I suspected Matt's flash of optimism might be brief.

Matt - you've consistently cheered us down to a lower and lower stock market, cratering real estate prices with an almost giddy thirst for gloom and panic. So why stop now?

I guess at least $25 a barrel oil means lower expenses for workers.  In all seriousness, though, as soon as I posted that blog about oil being so much more likely to go to $100 than $25, I did have doubts.  Clearly the contango in the market feels pretty confident, and my money is still generally on that. But I long learned that with energy prices and gold prices in particular, all bets are off on how low (or high) they can go.

But man, it's true, you look at this economy, and there really isn't much that is pretty about it. GM is trading at 1950 prices, pretty much every major financial business is either out of business or under siege, the number of newly unemployed is the highest in 35 or so years, and this recession they're saying is already nearly certain to be the longest since the great depression (that one is a bit hard to figure out, since they only said we were IN a recession officially a couple weeks ago...but don't try to hard to make sense of the government's economic statistics­­).

And heck, it's probably WORSE overseas.  Iceland is practically bankrupt with its citizens fleeing en masse to find work (how is unemployment across Scandanavia still generally under 2% BTW? I thought that was not economically possible). The UK feels like panic in the streets with the government doing a very good job of convincing the public there that they have absolutely no idea what they're doing - and they've cut rates to the lowest in England since 1807 or somesuch. The ECB has completely slashed rates as well after a long period of denial.  Um, looks like trouble.

So what does all of this mean?  Well, it means for one thing, that if you are in your prime earning years and can stay afloat and stay employed, this is a once in a lifetime opportunity to ride a weath creation train that will ultimately make that last little real estate runup look like a kiddy park horsey ride (though you may not be levered up in the same way).  Who knows when that train will get started, but it WILL sometime.  I guess that's what you have to see, to feel confident of...it's the silver lining in what is generally (as one member of the U.S. Congress so eloquently put it) one giant crap sandwich.

The IMF will lend Iceland $2.1 billion, and Finland, Sweden, Norway and Denmark will loan $2.5 billion to help the country re-float its currency and shore up its banking sector.

The Icelandic krona, or crown, has lost about 70% of its value since the nation’s financial crisis first began. The government put restrictions on currency trade as it wrestled with the crisis, however one of the stipulations of the IMF loan is that Reykjavik once again float…

This from The Sovereign Society:

I found this chart online and thought it was such a good representation of what is going on that I just had to share it with you. (Thanks to the folks at http://frigginloon.com/ )

As I’ve written about before, this is really just the beginning of the flood of bad news we’re going to continually hear about over the next few months.

As you…

OK… Whew! What an awful day yesterday for the currencies… In the morning, they ere in rally mode with the euro gaining ground to well within the 1.27 handle. But then the Trading Theme set in, and those gains were wiped out. The Trading Theme was set off by the awful Housing data, which reminded everyone of the deep, dark , dangerous days ahead… I bought some euros, and watched them rise, and went off to do something else… When I returned, they had fallen… UGH! The Japanese yen, however, rallied, as is the case with the Trading Theme……

For an erudite debate over the Paulson doctrine, we turn to our friends at The Onion this morning:

The Money Hole.

It’s not any more complicated than that, is it?

Indeed, Paulson and company announced a TARP switcheroo yesterday. Now the Treasury’s Troubled Asset Recovery Program (TARP) is suffering a serious case of the STD “mission creep.”

Instead of purchasing troubled assets from banks, the Treasury, as of this morning,…

The “that” is simply the national debt,…

Now, twelve months later, as W’s presidential twilight years draw to a close, another of the West’s leaders journeys to the Gulf region. Like Bush, England’s Gordon Brown is not particularly popular in the polls. But this captain from the west has more pressing issues to deal with than the restoration of his public image; he needs…

Key Reports Due (WSJ):
8:30a.m. Initial Jobless Claims For Oct 25 Week: Expected: -3K. Previous: +15K.
8:30a.m. 3Q Advance GDP: Expected: -0.5%. Previous: +2.8%.
10:00a.m. DJ-BTMU Business Barometer For Oct 13: Previous: -0.3%.

Quotable
“But I'm not saying that the government should impose a litmus test. God forbid. I just want clueless people to find something else to do on Nov. 4.”

