Monday, March 29, 2010

CDA Biz to CDA Gov: Raise Taxes! (Wot?!???)

According to the Globe & Mail, Canadian business executives say it's time to raise taxes? What?? Surely this is some mistake. What could they possibly be thinking? Is there something wrong with the water? Don't they know this is pure unadulterated heresy? Don't they believe (like their southern neighbours certainly do) this is akin to declaring "war" on their class and the future of the nation? Don't they understand what higher taxes actually mean....and what they lead too? (Answer: bureaucracy, give-aways, free-lunches, Nancy Pelosi's, yada yada yada,  and more SOCIALISM, of course). The poll must be tainted. The Globe & Mail must be biased, run by Che Guevara fashionista Marxist-Lenninst sympathizers. And all this time, we've been looking at that long divide to the south, when, the REAL menace has been lurking to the north. It's clearly time Americans locked down their northern border or else we will soon be over-run with....ummm...... errrrr......prudence and, heaven forbid, common sense.

We Are All Zaitech Now

Repo 105 has come and gone in the media - a mere Tourette's tic-of-a-reaction. Lots of shock and indignation (in which, surprisingly, NY law firms came out looking good), along with calls for some good ol "hang 'em high" Fuld-targetted vigilanteism, but not the amount of introspection one might expect. Former bank analyst, John Hempton, now CIO at Sydney Bronte Capital made the very important point (in Repo 105's Antecedents: Ken Lewis) that Repo 105 was an old trick, commonly used by many firms to - without mincing words - brazenly deceive.  "Bed & Breakfast" trades are of course common in equity-land too, by hedge funds and banks, used to tart things up for prying eyes when out in public. John points the finger at Bank of America as an example (and what he believes is MUFJ on the other side) highlighting the difference between average assets over the quarter and end-of-quarter measures (witnessing the inverse at MUFJ). There are of course other explanations, but John's sleuthing makes sense, conjecture though it remains.  

The natural question implied by Repo 105 and by John's accusation, in the bigger picture is, "How endemic is this raping of the spirit of the law", not just in finance but across our society ? Wasn't Enron and Sarbox was supposed to usher in a new era?

I remember the scathing denunications and indignation coming from the USA in regards to the arguably laughable and ludicrous zaitech shenanigans in Japan, at its height during the early 90s. So pure and transparent was the US by comparison (so Japan's critics argued), that by comparison, one could have no confidence in the Japanese accounts. And after Yakult, Olympus, and admissions by other companies that the financial assets on their balance sheets were not real, the skeptics were proved right.  

But that was then.  And (despite Boesky and no shortage of similar dithering in the grey netherworlds) then), "What is Normal" now, in the USA (particularly in finance) has travelled a long long way, as a mere inventory across the timeline reveals (noting that these were systematic crimes - not idiosyncratic:

- Tainted & conflicted analysts passing off conjured fiction as "research"
- Largest mutual fund companies complicity in mutual-fund timing scandals that systematically defrauded longer-term investors for the benefit of the management company and short-term trader;
- Rampant, options back-dating by managements for self-gain, systematic balance sheet and income statement fabrication across a wide universe of securities whether channel-stuffing or any other manner of creative accounting;
- Systematic altering of pension-fund return assumptions to reduce required corporate contributions to pad EPS;
- Ludicrous, unbenchmarked and grossed-up executive comp schemes, structured by boards appointed by management themselves;
- Endemic abuse of SPVs and tax-havens for balance sheet distortion and tax avoidance;
- Bid-rigging by brokers (supposedly working for their clients) across the entire reinsurance industry with complicity by the reinsurers themselves;
- Acceptance and use by major companies of "finite-insurance" to directly smooth earnings, at best willfully deceitful, and at worst, completely fraudulent;
- The wholesale capture and corruption of the ratings agencies who were at the very center of financial money markets;

This is before one even talks about the abuse of securitisation-run-amok, and the shadow banking system. And I have undoubtedly left a few out. All these things were/are criminal in the spirit of the law, and most to the letter. It has gotten to the point where one must look very hard for the honest company with real down home values, I suppose like Berkshire Hathawy. Ahhh, yes, one points to Warren Buffett and that pillar of sobriety, Warren and Berkshire Hathway. Errr ummm, except that even the revered WB was front-and-center to the finite reinsurance game of providing earnings-smoothing "insurance" and earnings management to those in need. Anything to make a buck.

