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Sunday, August 21

21st Aug - Weekender

Summary: Will the Fed announce QE3 next Friday? How much of the Italian and Spanish debt ECB bought, and how many will they buy next week? How much more short-term funding pain can the weakest eurobanks take?

Joke of the day: ”Chicago Fed National Activity Index: Doesn’t get the attention it deserves, but this report will be about July, which is when dinosaurs roamed the earth.”

Very nice roundup

“traders had behaved in a fundamentally disproportionate manner”, no to Eurobonds for now

“Expect more social unrest and a huge recession in Europe because both are on the way. Germany will not be immune.”

If France's economy is in trouble, then all of Europe is at risk.

Pay-as-you-go pension systems are not helping the debt problem

Strength of Swiss Franc: in addition, households across Hungary, Poland and Croatia have significant Swiss-franc debt, which has been weighing on domestic consumption

John Mauldin’s newsletter goes through the global macro situation. One of the few positives he sees is the Europe’s dysfunctionality, which does not make U.S. look that bad in comparison.
The Recession of 2011? – The Big Picture

Weekly commentary, this edition heavy on gold and Venezuela squeeze
(pdf) Things that make you go hmmm... - the trader

Good points, linked to relevant articles
Weekly Bull/Bear Recap: August 15-19, 2011 – Rational Capitalist Speculator

Basel III increased capital requirements are not met and banks cannot currently raise capital

By flooding the system with cheap funding, people are “forced” into taking stupid decisions and many have been buying assets in a panic fashion

John Paulson interviewed by J.P. Morgan in March 2009, pointed out the superficially better, but structurally weak balance sheets of the financial sector.

12 points that could happen

BIS paper: increasing sovereign risk makes bank funding more difficult (duh)

No, they can’t

PE ratio and price sector charts
A Look at Historical Sector P/E Ratios – Bespoke Investment Group

Good luck to my readers in Croatia for tomorrow’s meeting with Mrs. Merkel.
Week ahead – beyondbrics FT


“For investors full of anger and fear, however, benign neglect might be the best they can muster.”