  John Stossel

FX Trading – Federal Reserve and IMF are Getting Good with Handouts.

Does the ‘establishment of temporary reciprocal currency arrangements’ mean anything to you?

Yeah, it kind of went by me in a blur the first time I read it. Basically, this has become one of the side shows for the Federal Reserve. They cut their benchmark lending rate yesterday by 50% and at the same time established temporary reciprocal currency arrangements (more commonly known as swap lines) with four more global central banks ... bringing the total number of arrangements between the FOMC and other central banks up to 14.

The recent additions are of emerging market central banks: Singapore, Brazil, South Korea and Mexico. The goal here, for the Fed, is to help fight off the systemic financial crisis that’s begun to hit hard in these smaller, developing markets.

What these swap lines do is increase the liquidity of US dollars and hopefully restores semi-normal money flow within these, and surrounding, economies.

Another measure has been taken by the International Monetary Fund. They recently struck deals with Ukraine and Iceland, and since then have also finalized business with Hungary.

What they have now set-up they are calling the Short-term Liquidity Facility (SLF). The main goal of SLF is to fund these pint-sized economies without question so that they can shore up their deteriorating financial positions.

So with roughly $30 billion granted to these four newest central bank recipients and a deadline of April 30, 2009 to get things back on track, plus the IMF’s newly announced SLF ...

… will these steps cure the illness or just alleviate the symptoms of ailing emerging market economies?

Our guess: simply alleviate the symptoms. A cure is still a long ways off.

Lacking in many features of strong, well-rounded economies, most of these emerging markets have put all their chips into their exports sector. They rely almost entirely on neighboring and developed economies buying up cheap goods and raw materials – these swap lines and lending facility aren’t going to compensate for that fact.

There are still too many problems – throughout all economies of the world – that need fixing before generous demand can return. Until then, developing economies will wallow in self-pity, smacking themselves in the forehead because they made no investment in their domestic economies but rather only on the insatiable consumption of larger foreign economies (there are of course some noted exceptions here—Brazil being one of them).

The way we look at it, this is something that’s only beginning. As quickly as these economies gained the backing of foreign investors in the last couple years, these same foreign investors (whether individuals or institutions) are running for cover just as fast.  Thus it is no surprise the emerging market stocks have been slammed—even harder than the developing world variety.

In witnessing the last couple months of currency trading, it’s obvious where this capital is fleeing for refuge. That’s one of the factors, and a powerful one, behind our view that the buck is entering a multi-year bull market; at the expense of most major and emerging market currencies.

Regards,

Jack&JR

The Dow logged its second best one-day point gain, 889 points, in its even more storied history yesterday:

Percentage wise, at 10.8%, the rally ranks sixth. The S&P and Nasdaq trundled alongside the old lady like puppies.

After finding a new “credit crisis” low on Monday, traders on Wall Street snapped back…

``The agreement is designed to restore investor confidence and alleviate the stress experienced in recent weeks in the Hungarian financial markets,'' IMF Managing Director Dominique Strauss-Kahn said in a statement in Washington yesterday.

“One way to look at the EU assistance to New Member States is that this is also part of the operation aimed at making sure Euroland banks don't get into trouble. The banking systems in New Member States are practically owned by foreign (mainly Euroland) banks, and if their NMS subsidiaries get into trouble, that would not be good news for the holding companies either. In the current environment that is a strong additional argument for major Euroland countries to make sure that New Member States (and their banking systems) do not get into trouble because of the liquidity crunch."
István Zsoldos, Goldman Sachs, London

``The aid package won't make Hungary immune to the real economy effects of the financial crisis..........Where the IMF appears with its strict conditions, the requirement of consolidation inevitably leads to real economy and social consequences.''
Laszlo Andor, European Bank For Reconstruction and Development Board Member

``A sharp economic slowdown, driven by declining foreign- currency credit flows to the private sector, tight fiscal conditions and weak external demand is unlikely to be avoided''
Eszter Gargyan, Citigroup Inc, Budapest

“We expect the EU and the IMF to announce additional rescue packages for other Central and Eastern European economies in the coming days and weeks. Top of the list are the most imbalanced countries in the region - the Baltic States, Romania and Bulgaria."
Lars Christensen, Danske Bank, Copenhagen

“All in all, the crisis seems to have been averted and even though it is no doubt a major shame that Hungary got to this situation, the authorities managed well in the rough waters, far better than Iceland (major policy mistakes in particular by the CB), Ukraine (political fragmentation still a major problem, currency peg had to be abandoned after failed interventions) and Romania where politicians remain ignorant even now, after the problems are more than evident. Bulgaria also does not seem to be prepared, though the currency board, the fiscal reserves and the significant budget surplus at least provide more cushion."
Gábor Ambrus, 4Cast, London

“At the same time, there is no doubt that to ensure Hungary's long-term survival a major diet is needed (this is in fact true to every emerging country which experiences the same problem)."