At least the Japanese bowed their heads in shame, and eventually fessed-up and took the painful medicine. Mr Buffett, as the example of the American solution by contrast, disavowed himself of all knowledge of these activities, for crimes which his loyal underling is now rotting in jail. With Repo-105, only the number of zeros have gotten larger, and the fact that they were caught red-handed. However, the pattern of behavoiur of what is normal, remains completely out of bounds to what prevailed, and what is required in modernity to enforce the rules of fairness and what remains of trust, else the entire system unravels towards lawless chaos, or an authoritarian nightmare arbitrarily awarding the spoils to the cadre of cronies. How have we fallen so far? How is it our society grants the rights and privileges seemingly without the responsibilities? These are the questions we should be asking ourselves when looking at Repo-105.... 

Friday, March 26, 2010

"Serving the Nation's Dreams..."

Did anyone else find irony in the [proposed] agreed acquisition of British National Lottery concessionaire, Camelot, by the Ontario Teachers Pension Fund? One wonders whether this presages the possibility that the hapless teachers will, in the future, find their benefits awarded as much by games of chance as by the investment acumen of their managers? "Serving the Nation's Dreams..." is Camelot's motto, though Teachers' beneficiaries will undoubtedly hope theirs are not left to similar spins of the wheel.

Leaving the tongue out of the cheek for moment, Teachers' are a clever lot. And there is much one might infer from such bids: that asset ownership of quality or monopoly concessions (call them utilities) are a better and safer bet than cash, bonds or government credit; that these assets have inherent properties that hedge (partially) against inflation since revenues (and hence margins) are nominally indexed; and that IF this given the safety profile, is a cash proxy, there are as few short-term yield-plays with asset-backed safety anywhere near those of such a deal. But as a quasi-government organisation, perhaps the most interesting and ironic inference (if the preceding is correct) is that is signifies a distrust and skepticism of government itself by government. Governments would be well-served to heed such growing sentiments of distrust, else they lose one of their most important assets: trust.

Saturday, March 20, 2010

In Praise of Free Lunches

I enjoy skilled writing as much as I enjoy good debate. Former Ms. Equity Private, author of the occasional Finem Respice, and I believe more recently, ZeroHedge co-conspiratress, "Marla", provides both. In the past, I was flattered that she took yours truly to task over my lyrically-nostalgic view of the nobility inherent in Japanese paternalism, and the derision I heaped upon certain so-called activist carpertbaggers. Judged by the resulting comments, her reply was met with certain suspicion by readers.

Now it is my opportunity to return her favours. Consistent to her beliefs, Madam EP zealously champions the primacy of the market in general, and a view opposing The State's role in Health Insurance detailed in this very articulate though, I believe, ultimately misguided post, in which she draws comparisons between risk-bearing insurance, (whether marine or catastrophe), and healthcare. Subsequently she forecasts incipient doom to those who tread the interventionist path, which for her, is but an entree to indict all manner of so-called redistributive free-lunches, with the focus remaining pejoratively upon "socialized" medicine.

It is hard to disagree with the logical veneer of many of her points. For example, there is much merit in the thought that were one to...
"Kill risk pricing information, insurance is doomed."

While utterly true in capial-intensive lines, this has little to do with health insurance, which, from the health insurers perspective, (particularly where the risk pool is wide and deep), I will argue, is essentially a TPA (third-party administrator) function.

She oh-so-rightfully points out that
"Risk pricing is tricky at the best if times."

