The CDS risk to insure the sovereign debt of some of the most deficit troubled and debt burdened countries within the EuroZone ticked a tad lower recently. Greece actually started to come down as the Basel III measures appear to be less of a hurdle than initially thought. Regulators now believe that an extended time to get things in order will be the better course. Remember, it is always easier to plan a diet some time into the future. While the idea of the New Year diet may be on the mind, the reality only hits on January 2nd.

Banks should then be continuing their feast while wearing elastic waistbands until the day of reckoning comes. Pay me now or pay me later – the answer for government has always been to push out the inevitable… That is how we got into this predicament into the first place.

Portugal is one of the only “trouble” countries that has seen a tick up of CDS rates in the last few days.

The returns within the equity markets still reflect the concern that these countries will have a very tough time marrying austerity with growth. Even as Trichet today announced that there could be a doubling of growth over the next year for the zone (later we found out that he was speaking of France, Germany, Italy, the Netherlands and Spain ONLY), rhetoric does not spend.

We are highly skeptical of the EuroZone’s chance to return to growth. In fact, in our next Quarterly report to clients, we will have a detailed discussion about why we are short EuroZone equities and our forecast for the next few quarters.