“The thirst for debt financing, domestic or local, has to be drastically reduced and not just for a period of a year but for longer, given that credit markets are not going to be the same in the foreseeable future as they had been before the world 'subprime' become known outside the circles of the debt securitization market."

“This implies not only a reduction of the public debt but also the substantial reduction of the deficit of the current account which implies a major diet for consumers (how much is needed exactly is highly uncertain, given that the massive errors and omissions row on the C/A statistics render the C/A figures rather meaningless)."

“While the increased credit costs and the restricted credit availability will drive demand down, a key tool to rebalance the economy is the exchange rate. Hungary needs a week forint to ensure the sustainability of financing and in this anti inflationary global environment the NBH should in our view be ready to accept a slightly slower paced disinflation to allow the financing thirst to reduce and ensure the long term sustainability of growth."
Gábor Ambrus, 4Cast, London

“In this new situation monetary policy makers will need to rethink which way to go from here," Simor said.

Austria, one of Europe’s stronger economies, cancelled a bond auction on Monday in the latest sign that European governments are facing increasing problems raising debt in the deepening credit crisis.

Market conditions have steadily deteriorated in recent days with the best gauge to credit sentiment, the iTraxx investment grade index, which measures the cost to protect bonds against default in Europe, widening to more than 180 basis points, or a cost of €180,000 to insure €10m of debt over five years, on Monday.

The eurozone countries will raise €925bn ($1,200bn) in 2009, according to Barclays Capital. The UK, which is expected to increase its bond issuance from the current €137.5bn in the 2008-09 financial year, will take the figure above €1,000bn.

``The resources of the IMF may not be sufficient for wider bailouts if needed,'' said Vivek Tawadey, head of credit strategy at BNP Paribas SA in London. ``If it can't raise the money, some of the more distressed emerging markets could end up defaulting.''

Gordon Brown on Tuesday spearheaded calls for a multi-billion pound "bail-out fund" to prevent the global crisis spreading to more countries, and warned of the need to stabilise economies "across eastern Europe".....

The prime minister on Tuesday urged the oil-rich Gulf states and China to provide "substantial" funding to the International Monetary Fund, before flying to France for talks on an increase to the European Union's bail-out fund. The government is keen to emphasise the link between global action and domestic voters' interests, as well as portraying Mr Brown as a world leader.

The prime minister said it was "in every nation's interests and the interests of hard-working families in our country and other countries that financial contagion does not spread". While he did not rule out the UK making a contribution, he insisted the "biggest part can be played by the countries that have got the biggest [balance of payments] surpluses".

The IMF's $250bn (£158bn) bail-out fund "may not be enough" to prevent the crisis destabilising more countries, Mr Brown said. His spokesman added the UK was "looking at a figure in the hundreds of billions of dollars" for the IMF. Mr Brown called for "action on this new fund immediately".

Germany plans to finance part of its 500 billion euro ($636 billion) bank rescue package by issuing bonds to banks in exchange for new preferred stock, according to Finance Agency head Carl Heinz Daube.

``The banks will not be allowed to sell the injected government bonds,'' Daube said in an interview in Tokyo today. ``So far there's obviously not a huge demand for any rescue measures, but this might change in the coming weeks.''

Germany's rescue plan, approved by lawmakers on Oct. 17, amounts to about 20 percent of the gross domestic product of Europe's biggest economy. Chancellor Angela Merkel's administration pledged 80 billion euros to recapitalize distressed banks, with the rest allocated to cover loan guarantees and losses.