This is indeed true the sparser the event set, and the more remote on the tail the probability of loss. It's trickiness (along with bog-standard human greed, and shortsightedly constructed asymmetrical incentives) are some of the reasons why there are feast and famine underwriting cycles in many lines, with reinsurance being most exemplary. However, the deceptively simple truism ignores that the more perfect the information and the more diversified the risk pool, the more one approaches perfection in the pricing of risk. Admittedly, even with the best models and information, it is likely that it never will be possible to bulls-eye the odds on a satellite spontaneously combusting during launch, or a Tokyo Quake laying waste to the night-owl haunts of Roponggi. But healthcare IS decidedly different. So-called underwriting losses ARE highly predictable across the population, as are both sides of the income statement (particularly where there is a single-payor with intimate knowledge of the cost-side of the equation). And unlike Lloyds or other Catastrophe Insurance examples, the implied leverage in Healthcare across the population is extremely low. Insuring Florida or GOM Wind, or California Quake and other peak risks are the opposite on all accounts, which is why (in these lines) capital is almost always insufficient relative to the potential required cover, and one of the reasons why peak-risk reinsurance prices, are elevated. Her lack of appreciation of these differences is revealed as she attempts t0 apply her classical definition of insurance.
the presence of some probability of loss (risk) and the ability to transfer it (typically for a fee or premium) to an entity or entities with capital (one hopes) across which it can then be diversified.

It is not picking nits to suggest (even yielding at least some uncertainty) that capital requirements for the optimal diversifying entity across the risk-pool are miniscule in comparison to that required to make good on a tempest-tortured or pillaged fully-laden East India Co. vesse,l Northridge Quake, or a Cat5 named "Cassie" ploughing through Miami.

Mlle. EP rightly (no pun intended) continues that
Healthcare isn't and never was a "right"

a sentiment which I violently agree with (at least, to-date, in the USA), and so point out, by extension, that "cheap" healthcare therefore cannot be a right. Indeed Healthcare is no more a right than Liberty or the sanctity of owning property which become rights when men (sorry girls, but it was men) declared it thus. I would argue that hierarchical domination is the natural order within human and similar branches of the animal kingdom, and that individual "rights" ascended only through the organization of society and the extension of laws to guarantee present cornerstones such as freedom and property rights. Healthcare follows in this vein of argument. Liberty, (and in other nations) universal health insurance covereage and public finance of basic insurance for those unable to pony-up, are not naturally-conferred, but societal constructs not as a result of their ordination by a deity-of-choice, but because they yield meaningfully large positive externalities far in excess of their costs.

She continues with yet another correct observation that
"Mandating myopic risk pricing for political reasons is nothing more than a rank subsidy."

which is undoubtedly correct when she indicts subsidized prop-cat insurance that encourages the brazen to construct houses on known flood plains, or exposed coastal areas prone to extreme disasters, privatizing the gains and socializing the losses through the insurance subsidy. Though such political intervention in the prop-cat markets are certain vote-winners where interest-intensity is elevated, this is not the primary driver in regards to health insurance, where the intent is precisely the opposite. The public policy objective (given the very low underwriting risk) is NOT to legislate subsidy, but to finally price the so-called risk at its true actuarial cost, and extend the savings to insured AND as importantly, to the taxpayers who are currently insuring parts of the market due to market failure, information asymmetries and the like. There is nothing myopic about the desire to know the price across the population. Armed with the true costs of basic coverage, a relatively simple actuarial exercise for a single-payor even before tackling the systemic inconsistencies and conflicts (e.g. doctors owning hospitals, etc.), one can then discuss the quite separate public finance issue of how to extend insurance to those presently unable to afford it. This is not to say that one could not conjure an image of a hideously comprehensive and unaffordable system that makes little sense either in terms of systemic incentives or finance, but this is NOT what currently exists in France, Germany, Netherlands, Belgium or Canada, nor what should be considered for implementation in the US.

Miss EP then capitulates, stating the obvious that
Habitual reimbursement for regular, recurring costs is not insurance, people.

Indeed, not for a PE professional customer's viewpoint perhaps, but for the meaningfully large percentage of Americans who live paycheck-to-paycheck, it is. Her point was my point: health insurance is essentially a TPA function. Premiums in, claims out. play the float (when there is one), carve-up and cherry-pick the risk-pool and capture the fat tail. But this very fragmentation does precisely what Libertarians purport to detest: privatize the gains and socialize the losses.

