17th Aug EARLY - Summit hangover

Summary: Euroland’s new economic government, to be completed by summer 2012. Like this crisis would not be over before that date.

Views: EURUSD sell at-the-market (now @1.4390), stop @1.4440, take profit on half  @1.4300.

EURO CRISIS

Sarkozy and Merkel Vow Fiscal Unity for Euro Nations - NYT

“Given that it takes a unanimous approval from all Eurozone nations to enact Eurobonds, Merkel and Sarkozy both realized political support was simply not present… Sadly, Merkel had it correct in the beginning, initially insisting on haircuts on bondholders. She gave in to the "no haircuts" fantasy under pressure from ECB president Jean-Claude-Trichet and French president Nicolas Sarkozy.”

Merkel, Sarkozy Reject Euro Bonds and Expansion of Rescue Fund; What Does it Mean? Middle of the End for Merkel – Mish’s

EMU crisis deepens as slump reaches Europe's AAA core – The Telegraph

Collapse in German growth will add to euro rebellion – The Telegraph

Lack of talk on solutions (eurobonds and ESFS) was a disappointment

Angela Merkel and Nicolas Sarkozy fail to calm markets despite eurozone concord – The Telegraph

Nice GDP graph. Eurostagnation is not only a debt story, but an emerging markets story.                  

Fresh Plan for Europe Crisis - WSJ

On ECB’s bond purchases

ECB moves to back Italy and Spain – Washington Post

Finland guarantees Greece’s loans, gets a fractional cash deposit from Greece as a guarantee.

Amazingly Absurd Loan "Guarantee" Arrangement Between Finland and Greece – Mish’s

Translation of Frankfurter Allgemeine’s yesterday’s report.

Merkel And Sarkozy Propose New European Economic Government – Econotwist

If the core’s economies would be expanding, markets might have more patience.  But the leadership is dismally late, behind the curve, in denial.

Moment of Truth May Be Here for Europe – Rational Capitalist Speculator

Argues that GER growth is more reliant on global, not European situation.

Will Germany's Slowdown Doom Global Growth? - Time

“Italy is on its third fiscal consolidation package in just six weeks, and none have addressed its credibility crisis.” Also, ECB bond purchase conditionality on fiscal targets should be more credible.

Italy's confidence crisis: Bad policies from bad politicians – voxeu.org

Gordon Brown’s very good opinion piece on 15^th that I missed earlier.

Saving the Euro Zone – NYT

OTHER

The best approach to tail hedging is a flexible one; using dynamic rebalancing, diversification and affordable option-like securities.

The Case for Tail Risk Hedging in Emerging Market Equities - PIMCO

The bullish case: everyone is yelling that earnings must come down

The Wall Street Parrot – A Dash of Insight

Poor man’s EcoWin.

Government Debt in Europe - Google Public Data Explorer

Real seasonally adjusted GDP fell on 2^nd quarter over a year ago – last seen in 2008 recession

A Few Words On Hong Kong Economy – Also Sprach Analyst

DIVERSION

CNBC: 'Anyone Who Owns A Suit Can Come On Television' – The Onion