....Hypo Real Estate Holding AG, the Munich-based lender that's already had a 50 billion euro bailout, today asked the Deutsche Bundesbank for 15 billion euros to cover short-term liquidity needs. ....Frankfurt-based Deutsche Bank AG may also need 8.9 billion euros of new capital, more than any bank in Europe, Merrill Lynch & Co. analysts Stuart Graham and Alexander Tsirigotis wrote on Oct. 20.

The bailout plan is still being discussed in Berlin and more information will probably be released at the end of this week, Daube said.

Germany may meet additional funding needs for its bank rescue by selling six-month bills before examining options for borrowing using longer-term securities, Daube said. The government plans to offer between 212 billion euros and 215 billion euros of debt through its 2009 program, about the same as the 213 billion euros scheduled for this year.

The debt-for-equity swap will probably have ``next to no effect'' on the country's yield curve because the notes offered to banks won't trade in the so-called secondary market, he said. The yield curve plots the rates of government bonds according to their maturities, and increases indicate higher borrowing costs.

``The government deficit of course will increase, the outstanding volume of bonds will increase as well,'' Daube said. ``The number of outstanding bonds available in the secondary market will stay exactly the same.''

The next meeting of the Federal Open Market Committee is scheduled for tomorrow Wednesday Oct. 29. There is no doubt that growth will be the central issue of the committee’s discussion, as fears of a global recession are intensifying alongside deteriorating economic data.

The British Office for National Statistics’ said Friday that, after a flat second quarter,…

Quotable
"A good conspiracy is unprovable. I mean, if you can prove it, it means they screwed up somewhere along the line.”
Jerry Fletcher (played by Mel Gibson), Conspiracy Theory

FX Trading – Kookburger Time!  A rant it is!
----------
Editors Note: Warning to gold lovers, conspiracy nuts, and US haters.  This rant you may want to avoid. 
----------
The conspiracy crowd is working overtime these days.

Many “deep thinkers” among the gold crowd still spout conspiracy stuff on a regular basis to help explain why their beloved metal is not now sitting at least $2,000 an ounce.  Could it really be that each morning Fed Chairman Bernanke, Treasury Secretary Paulson and, of course, V.P. Dick Cheney wake from their slumber and huddle in the safe room to discuss how they can manipulate the gold market.  We tend to think they have bigger fish to fry. 

What’s odd about the gold conspiracy theory crowd is that gold’s price action, and minor role in the system, is very rationally explainable (granted the explanation may be wrong) on standard economic terms.  But gold guys all seem to have the secret handshake and “know” it’s manipulated.  Odd indeed!  Does it make one feel better to say you lost money because of some nebulous “manipulation” you can’t really define?  Guess so.  And isn’t it disconcerting when the “manipulators” push gold up for no particular reason and a believer makes money?  We don’t get it. But then again, Philistines we are. 

But it’s getting better than that out there.  Over the past couple of days we’ve been made privy to some whoppers in the making.  If you don’t already know, let us clue you in on a couple: The Amero is on the way.  This conspiracy uncovered says the US will soon toss away its world reserve currency status in order to distribute new currency that has Mexican and Canadian politicians’ pictures on the front.  Aren’t American politicians on our money enough already?  It’s a loony idea indeed. 

And a new conspiracy uncovered, and emailed to us, stars on You-Tube.  A gentleman there has revealed a well heeled crowd in the Middle East will use its vast wealth to take over Russia of all places; after it crushes the US economy in its spare time.  Hmmm…wouldn’t Spain be a lot nicer given those nasty winters in St. Petersburg?  We’ve heard real estate prices are looking good in Barcelona.   

Do powerful people do all they can to advance their interest and power in the world?  Absolutely!  Are markets “manipulated” by pools of capital at times?  No doubt.  But, this doesn’t automatically equal conspiracy.  At least we don’t think so.

“There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen,” wrote Frederic Bastiat.

We don’t think Bastiat was talking conspiracy theory here.  We do think he was talking about all the stuff underneath the surface of an advanced and complex, yet fragile, system of decisions by millions of players with all types of varying interests that make up what we call an economy. 

Just because we can’t discern what’s going on below the surface, it doesn’t mean it isn’t at least as important, or more important, than the stuff we see going on above.  And because we can’t always apply our Newtonian cause and effect to what we see above, it doesn’t mean we should create conspiracy theories as explanation. 