Then Miss EP gets contentious. She asserts:
" actually takes very little wattage to understand that discrimination is the very purpose of insurance. In fact, insurers employ legions of experts toiling away to practice the most base sort of discrimination every day. They are called "underwriters."

Not to be pedantic, but actually, the ones toiling away and finding the anomalies are called "actuaries". The underwriters are the ones with the gift of gab, who cut class at uni (if they went to one), buy the drinks, and pay for the less-than-salubrious forms of entertainment on behalf of their clients. (Apologies in advance to my friends who are underwriters, if you think this an exaggeration). Yet, while discrimination is indeed the route to profitable underwriting, it doesn't follow that it is the route to better risk-pricing. It certainly yields a more profitable spread in regards to return upon capital deployed, but doesn't deterministically push prices towards actuarial value. Good discrimination is essentially predatory zero-sum behaviour - an exercise in torturing the data until it yields a profitable anomaly, one where the underwriter (thanks to his clever actuary) captures the lion's share, leaving the underwritten, begrudgingly, the crumbs. It also strikes at the heart of what makes Health Insurance patently different from other insurance markets mentioned which is that Health Insurance is a necessary exercise in Generational Smoothing. Tempests afflicting laden triple-masters, or natural disasters do not care in the least about the age profile of who is insured. But maladies of senescence do. Health insurance, therefore, is necessarily an exercise in everyone who can paying a percentage of the entire risk pool for the duration of the life-cycle, to prevent privatisation of the profits and socialisation of the costs, which is to the detriment of BOTH insured and the taxpaying "underwriters" of last resort. It is not merely fair, but it is seemingly the only way to assure that finance-able insurance is, in fact, finance-able, regardless of age, or existing conditions, precisely because one cannot know who, what, when or if one will be afflicted, and/or what side of the tracks one will be inhabitating when and if "it" happens. This, it seems to me, captures the more pertinent characteristics of insurance more relevant to healthcare, the insured, and it's associated social utility. To place underwriting profit in front of such practical utility is a rather bizarre approach to the problem--solving of quite real-world problems that the real world (in America, at least) has proven itself incapable of solving.

Universal health insurance has many positive externalities reasonably outweighing any unlikely negative errors stemming from the accuracy of the risk-pricing component itself. Enhanced family stability and reduced anxiety, increased corporate managerial focus as our enterprises are relieved of managing (though not necessarily contributing towards the finance of) legacy, current, future and burdens; improved health and productivity; freed-up emergency-rooms in hospitals; lower absenteeism; diminished costs resulting from earlier intervention; increased labour-force flexibility making part-time employment a viable alternative for many; a large percentage savings of GDP that can be usefully channelled into economically virtuous free-market things like venture capital and attendant enterprise creation, rather than funding Richard Scrushy-like vintage car collections for future healthcare contrapreneur wanna-be's gaming a broken system. It has the ability to create a consistent and honest accounting of costs, allowing the the forthright discussion of choices at hand, be it rationing of services or the trade-offs between the nature of the basic insurance coverage provided, and that which can be afforded. These are powerful and compelling reasons to NOT fragment the risk pool.

Miss E.P. is of course right to viscerally feel as she does about about discrimination, and the perceived unfairness of presently healthy people footing the bill for the unlucky, unwise, or just plain self-destructive. But these protestations are bogus. For in the real world of real insurance, life is far from fair as much by design as by chance. A Cat-5 rolling across Florida, or a well-placed 7.5 California quake will result in higher insurance prices everywhere, in primary and reinsurance prices alike. The cost of insurance IS at the least, the cost of insuring on an aggregate basis. Only happenstance and serendipity separate winners from losers in this game. Healthcare insurance by contrast, benefits from low implied leverage, low volatility of losses, a reasonably short-tail, and de-minimus capital costs which on a practical basis diminish contrary protests due to solvency or fears of implicit or explicit guarantee. Importantly, there are many knobs to turn in order to attenuate the potential mismatch between side of the income statement: premium levels, co-pays, benefits, usual and customaries, are all within the arsenal, and all can be turned at a moment's notice where the public interest is concerned. There are indeed fault-lines over whether the a 45 year old should be granted the right to fertility treatment, whether the requirement for Viagra is merely "a shame" or a legitimately reimbursable expense. Wiser folks than I have agreeably determined this in the systems of our peers, and so I am certain that we, too, if pushed would be able to appropriately decide as well.

