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| Spain and Italy in melt-down? Painting by Mrs. MoreLiver |
Price page now online! It has charts of 10-year government bond yields and CDS-charts.
Summary: S&P decided to downgrade U.S. debt after the markets closed. This was somewhat expected, based on the agency’s rhetoric, but still, a historical event. Saudi stock market was open on Saturday, and down 5.46% for the day. The move can be partly blamed on the lower oil prices, but the U.S. downgrade was the main culprit.
Summary: S&P decided to downgrade U.S. debt after the markets closed. This was somewhat expected, based on the agency’s rhetoric, but still, a historical event. Saudi stock market was open on Saturday, and down 5.46% for the day. The move can be partly blamed on the lower oil prices, but the U.S. downgrade was the main culprit.
Reports from Germany are suggesting that the government will not bail out Italy or Spain – this will be interpreted as lack of Germany’s support for the ECB’s Friday’s rhetoric of becoming Europe’s lender of last resort. European central bank governors will hold a crisis telephone meeting on Sunday, 6 p.m. Paris time. Probable topic will be ECB’s possible Italian and Spanish bond purchases, as there is nothing else they can come up with on such a short notice. Meanwhile, G20 deputy finance ministers will have a conference call today at 22:30 GMT.
Quote of the Day: While risk-taking remains rather subdued, history informs us it is likely to return as the crisis fades in the collective memory. The bailouts left us with a legacy of poor balance sheets and moral hazard. None of 10 factors discussed above have been, in any meaningful way, resolved.
EURO CRISIS
Topic: Spain and Italy, Sunday 6 p.m. Paris time
…"Help" is offered in return for fiscal austerity, austerity worsens the underlying economic situation and thus the fiscal position, and funding pressures resume…Although market participants increasingly believe the Eurozone will jettison the periphery (and maybe even part of the core), the Euro stays relatively strong. Why? Whatever is left over is certain to be a hard-money union.
Good News That Is Really Not So Good – Economist’s View
FINANCIAL CRISIS
Deputy finance ministers from the Group of 20 leading economic powers will hold a conference call on Saturday to discuss the crises in Europe and the United States
S&P Downgrades U.S. Debt Rating – Press Release / S&P via WSJ
The ultimate USA downgrade linkfest – Abnormal Returns
On the S&P Downgrade of the United States of America - EconoMonitor
On the S&P ratings move – Zero Hedge
Goldman's Take On The Downgrade – Zero Hedge
Gloating China Says "Has Every Right To Demand US Address Its Debt Problem", Asks For New Global Reserve Currency – Zero Hedge
Saudi stock exchange was open on Saturday and down 5.46%. Partly because of the U.S. downgrade after N.Y. close, but also because of the drop in oil price.
Saudi stock market first to plunge on S&P downgrade – The Telegraph
1. Tell when or under what condition Fed will start shrinking its portfolio, 2. tell for how long or under what condition interest rates are kept low, 3. stop paying the 0.25% to banks for their reserve deposits, which is above the rate available elsewhere.
“..countries capable of creating high-productivity capital investments and those that cannot create such things absent huge, misguided stimulus programs and bailouts.”
The Case for Going Global Is Stronger Than Ever – John Mauldin via The Big Picture
Quote of the Day
Debt Ceiling: 10 Lessons Beyond That Crisis – The Big Picture
OTHER
The newsletter has an essay on quant meltdown of 2007
(PDF) The Trouble with Quants – Research Affiliates
DIVERSION
“There is no Man Behind the Curtain. Only former children who, once upon a time, believed that another Man Behind the Curtain was taking care of the Really Big Decisions somewhere far, far away.”
The Man Behind the Curtain – The Reformed Broker