I’ve recently talked about the doom and gloom crowd getting it exactly right with their broken clocks, but most got it exactly wrong too as they believed US dollar doom was the upshot of the story.  What we found interesting as we followed the dollar doom and gloomers along this long path was the degree to which price action seemly proved them right, hiking their egos along the way, yet the reality bite now shows maybe they were simply fooled by randomness, and shouldn’t have chalked up their rightness to their rather pedestrian intelligence.

Nassim Taleb said it well in Fooled by Randomness: 

“By some viciousness of the structure of randomness, a profitable person like John [trader of rather pedestrian intelligence], someone who is a pure loser in the long run and correspondingly unfit for survival, presents a high degree of eligibility in the short run and has the propensity to multiply his genes.  Recall the hormonal effect on posture and its signaling effect to other potential mates.  His success (or pseudo-success owing to its fragility) will show in his features as a beacon.  An innocent potential mate will be fooled not thinking (unconditionally) that he has superior genetic makeup, until the following rare event.  Solon seems to have gotten the point; but try to explain the problem to a naïve business Dawarinist—or your rich neighbor across the street.”

Let me put this yet another way.  Many so-called “currency experts” got it right for many years because of the trend and carved out guru-like status along the way.  The root of their argument was the US was, and still is, all bad.  The US fundamentals were terrible.  The US is the root of all global financial evil.  Thus, despite this “bounce” of 23%+ in the US dollar, to hell in hand basket it will still go.  This crowd has no clue as to what is and has gone on below the surface for the most part, yet glib they still are. 

I’m sure the US haters will wine and complain about our defense of the US financial system—so be it.  But what if all of you who bashed the US for its “dependency” for money flow to support its deficits got it completely wrong?  It would explain why many of you find it so confusing the dollar could dare to rally.

What if the US was the lynch-pin for the global financial system and therefore charged with finding a proper home for all those forex reserves built up by dictatorial countries who were very happy not to reinvest in their own people lest they create wealth that could come back to challenge their rule?  What if they just kept dumping all this stuff into the bad old US where their assets were most efficiently processed and protected by the rule of law, which isn’t quite available at home?  What if the US current account is what we have always said it was, a representation of US dollar credit greasing the wheels of all global asset markets for the betterment of the this thing called globalization (which helps explain why the last two times we got what the economists and whiners wanted, an improvement in the current account, which coincided with stock market crash in 1987 and 2000)?  What will happen to all those resources re-funneled by the US financial system to strengthen export sectors the world over when said export demand by the bad old US falls?  

In short, blame the US financial system if you wish.  But be careful about your diagnoses on the dollar.  If all this efficient recycling of resources which sparked a massive run-up in global growth by creating massive dollar-based credits for others around the globe to grow is now heading home and said export models built on credit come crashing down, this little dollar bounce could easily morph into a multi-year bull market; which is what we expect after applying our pedestrian-like intelligence to the stuff we can and can’t see.   

And of course you can just imagine the plethora of conspiracy theories hatched when the world realizes the good old greenback’s world reserve currency status is poised to soar in a way it never has before.  This will make the Plunge Protection Team look like child’s play.  Stay tuned. 

Is the dollar finally correcting?  We’ve been playing for it near-term and getting steamrolled by it.  But this morning, it’s getting whacked a bit as stocks are actually bidding higher pre-open and did well in Europe. Hopes of a US rate cut tomorrow from the Fed seem to be lifting spirits, and some calmness in the interbank market suggesting the credit may be normalizing a bit. 

The high yielders, which have been whacked so hard recently, are flying today…

AUDUSD 90-min: Just above near-term resistance.

Given the dollar index chart is looking parabolic, any correction that does materialize could be very powerful.

…and by the shape of the open interest and mix of overwhelming bears to bulls in the euro currency futures, maybe Mr. Market is due to shake off some dollar bulls…
 
Regards,
Jack&JR

Investors will be utterly confused today about what to fear most. First, you had the nightmare open in New York on Friday. The futures markets were limit down and closed briefly. By the time order was restored to electronic markets, the Dow opened down 6%.

The Dow rallied-if you can call it that-to close down “just” 3.6% on the day. A that point, you could safely say the market was ‘pricing in’ the fear of a global recession, and just what that would mean for corporate earnings. Not…

This from Taipan Daily:

Whither the dollar and gold? To answer that long-awaited inquiry – which will take some time to cover in full – let’s start by getting a handle on “exploding debt dynamics.” Cartoonish as it sounds, it’s a real term that IMF economists use.