Yet, Miss EP doesn't stop there. She makes a further great big leap from gubmint disintermediation in the health insurance market (consolidation is perhaps a more accurate term) to a Glenn Beck-like conspiracy that healthcare reform is merely a guise for politicians to gift out $20,000 per family- in a paranoid belief that the primary purpose of a national health-insurance scheme is a stealth wealth grant to the masses clamouring to suckle the teat of the government milchcow. She has, by the end of her missive, seemingly missed the obvious virtue in simple risk-sharing, and the necessity of bringing some order and rationality to costs, in lieu of a mantra that resembles "...don't get sick...don't get sick, AND don't get old.."

If a well-functioning, reasonably cost-effective system of national health insurance was merely a utopian dream, or if the current American system was viable in any way other than providing prima-donna services to the top veneer of the income scree, I could empathize with the skepticism of Miss EP. But it's not. The chaotic American model of healthcare and its finance is irredeemably broken. There are many examples of meaningfully better-functioning systems providing universal coverage with excellent care and outcomes, while spending far less - well-organizaed systems in between the UK's 9% of GDP achieved with near-draconian rationing, and the 18%-plus of GDP consumed in the US while still leaving a meaningfully large percentage without coverage. The existence of such tangible realities amongst our peers, all with levels of intervention between these extremes, provide a well-worn path for us to follow, and reap the subsequent benefits if we choose to suspend the misconceived belief that social insurance is a "free lunch" replete with only negative externalities, abuse and fraud that will ultimately lead to an America ruled by a Politburo headed Fidel Castro, Jr.

The containment of systemically unaffordable, unsustainable privilege (as we have seen in Greece or Detroit) is always met with with righteous indignation, whether they are unions (the whipping boys of the right), bankers (the whipping boys of the left), or service providers who (in the case of healthcare feel it appropriate to discriminate pricing in ways that humiliate the uninformed (and even the informed) with seeming randomly-generated prices that bear little relation to the cost of services provided.

To be certain, cost-cutting can be painful. And one can conjure some possible negative externalities. But do not be frightened by threats conjured by medical, medical device, and pharmaceutical lobbies, as societally we attempt (finally!!!) to share market information amongst ourselves in order to drive health spending from >18% of GDP to some OECD median. France, with its single-payor has no shortage of doctors or nurses. No shortage of quality pharmaceuticals available to all at dramatically lower prices than in the USA. No shortage of pharmaceutical or biotech innovation. No paucity of stents, surgical bypasses, nor cancer treatment centers. And no shortage of sensibility when it comes to non-partisan pragmatic design, and implementation of public health policy. Obviously, mistakes have been, and continue to be made. But they are, generally-speaking, corrected in a forward-thinking, iterative process. And the fact remains they spend 4 to 5% of GDP LESS than the US (combined public and private expenditure) and achieve universal coverage with better overall outcomes, at least as measured by independent healthcare advocacy groups.
How much longer, and what calamity will it take for genuine non-partisan pragmatic reflection from all sides to meditate upon others success (and failure) then emulate and implement accordingly?

Sunday, March 14, 2010

Matsuya - An SFP Pre and Post-Mortem

Once in a while, whether by happenstance or serendippity, one does hit the proverbial bulls-eye. A few readers were kind enough to pay a compliments to yours truly over posts related to SFP Value Realization Fund and their Russian Roulette fun-and-games with one of my long-favored shorts, Matsuya Co Ltd (8237) published in late 2007 under the title Matsuya (8237) - Good Luck - (You'll Need it....!!), which painted a scenario eerily close to that which came to pass. I reprint it here by request...
Matsuya (8237) - Good Luck ! ( You'll Need It....)

