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| Source |
News (Thu evening) – BTH
News (Fri morning) – BTH (online Fri morning)
Danske Daily – Danske Markets (online Fri morning)
FX option vols – Saxo
TV: Bloomberg, CNBC, BBC World News
Markets Live – alphaville FT
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| This is from SG's Edwards' research note. |
Debt crisis: live – The Telegraph
EZ crisis Live blog – The World / FT
EURO CRISIS
Joschka Fischer, Germany’s formin and vice-chancellor from 1998 to 2005: It was believed at the time that formalized rules – imposing mandatory limits on deficits, debt, and inflation – would be enough. But this foundation of rules turned out to be an illusion: principles always need the support of power; otherwise they cannot stand the test of reality.
Euro bonds: The tricky path toward greater fiscal integration – Free exchange / The Economist
You shouldn’t reason from past data on something that is almost entirely a forward-looking issue. Past budget deficits or current debt to GDP ratios tell you very little about the sustainability of debt. The future debt burden and the future capacity to pay are what matters.
EURO SUMMIT
EuroDeal 101: Five basics of the new agreement – Wonkblog / WP
Short primer on what just happened.
Goldman's 10 Unanswered Questions On The European Bail Out And The Revised EFSF – ZH
E.g. What is the EFSF, how big are its guarantees and who is liable? What is the EFSF’s actual lending capacity and what happens if a country ‘steps out’? Will the ECB continue to backstop the financial system?
Edwards: Going bust and ECB QE – alphaville / FT
SG’s Albert Edwards: I feel more bullish! Why? Both Dylan [Grice] and I have come to the view that the ECB will be forced, by events, to monetise debt in the GIIPS and beyond. And if investors believe the governments in Spain and Italy are bust, then Germany, France, and not forgetting the UK and US, are far, far worse.
Albert Edwards: "The Eurozone Crisis Will Get Much, Much Worse" And "The ECB Will Print" – ZH
Adds more commentary to the above research note.
So. Many. Bailout questions – alphaville / FT
Questions on both the Greek debt deal and the EFSF
The battered, listing Euro-zone ship sails on – BNY Mellon
Has a good list of “remaining key risks” toward the end.
So in the end, this historic agreement will likely get dumped in the dustbin of history like all of the other historic agreements. So the same cycle will repeat itself again. We'll probably be talking about a new grand agreement to halt the debt crisis by early next year. I guess it could be worse. I could be the groundhog.
"Springtime For The Euro, Then Reality" - Citi Summarizes What Happened In Europe, And What Are The Next Steps – ZH
we don't think this package can sustain major gains unless outside money is more enthusiastic about backing euro zone debt than either the ECB or euro zone governments seem to be, and we are not sure why this should be the case.
The key parts of the statement translated to a real language, e.g.: they still believe Italy and the other periphery trade deficit nations can undergo austerity, external sector outflows and debt improvements. Greece has already proven this wrong.
little results, a failure judged by the expectations they had set. They don’t have time for many more such failures as conditions worsen, the financial contagion spreads across Europe, and their credibility diminishes.
The euro crisis: A (big?) deal – Free exchange / The Economist
And so the euro zone's leaders tip-toe toward a mildly satisfying temporary solution, in hopes that the ECB will pick up the slack.
headlines ok, but details are missing.
Phew! Emerging from euro fog – Reuters blog
The headline, box-ticking numbers — a 50% Greek debt writedown, agreement to leverage the euro rescue fund to more than a trillion euros and provisions for bank recapitalisation of more than 100 billion euros — were broadly what was called for, if not the “shock and awe” some demanded.
Ambrose Evans-Pritchard: The view in the markets is that only the ECB has the credible lending power to contain the crisis, and on that score the summit did not advance one millimetre.
EZ rescue: Déjà vu all over again – voxeu.org
Why it will fail: EFSF resources exhausted in few years, but confidence has no expiration day. Why would you trust it now if you know it will go bad shortly? Seasoned debt issues are penalized. 20% loss guarantees are modest.
The pitfalls of official first-loss bond insurance – voxeu.org
a central pillar of the package will not work. The so-called first-loss insurance of EZ sovereign debt relies on an incomplete analysis of the underlying problem and the proposed solution.
Pass the Eurofudge Please – The Source / WSJ
A 50% private-sector loss on Greek bonds will only reduce the country’s debt load to around 120%. While that’s a sight better than the IMF’s recent projection of 190% of GDP for 2012, it’s worth remembering the Greek debt load totaled little more than 110% of GDP in 2008.
Risk Transfer Begins As EFSF Spreads Widen And Sovereigns/Banks Improve – ZH
EU Plan to Save the World: Analysts React – MarketBeat / WSJ
At a Glance: Reactions to the EU Deal – The Source / WSJ
Collection of short comments from analysts.
Who can (or cannot) cut it – alphaville / FT
The banks are announcing how much they need to meet the EBA capital requirements
More lessons from bank recap history… – alphaville / FT
How will the EBA make sure banks are not trying to avoid raising capital by simply shrinking their balance sheets, i.e. cut lending.
CDS FIASCO
Obligatory Greek CDS Post – Dealbreaker
Long, well-linked and good text.
How gross and net CDS notionals really work – alphaville / FT
please stop interfering by way of introducing sheer uncertainty into the market. The market has plenty of it without over-engineered debt restructurings and bailouts that come too late.
Trash heap for sovereign CDS? – Reuters Blog
But to the extent that CDS on developed country sovereigns has only been around since 2006, some commentators reckon the Greek manoeuvre may consign that particular version of credit insurance to the historical dustbin of failed financial “innovations”
Greek CDS: No Soup For You! – Kid Dynamite
previously a bank could buy Greek bonds and Greek CDS and sleep tight – but now they know that they can get their arms twisted by political leaders and/or the ECB, to “voluntarily” restructure bad debts, leaving their “insurance” worthless.
So, About That Insurance You Bought on Greek Debt… – MarketBeat / WSJ
Now, you might logically ask: “What’s the value of buying insurance on sovereign debt when you won’t even get paid on the most high profile sovereign restructuring in the last 10 years?”
Underwhelmed? – research ahead
Overall, I see a substantial probability that (on the assumption the ECB can continue with its SMP and Italy adheres to the promised structural reforms) the joint Eurozone sovereign debt and banking crisis has reached a tipping point.
European deal and what next with CDS – The Big Picture
Credit Default Swaps Useless as Hedge Against Default; CDS on Greece a Purposeful Sham; Derivatives King Always Wins – Mish’s
RIP DM Sovereign CDS (2006-2011) – Macro Man
The bookie isn't going to pay off. Try and collect from him J
OTHER / DIVERSION
Abolish banks? Maybe, maybe not... – The Physics of Finance
good economics is never going to provide the apparently certain, simple and complete answers which the pre-crisis conventional wisdom appeared to.
A Goldman guide to the monetary policy playground – alphaville / FT
A primer on “‘unconventional’ unconventional policies” to guide us through the maze of recent central bank moves from ‘operation twist’ to UK QE2 and the imposition of a minimum rate for the EUR/CHF exchange rate by the Swiss National Bank.
Steven Levy on Facebook, Spotify and the Future of Music – Wired