If, like me, the phrase gives you visions of Wile E. Coyote blowing himself up with a box of ACME brand…

“The growing reality is that this is not just a slowdown, but a true recession,” Joel Naroff, president and chief economist of Naroff Economic Advisors told Money Morning Friday. “Europe and Asia can no longer deny U.S. problems are also hitting there.”

Friday was the 79th anniversary of 1929’s “Black Thursday,” when U.S. stocks were decimated at the start of the Great Depression. And while U.S. markets weren’t quite as hard hit on that date in 2008 as they were in 1929, the overall global effect was chilling.

This October is…

"A substantial financing package in support of these strong policies will be
announced when the program is finalized in the next few days," IMF Managing
Director Dominique Strauss-Kahn said in a statement that did not indicate the
size of the package.

"The agreement contains standby access to resources, which will significantly reduce Hungary's exposure to foreign market financing," according to one anonymous source.

With Hungary's commitment to strengthened economic policies, Strauss-Kahn said he expected Hungarian banks and other financial institutions would be able to start lending. "The policies Hungary envisages justify an exceptional level of access to fund resources," Strauss-Kahn added.

“The IMF/Hungary package could prove significant to the extent that it seems it will explicitly include EU and some EU govt funding. This is clearly positive for the rest of the EU27 including Romania and Bulgaria. Although big underlying problems remain, we'd remain flat EUR/HUF and Hu, Ro and Bg CDS into this weeks likely Hungary IMF financing announcement. In short, the big question now is the scale of EU/EU govt funding."

Daimler has on Monday signed an agreement with Hungary's government to invest around EUR 800 million in a new plant in Hungary that will manufacture over 100,000 compact cars annually from 2012, and create up to 2,500 jobs. “Mercedes-Benz is building the plant in order to create additional production capacity in the compact car segment, where the model range will be expanded from two to four vehicles. The plant contributes to the profitability of the product portfolio extension," Daimler said in a statement.

"A substantial financing package in support of these strong policies will be announced when the program is finalized in the next few days," IMF Managing Director Dominique Strauss-Kahn said in a statement that did not indicate the size of the package.

An aide to Ukraine's president accused Prime Minister Yulia Tymoshenko on Monday of putting a big IMF credit at risk by linking quick approval of financial legislation with the country's long-running political upheaval......Tymoshenko and her supporters last week blocked discussion of the financial package for four days in order to prevent inclusion in it of any funding for disputed early elections, called by Yushchenko for next month.


Ukraine's prime minister and the head of the IMF called on parliament to pass legislation quickly to underpin a loan deal and described political stability as a key part of the process, the government said on Tuesday. The government issued the statement ahead of a scheduled sitting of parliament, blockaded for a week by protesting deputies, to consider a package of financial measures.

Consultations to forge a package were proceeding in parliament, which has a long history of fractious behaviour. It was uncertain debate would go ahead as scheduled. Ukraine remained gripped by its latest bout of political turmoil after President Viktor Yushchenko dissolved parliament last month and called a snap election. Tymoshenko opposes the election and her supporters disrupted debate last week to prevent any bid to finance the poll.

``The Belarusian economy and its access to external finance,'' have been hurt by the credit squeeze, IMF Managing Director Dominique Strauss-Kahn said in its Belarus statement. ``At the same time, changing conditions in trade have negatively affected the country's balance of payments. A Fund mission will begin discussions with the authorities in the next few days.''

"The agreement contains standby access to resources, which will significantly reduce Hungary's exposure to foreign market financing," according to one anonymous source.

With Hungary's commitment to strengthened economic policies, Strauss-Kahn said he expected Hungarian banks and other financial institutions would be able to start lending. "The policies Hungary envisages justify an exceptional level of access to fund resources," Strauss-Kahn added.

“The IMF/Hungary package could prove significant to the extent that it seems it will explicitly include EU and some EU govt funding. This is clearly positive for the rest of the EU27 including Romania and Bulgaria. Although big underlying problems remain, we'd remain flat EUR/HUF and Hu, Ro and Bg CDS into this weeks likely Hungary IMF financing announcement. In short, the big question now is the scale of EU/EU govt funding."