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Wednesday, October 19

19th Oct - Rumors Part XVI

My precious!
Summary: Rumors of the “EU plan denied, European Commission raids banks in look for EURIBOR collusion, CDS short selling partial bans to Europe, Spain’s rating cut while the French were warned.  

Short post, as most of the material was posted yesterday. Good luck, enjoy the show while it lasts.

Quote of the Day: “Everyone is entitled to their own opinion - but not their own facts.” – Senator Daniel Patrick Moynihan

News (Tue evening) – BTH
News (Wed morning) – BTH
Danske Daily – Danske Bank (pdf)
FX option vols – Saxo
Markets Live – alphaville FT
Debt crisis: live – The Telegraph
EZ crisis Live blog – The World / FT
Countdown to Euroday Oct 23rd: Another wild dayCalculated Risk
Summary of headlines: 2tn rumor, denial, Spain’s rating cut, France’s cut threat and Sarkozy’s whining.

There is no sunlit future for the euroFT
Martin Wolf’s excellent piece. If you cannot access this, a key excerpt and short comment can be found here: Wolf nails the euro crisis.

France and Germany ready to agree €2tn euro rescue fund The Guardian
This rumor was denied almost immediately, but it made the U.S. markets rally. Perhaps an intentional test of market reaction to a plan?

Breaking: Europe is saved! Actually, wait…alphaville / FT
The market reaction to Telegraph rumor was strange, as the main plan has been known for a week. Only news was that the French and the Germans have reached an agreement, but the story later said “technical details remain to be settled”.

RBS Joins Citi In Blasting "EFSF As A First Loss Insurance Guarantee" PlanZH
RBS: “We think the insurance model for the EFSF is conceptually interesting but practically makes little difference to the crisis.”

Portugal: fiddler paid, music stopsLighthouse IM
“When it comes to inquiring about monthly fiscal deficits you bite on granite. Banco de Portugal has limited quarterly figures. The “Instituto Nacional de Estatistica” has conducted a study about population growth in Angola. It supplies data series on important topics as the “self-sufficiency ratio of wine”, the “movement of passengers on inland waterways”, and, not to be missed, the “crude divorce rate”.”

Moody’s downgrades Spain to A1 from Aa2alphaville / FT
“double-notch downgrade, taking Spain to A1 with negative outlook... Moody’s currently rates Italy at A2, with negative outlook, one notch below Spain...Moody’s also notes that most sovereign issuers with a Aa3 rating have much stronger fiscal and external positions than Spain, including very low public debt, sound public finances and a net creditor status vis-a-vis the rest of the world.

France Back In The
“We note that the French developments underscore the fact that the supply of true AAA credits is dwindling. In Europe, there is still Germany, but we believe that as it takes on more and more countries to backstop, Germany’s debt ratios and fundamentals will deteriorate too.”

Parliamentary Bailout Committee May Be UnconstitutionalDer Spiegel
“A new parliamentary panel being set up in Germany to provide speedy approval of future rescue measures by the euro rescue fund may be in breach of constitutional rules.”

Emergency exit? That'll be £250,000The Guardian
Economists can win £250,000 by coming up with a way for debt-burdened countries to leave the eurozone