Fiddles from the Portuguese

Tue, 2017/02/21 - 2:13pm | Your editor
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With apologies to Elizabeth Barrett Browning, today's lead articles are about Fiddles from the Portuguese. Today we learned that Brazil is having to import lower grade robusta coffee beans to feed its instant coffee roasters because Brazilian arabica beans would make the mixture too expensive. The lesson is that you should never be surprised at what happens in Lusitania, the parts of the world where they speak Portuguese. To keep the instant coffee cheap enough, they cannot use Brazilian beans although of course the labels will still read “Made in Brazil”.

Another example. The Portuguese central bank selected Lone Star, a US fund, as the final buyer of Novo Banco, created 3 years ago by the euros 4.8 bn bailout of Banco Espirito Santo. BES looted its customers with bonds whose proceeds were stolen and also took the cash of NYSE-listed Portugal Telecom, which we owned shares of at the time. BES's dominant Espirito Santo clan used a Luxembourg holding company to stash the ill-got cash. Under European Union rules the defrauded Portuguese who bought bonds, or the defrauded Americans who owned NYSE-PT could do nothing to extract assets in Portugal and Brazil held via Luxembourg, a tax haven.

Now, however, the Bank of Portugal is under the gun to sell down its 100% stake in Novo Banco to make sure that the state-owned bank doesn't offer better loan and savings products than the private banks it competes with. The European Union deadline is this August.

Novo Banco was bid for by Chinese outfits and other US hedge funds, and reportedly Lone Star came closest to taking control, offering to buy 65% of the bank for euros 750 mn on condition that the Portuguese government keep the rest and go on covering the bad debt and litigation risks left in their wake by the Holy Spirit oligarchs.

Lisbon's “Fed” is hoping to raise the price to euros 1 bn, still barely 20% of what the bailout cost it.

Neither Lone Star nor the Portuguese CB will comment publicly. The Social Democratic opposition party leader in a TV show revealed the current negotiations between Lone Star and the CB. To cover the Espirito Santo theft, the Portuguese Central Bank has to get permission from the EU, whose Commission is headed by a Luxembourger.


The common key in these two notes is that in Portuguese, things are not always what they seem. Another example from our portfolio follows for paid subscribers from Portugal, Brazil, Britain, Israel, Panama, Mexico, Spain, Finland, Norway, Germany, India, Finland, Israel, and Colombia.

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