Symphony Financial Partners 'SFP Value Realization Fund, is a buyer of what, to a growth or GARP-investor is micro-cap and nano-cap detritus. It does so in large, concentrated and, once-acquired, unmarketable sizes. This comes with the attendant benefit of creating what (I have termed as) "market-impact options" where once a position is acquired, the manager can typically use their persistent and concentrated buying-power that results from unused leverage, self-generated market-to-market profits, topped-up with cash from additional subscriptions to their Fund, to goose the prevailing stock-prices of companies in which The Fund already has large positions. Fortunately (mostly for SFP management) investors have been none-too-inquisitive about such practices, so long as they've been able to report P's rather than L's when crunch-time (at quarter-end) arrives.

Their biggest (reported) commitment to-date has been the lamest and least-profitable of remaining department stores, Matsuya Co. Ltd. (TSE Code# 8237), which seemingly has absorbed perhaps a fifth to a quarter of the fund's gross long assets. The rationale for said position is a belief (which I have no reason to doubt) that their flagship Ginza store is worth far more as a veritable hole-in-the-ground, than it is as a time-honored Tokyo shopping and dining destination. Optimistic rumor has it that the block-long site-alone is worth upwards of USD$1.5billion, set against a current market cap of $1.1 bn.

Now I will admit to being a sucker for such "hidden asset stories", particularly in under-covered small and mid-cap names. And I am not alone for there is a (or used to be) an entire slew of funds focused on the so-called hidden asset game in Japan. So much for efficient markets, I guess. But given that some of these funds have been in existence for a decade and half, with fees far outstripping any investment return, it might be wise to ask the question: Is it a reasonable expectation for a carpetbagging gaijin portfolio investor to be successful in pressuring a time-honored Japanaese company to restructure or otherwise disassemble itself for the short-term parochial profit of foreign cage-rattlers?

Many - mostly those accruing management fees from their investors on Saturdays & Sundays - take an optimistic view as one might expect them to. They see positive change, management that is more sympathetic to "creating shareholder value" (the vernacular for asset stripping), despite the sh*t-kicking that activists have received on TOC (8841), Bulldog (2804), J-Power (9513), Fuji TV (4676), amongst other forays.

What IS true, once one dispenses with the hyperbole, is that some good companies continue to evolve into even better companies, but I, personally, harbour large doubts as to the overlap between these enterprises, and the low-hanging rotten no-growth fruit targeted by Steele, SFP, and other seekers of embedded-value-on-the-cheap.

I do not pretend to know the inner workings of Matsuya. So obscure is it - despite its billion$$+ mcap - no one has written a research report on it in a decade. But it appears to be a time-honored way of life for the minority family owners and its extended constituencies, rather than a business that appears to be voluntarily willing to commit ritual suicide and so shutter itself in favour of yet another, large-scale glass & steel real-estate development by Mori Trust or similar. The time-honored web of corporate and personal obligation extends deep and far, but this is not visible to those who see it as US$1.5bn parcel of land.

It is currently held by a cross-section of TeamJapan, that for all intent owns it for legacy reasons, but is still NOT likely to sell Matsuya Co. Ltd. to the foreign devils, else the same thing kharmically boomerangs upon them in the future. And even if someone pays full-market value for the site, there are the legacy pension costs, outstanding short-term and long-term debts to settle, inventories to write down, and redundancy costs for full-shuttering, thereby decrementing net proceeds to common shareholders by a large dollup. But SFP must surely have taken this into consideration. Right? Their investors should hope so.

In the meantime, aside from the paltry shares being repurchased by the company itself, SFP is the only buyer, and their stake - painfully acquired at ever-higher prices - is unimaginably large relative to what might be realizable in the market were something errr ummm unforeseen to happen, such as, for example, their largest investor were to redeem their interest in SFP Value Realization Fund in order to allocate, for example, to the Enhanced-Leverage Super-Senior Mortgage Salvation and Redemption Turnaround Fund (Euro-Class). Any estimate is, of course, a whimsical exercise, but my guess is that they would be very lucky to realize an average sale price of YEN1000/shr (or 50yen on the 100) in the market were they to become a distressed seller, under current market conditions.

