated to be around $10 billion.  “We’ve got a myriad of cases that we’ll work through, but of the big stuff, that’s really the one that’s left out there,” said Moynihan. To date, Bank of America has paid about $60 billion in settlements and legal fees relating to the crisis, mainly from the shenanigans at Countrywide prior to its acquisition.  At the end of 2006, total shareholders' equity was $135 billion. (Charlotte Observer)  

Salvation Army, eat your heart out

Consignment shop chain Snooty Fox in Cincinnati has achieved $5 million annual sales and 11 outlets. It imitates clothing boutiques but with zero inventory costs and, of course, low prices. Is used clothing moving upscale, or is America moving downscale?

What? Me worry?

Niall Ferguson et al, reports the WSJ, provided the following chart at a conference in Portugal. He said that we shouldn’t worry about it.

In space they can’t hear you scream.

Also in today’s WSJ, Sayuri Shira, board member of Japan Central Bank, worries that inflation will not be high enough next year.  (The target is 2% by spring 2015.)  Meanwhile, the Brazil central bank kept rates at 11% even though inflation is higher than it would like. In Turkey, the central bank cut interest rates 0.5% to 11.5% despite the fact that inflation is likely to exceed the bank’s 5% target by a wide margin, but Prime Minister Erdogan is not pleased.  He called the cut "a joke" and wants more aggressive cuts to stimulate investment.

”I want inflation to be higher than I want it to be.”

So says, in effect, San Francisco Fed President John Williams, who is quoted in the WSJ today as arguing forcefully that the “optimal policy should trade off a transitory period of excessive inflation. . . in order to bring the broader measure of underemployment to normal levels more quickly.”

And the winner is. . .

In the race to the currency bottom, this year’s losers are the yen and the won, both up 3% versus the dollar.  The Renmimbi wins; it’s down 3%.  Ultimately, the winner will be the currency that first achieves zero value.