Summary: Interbank liquidity the big issue. European banks are facing a short-tenor dollar shortage and interbank markets are wary, as can be seen on the swap graph – short-term prices all negative. Some heavy-duty austerity in Greece: “GREEK JAN-JULY STATE BUDGET DEFICIT EU15.6 BLN VS EU12.5 BLN”. Not working.
View: Why Swiss National Bank did an FX swap for USD 200 mio with the Federal Reserve? Credit Suisse, UBS and other Swiss banks have already denied that they needed, received or used the dollars. Could it be that the SNB was funding a Eurozone-bank, as a favor to ECB?
EURO CRISIS (first three are best)
Credit crunch among European Banks – the trader
Short-term dollar funding costs high as trust is low in interbank markets. Even though ECB is offering unlimited funding.
Basis swaps and beer – alphaville FT
Nomura’s piece: banks’ funding will get worse
More on that US dollar funding problem – alphaville FT
Summary articles
Euro zone bonds a "false solution", bond buys are temporary operation to buy time
Will the Germans do what they have to do, or wait until taxpayers again have to save banks
Europe’s Financial Wasteland – Project Syndicate
UBS and Credit Suisse have denied using or needing the swap.
“whether the Finland deal could be an event of default for Greek bonds,”
More on the Greek collateral grab – alphaville FT
Very expensive and technically difficult to leave, bank run highly likely
Can you ever leave the Euro? – Ezra Klein / WP
FINANCIAL CRISIS
Weekly macro views – Morgan Stanley
End the credit ratings monopoly: “Neither the government nor the SEC has any business handing a monopoly business to anyone. End immediately the requirement that all debt be rated. The market will sort this out in a flash.”
Michael Hudson: The Case Against the Credit Ratings Agencies – naked capitalism
Implied and realized correlation of stocks is high and rising.
Guide, in simple language, from (rest in peace) Lehman Brothers
DIVERSION