I could of course, be wrong. SFP might have a trade-buyer in hand, one keen to acquire the site, and ready to "pay-up" for any and all shares, at a "fair price" far-above my estimate. But, investors would be wise to pay attention to the interim risk here, which is that there appears to be a large fat-tailed accident waiting to happen, as the race between the patience of SFPs investors, and the success or failure of their very large punt comes to an end. Personally, I would wager that SFP's investors lose patience before Matsuya's management gives up the proverbial ghost. Anyone with the bull-side of this story, please do divulge the particulars...
Posted by "Cassandra" at 11:24 AM

I followed this up in the fall of 2009 with a sort-of Post Mortem entitled "Every Day Has It's Dog", and is worth a read too, though it held little interest to most given the prevailing Bailout Rage and mass-finger-pointing at the time.

Thursday, March 04, 2010

Farewell Hummer

Farewell then
wheels of choice
to arschloecher the
world over.

aspired to be
a monster-truck,
which you achieved
monstrous symbolism.

You began
life as
a large "Willys
with four-wheel drive

But you ended the
the same as other
AMC flops...
the Ambassador
the Pacer,
the Matador (5.9 litres!!!),
the Spirit and, of course,
the Gremlin.

Tuesday, March 02, 2010

Yankee Triumphalism Returns

It wasn't but a few months ago the American Financial Press and critical observers (led by the seeming financial tabloid, the WSJ) were quiet as dormice given the great unraveling in the economy, markets and hubris. But with the double- top in the Euro spawned by Greece, and a [brief] interlude of global de-risking in fear of a double-dip, helped along nicely by a veritable gang-bang of the Euro by group-think Macro investors pulling along their trend-following henchman, American triumphalism spewing forth from the press and observers is back with a vengeance, and not without some schaudenfraude.

I am not here to defend Greece, Italy or Spain, their shameful financial engineering, or the practical difficulties of implementing a single currency atop imperfect political integration. Nor am I here to attempt to extol the albeit painful benefits of internal adjustment vs. devaluation, which while not ideal have proven possible. But it seems to me American commentators are in a rather weak position to be triumphantly trumpeting what are essentially political logjams on the periphery of the Eurozone, when the very centre of the American system can agree on absolutely nothing, before ignoring the rampant left-coast denial that makes Greeks feel as if they've done nothing wrong. And it must be pointed out that the Europeans (ex-anglo-saxons) are prodigious savers and can reasonably self-fund their apparent profligacy, unlike the fiscal folly of their new world relations. As such they retain more independence remaining less-beholden to Asian benefactors.

But at least the Europeans are attempting to pragmatically deal with some of their issues: Latvian and Irish internal adjustments, while painful, are moving things in the correct direction; UK tax rises are a precursor to more painful cuts to come - both at the national and local authority levels; retirement ages are being raised (and not just in Greece!). Benefits and spending will almost certainly endure a manicure, if not a larger crop. Yet, in Washington (and New York) demagogues and financial free-riders lobby to retain the status quo, preventing change, thereby forestalling adjustment. And as has become a culturally-defining trait, it seems as if the entire polity awaits the excrement-hitting-the-fan moment before setting aside their petty partisan squabbles and beginning to tackle fiscal insanity, the prevailing inexorable inequitable healthcare vortex, and pitifully-low carbon taxes that prevents more rapid progress towards greater efficiency. "Pre-emptive Action" might as well in sanskrit, it is so foreign. All the while the WSJ ever-more resembles Radio Pyongyang its anti-european rhetorical anathema devaluing the more valid non-sequitirs requiring attention..

Americans can learn many lessons from the world if only they disarm themselves of their sense of triumphal superiority. Austerity, non-partisan pragmatism, issue-confrontation and political compromise are but a few if they cease misplaced victorious chortling and open their collective eyes.