Summary: The adamant Finnish government whose narrow (1%) election win against the populist party was only based on the single promise that no further bailouts would be made without full collateral. Now Austria figured out a solution to the EFSF ratification Greek bailout tranche trouble: everyone should be eligible for guarantees, but the guarantees would be made so expensive that only Finland would take them. Excellent work, the single most important political promise by the Finnish government would be filled to the letter but completely, brutally broken. Good luck in the next elections, Katainen.
Germany’s commissioner Oettinger drew fire from MEPs, and now they want him to either apologise or resign. What was Oettinger’s mistake that has caused such an outrage? He suggested, half-jokingly in a tabloid interview, that the flags of deficit-sinners should be half-mast on EU institutions. Clearly, the MEPs have nothing better to do. I call for an apology from and a resignation of these MEP’s, as they are clearly not needed. Austerity, remember? Do you want to guess the home countries of MEPs who complained? Greece, Ireland and Portugal.
Oettinger has also suggested that as Greece seems unable to collect taxes or sell state-owned goods, foreigners – outsiders without the burden of brotherly Greek love – should be allowed to come in to do the job. That does not seem to trouble them that much. Apparently you can be poor, beg and be as submissive as commanded for the next bailout tranche, but you will not give up your pride. Has half of Europe turned into flag-waving FC-fanatics without any real reasons to be proud of?
Oettinger has also suggested that as Greece seems unable to collect taxes or sell state-owned goods, foreigners – outsiders without the burden of brotherly Greek love – should be allowed to come in to do the job. That does not seem to trouble them that much. Apparently you can be poor, beg and be as submissive as commanded for the next bailout tranche, but you will not give up your pride. Has half of Europe turned into flag-waving FC-fanatics without any real reasons to be proud of?
Views: No trades for now, quick EURUSD range trade earlier on twitter: Sold EURUSD 1.3725, stop 1.3760, tp 1.3650, profit taken
Quote of the day: “There are more, and worse alternatives for the BRIC's than sovereign defaults in Europe, mainly sovereign defaults once they own most of the debt.” – Peter Tchir of TF Market Advisors
Quote of the day 2: “We gave up the old safety valves of inflation and devaluation in return for lower interest rates, but now we do not even have the low interest rates…. Some people seem to think we have joined a currency board, but Italy is not Latvia….It would be better to leave than endure 30 years of pain.” – anon Italian policymaker, interviewed by Martin Wolf for FT.
EURO CRISIS
This was posted earlier today, but deserves a second upping:
“maybe, just maybe, they can build a TARP on the fly - wiping out a few institutions and then using an expanded EFSF/Eurobond structure to prevent systemic collapse. But politically that is increasingly feeling like a long shot. Rather it looks like we will get 17 TARPs - one for each country. That is going to require a US style socialization of each banking system”
** Jefferies Describes The Endgame: Europe Is Finished – Zero Hedge
Quote of the day come from this: Peter Tchir of TF Market Advisors:
** Marked and Unmarked Bonds – Zero Hedge
** Basis swaps reveal dollar funding stress – International Financing Review
“EU has plenty of money, they just lack fiscal disclipine. Besides, the bonds are a bad investment.”
** Bric euro rescue? Bad idea, says Booth – beyondbrics / FT
Dutch government considers a Greek default as unavoidable. Holland is the third largest AAA country in Europe and if they go against EFSF, it will be a no-go.
Eurozone crisis porn – alphaville / FT
Euro bonds
Economy minister: both himself and the German government are against euro bonds, high court ruling rules them out, Sarkozy and Merkel to send a clear signal on Greece,
Germany's Roesler Suggests Time's Up For Greece – Zero Hedge
Euro Banks
“under the mattress, not sustainable”
BNP still likes to mark the Greek bonds to higher than market values
* Marking to Greek myth – alphaville / FT
Fed Swap Line Tapped Again - Eurobank Funding Concerns Surge After Two Banks Borrow Dollars From ECB – Zero Hedge
Credit Agricole and SocGen downgraded, others under threat
Moody’s Deals Fresh Blow to French Banks – The Source / WSJ
With full text from Moody’s
With full text from Moody’s
Boss of SocGen today in New York on a road show, giving interviews and presenting.
SocGen comes to town – Bruce Krasting
BRIC’s saving euro
“The idea has been thrown at us by the Brazilian finance minister,” R Gopalan, a senior Indian finance official, told the Financial Times on Wednesday.
Bric euro rescue: a rush job? – beyondbrics / FT
“Put your own house in order”, says Wen
Wen: talking tough on EU aid – beyondbrics / FT
Medvedev’s economic advisor: “We would like to know what actions will the EU take itself, what scenario will they opt for: a default on Greek debt default or no default? Whom will they help: banks or governments?”
Russia: not so keen on eurozone aid – beyondbrics / FT
FINANCIAL CRISIS
People read papers and know what is going on. Twist or fiscal easing will not help, thus::
“The only logical outcome to the looming sovereign and household deleveraging here in the US is a lower standard of living.”
** Deep Thoughts From RBS – Economic Musings
On conservative language and lack of logic
** Framing: morality trumps reason when it comes to vampire squids and other blood suckers - EconoMonitor
Why gold forward rate inversion is important – alphaville / FT
OTHER
Nice collection of links – is the extra screentime helping or hurting?
How to spend your days not trading – Abnormal Returns
“If you want to know what is going on in Germany, read FAZ or SZ or watch DW”
Stop citing „Der Spiegel“! – Kantoos Economics
Changes proposed next Friday. Does not sound like much of a union to me.
Also a link to Sep issue of Finance & Development on the topic
For the average people, things turned worse already in 2001.
The Slump Before The Slump – Krugman / NYY
FX Options Analytics: Vols, Risk Reversals & Pin Risk – tradingfloor.com
DIVERSION
Pump Up The Volume: A History of House Music – brain pickings
The persuasive power of stigma? – Farnam Street