A fox caught in a trap is capable of gnawing off its leg to escape. The French football squad can do the same. And wthout the need for a trap.

Regulators too, it seems, sport the same self-harming skill set. Take this piece from the New York Times, for example: Volker Rule dilution is imminent. JP Morgan, apparently negotiating to buy hedge fund Gavea Investimentos of Brazil, appears to think so. Even the polite pretence of an uncertain outcome seems not worth their efforts.

There is related form for this sort of thing: the evolution of the USA's Chapter 11 bankruptcy "reorganization" legislation that every large company it was made for has claimed (in this crisis at least) it is too big to suffer though.

Enacted in 1978 it initially allowed a mere 8 exclusions from creditor protection. But that was never going to be enough for bond holding institutions concerned about assuming their risk waiting around to be made good (maybe) while a company gets itself in order.

Which helps to explain how, over the years, Chapter 11 exclusions from creditor protection rose to 34. That the broadest of these related to derivative transactions (none are covered) and included derivative instruments not yet invented is, well, depressingly normal when one takes a gander at the lobbying power behind such outcomes.

Course, 34 exclusions or not, sometimes there just are not enough assets to honour obligations. And for those times when you absolutely must get your capital back - without regard to the health of the underlying economic entity you lent to - credit default swaps were invented. Thank the 1990s era JP Morgan boffins for that. AIG and the US taxpayer certainly have.

But that cautionary tale of regulatory largesse is so 2008 - for now we are getting the Volker Rule. Unfortunately, with no oily pelicans or foreign oil companies in sight the scene is well set for another regulatory goalkeeper Jabulani-moment in the World Cup of finance.

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After living many unusual professional and personal weeks since the last entry here, getting back into the swing of bloggy things begins with some forecasts. Will there be a double dip recession? Is this the end of the euro? Which is the greater threat, deflation or inflation? When is the first of a domino-like series of sovereign defaults coming?


Frankly, come June 11, who cares?

In a week where "Woody" of Cheers fame can score the winning penalty for the Rest of the World versus England at Wembley, this attitude, in Bill Gross speak, is "the new normal". At least for the duration of the World Cup.

While other forecasters might feel as comfortable as Tony Hayward at a Friends of the Earth rally when issuing their calls readers can draw comfort from the solidity of the following, financially related tournament forecast: it will be good news for the PIIGS (that qualified without recourse to an EU bailout) until Spain (who beat Portugal in the last 16) fall to Italy in the quarter finals. Germany then explain the concept of a "strong euro" (with concrete examples) to Italy in the semis.

And, if there is a regret in all this, it is that the two Koreas will not meet.

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