29th JULY

Summary: The two first euro crisis links are really worth the time. I will take a break for couple of days from these regular updates, have a great weekend. I know there are some regular followers, and it would be nice to get some feedback on what you like and what you would like to see here. Send a mail or leave an anon-comment.

EURO CRISIS

System relies on moral hazard, high integration leads to contagion, lack of governance. Authors see three scenarios: all-it-takes, end of moral hazard or limbo, leading to disorderly end game.

Europe on the Brink – Peterson Institute for International Economics

ex-chief economist from IMF: EU just muddling through, not solving anything.

Which Is in Worse Shape, U.S. or Europe? - NYT

and Krugman comments the above

The Halt and the Lame - NYT

Six reasons Europe's debt crisis isn't over – Time

Greece’s new bail-out helps, but should have gone further – The Economist

Merkel can probably push through the latest bailout in parliament, but the inevitable follow-ups are going to be hard sells.

Subscription required: Germany and the euro: Angela the dragon non-slayer – The Economist

Spain Placed on Downgrade Review by Moody’s – BB

Moody’s puts Spain on review for downgrade – alphaville FT

Should the Greek bonds be impaired on balance sheets or not?

Greece as a test for auditors – alphaville / FT

Large part of Germany’s boom is because of demand from the periphery. Nasty feedback cycle that has now collapsed.

A light in the storm – the German economic boom – Bond Vigilantes

Greek Bondholders May Shun Rescue as Potential Losses Top 21%: Euro Credit – BB

FINANCIAL CRISIS

Roundup of headlines from NYT, WSJ, CNBC

Debt Ceiling Charade impacting Short-Term Credit Markets – Calculated Risk

Rich world governments can’t stop stimulating but can’t add to debt either. Either option could lead to nasty negative feedback.

Running out of options – The Economist

“America and Europe are flailing because their leaders are failing. They seem to be too small for the tasks at hand, too petty, and too myopic.”

Policy failure on a massive scale – The Economist

The Outlook for the Economy and Monetary Policy – S.F. Fed

Fed blog article highlights the U.S.’s GDP diff to real potential GDP and suggests full recovery will take a long time.

Are We There Yet? – Economist’s View

Once Unthinkable, Breakup of Big Banks Now Seems Feasible – Dealbook / NYT

EMERGING

China Regulator Said to Tell Banks Provisions for Bad Loans Are Inadequate – BB

New Challenges for Argentina’s Monetary Policy - EconoMonitor

DIVERSION

The Nine Stupid Things Investors Do, According to the Library of Congress – Wealthfront Blog

The road to investment losses… – Economic Musings

Experimental markets, elusive equilibrium/steady state and the connection to behavioral finance

Perpetual Novelty, Santa Fe Style – The Psy-Fi Blog