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Tuesday, December 13

13th Dec - All summit pieces broken

Quote of the Day: "Van Rompuy likes to alternate between his two pet lies. 1. ECB will step up bond purchases, 2. Eurobonds are coming. Someone needs to stand up to Herman Van Rompuy and call him a disgusting liar straight to his face in an interview." – Mish’s

News (Tue evening) – BTH
Recap – GMT
FX option vols – Saxo
Markets Live – alphaville FT
Debt crisis: live – The Telegraph
EZ crisis Live blog – The World / FT

The IMF as the ECB’s unsecured borrower of last resort alphaville / FT

The danger is that the ECB’s monetary policy transmission mechanism might become compromised due to a lack of domestic assets held on the primary balance sheet, which is currently absorbing deposits on the eurozone’s behalf. Without those assets the Bank cannot ease the collateral crunch easily.

The Failure of the EuroForeign Affairs
The euro should now be recognized as an experiment that failed. This failure, which has come after just over a dozen years since the euro was introduced, in 1999, was not an accident or the result of bureaucratic mismanagement but rather the inevitable consequence of imposing a single currency on a very heterogeneous group of countries.

Why the eurozone deal will failStephen King / FT
Asking governments to be fiscally responsible does not guarantee that they will. Also, fiscally sound policy does not ensure that no imbalances and economic trouble will happen.

Crumbling of Comprehensive Solution No. 4; Treaty "Legally Doubtful"; Cracks and Splinters Everywhere; Repeated "Pet Lies" by EC President Van RompuyMish’s
There is certainly is no legally enforceable deal and most likely no deal of any kind. Eurobonds are dead (Germany would never go along, nor would Finland and some other countries). The ECB is unlikely to step up bond purchases in a significant way for fear of the Bundesbank and German Supreme Court ruling

Greece – No PSITF Market Advisors
Why would any bank agree to a haircut when they are getting unlimited virtually free funding on the one hand, and the Troika has shown zero willingness to stand its ground and force a default?

Procrastination kills, Greek debt editionalphaville / FT
FT Alphaville is still confused by eurozone bigwigs’ promise that they’ll follow “IMF principles” to be friendly to bondholders in sovereign debt bailouts. Versus, say, being nasty about making them write down debt.

Is The UK Missing The Boat, Or Avoiding the Iceberg?MarketBeat / WSJ
Does Cameron see the iceberg? Has he ordered a full stop instead of a full-speed ahead into a failed treaty EU leaders have tried to rush into place? The answer is not as far off as many think.

Why Britain and the EU Still Need Each OtherThe Curious Capitalist / TIME
European banks ‘need tons of money’, says GMOalphaville / FT
GMO: Once the Germans understand that they too are exposed, they presumably will be amenable to more reasonable approaches to the sovereign debt problems, such as more generous volumes and maturities at collateral facilities or even a direct use of the ECB to support sovereigns so as to avoid crushing the banking system. Also ZeroHedge.
Policymaker potency in the next US crisis: part Ialphaville / FT
Nomura’s Lewis Alexander, a counselor to Tim Geithner from 2009 until Feb 2011: How are the banks doing right now vs. 2008…

Policymaker potency in the next US crisis: part IIalphaville / FT
…and then what would happen if a crisis would hit again.

Corzine: ‘I do not know whether all of these transactions were properly recorded and effectuated’Wonkblog / WP

MF Global for Dummies (i.e., Congress)Peter Brandt

Top economists reveal their graphs of 2011BBC
Their explanations of their choices are interesting too.

Fading the Vig: A Gambler’s Guide to LifeMcSweeney’s
David Hill is a gambler. Each column will tell the story of a single bet that he made and examine what that bet reveals about life in America.

Year in Review 2011Reuters

A collection of world maps, where territories are re-sized on each map according to the subject of interest. There are now nearly 700 maps.

The Long Life of the Vampire Squid MetaphorDealBook / NYT

What is the Higgs boson and why does it matter?New Scientist

Best of 2011 Science ArticlesLongform

Top 7 List of Lessons about Human Nature offered by SeinfeldFarnam Street