The Swedes and the British had the nerve not to join a currency union twice. One catastrophic failure under German rule was enough for them. This is the habit of successful empires and people – they learn from their mistakes. The losers are like the Empire from the Star Wars: they keep building new Death Stars just to have it explode again in the sequel.
Research round-up coming up later today. Have fun with your not voted choices and unelected representatives!
– MoreLiver
Then to today's links:
News (Thu morning) – BTH News (Thu morning) – The Trader
Market Preview – Saxo Bank
Daily – Danske Bank (pdf)
*Morning Preview – BNY Mellon
FX option vols – Saxo Bank
Markets Live – alphaville / FT
Debt crisis: live – The Telegraph
EURO CRISIS
Special Report: The maverick behind Merkel – Reuters Here was Europe's most powerful leader being called out in public by one of her ministers. Instead of rebuking Schaeuble, Merkel had deferred to him, admitting he was right. The unusual exchange in early November gives a glimpse into the complex relationship between Merkel and Schaeuble. Once his deputy, Merkel is now Schaeuble's boss. Their bond has survived two decades of slights and reversals -- and it is now central to the euro-zone debt crisis.
The Bundesbank has quietly lent half a trillion euros to the European Central Bank. Could that determine the fate of the euro?
This is certainly not a country that could take on a strict austerity regime without causing itself some significant short-to-medium term economic damage because it is obvious from the metrics that the private sector has been borrowing from both the external and government sectors for a long period of time.
So, about that IMF €200bn… – The World / FT
It is not for the first time that late-night eurozone summit announcements are looking ragged in the daylight.
The reality is quickly sinking in that, relative to the dimensions of the challenge, very little was really accomplished two weeks ago. And very little will be accomplished until European leaders come to the realization that they continue to treat the symptoms of the disease, not the cause of the disease. They need to find a mechanism to address Europe's internal imbalances that does not rely exclusively on deflation as a cure.
The Euro Zone's Double Failure – Martin Feldstein / WSJ
Europe needs country-by-country fiscal reforms, not a renewed push for political integration.
Europe needs country-by-country fiscal reforms, not a renewed push for political integration.
View from Deutsche Bank 7-Dec: This leaves in our view only two options for EMU 2.0: A hardening of EMU or a redrawing of the boundaries of EMU such that only countries meeting the real economy criteria for a currency union are members.
More Suffering Than Thriving in Some EU Countries – Gallup
Standard of living perceived as "getting worse" across much of EU
Greek Creditor Committee Said Near Hiring Blackstone, Law Firms – Businessweek
A steering committee representing global banks and insurers is close to hiring Blackstone Group LP and two law firms to advise it on debt-swap talks with Greece
FINANCIAL CRISIS
Sovereign debt: The outer limits – Free exchange / The Economist
Early in the new year, auctions of sovereign debt will crank back up. And as a new report from Moody's Economy.com indicates, much of Europe is moving past the point of no return. Check the original document here.
Too Big to Stop: Why Big Banks Keep Getting Away With Breaking the Law – The Atlantic
For the country's biggest financial institutions, it's still worth it to break the law, because the government has no way to make the banks pay for acting illegally
What If Lehman Happened Today? – National Journal
The euro crisis could trigger another American bank failure. Wall Street is better prepared this time, but U.S. regulators still haven’t mapped the new financial universe, written rules for it, or ramped up enforcement.
Bernard-Henri Lévy: Downgrade Moody’s! – The Daily Beast
Ratings agencies, with the careless batting of an eye, can bring down entire economies. Yet their decisions are veiled in mystery and cheapened by conflicts of interest.
MF GLOBAL / HYPOTHECATION
MF Global drew up survival manual in final – ThomsonReuters
Just days before it declared bankruptcy on Oct. 31, MF Global concluded it could remain solvent even if a major ratings downgrade limited its access to funding, according to an internal "break-the-glass" plan obtained by Reuters on Tuesday.
Revisiting Rehypothecation: JP Morgan Markets Its Latest Doomsday Machine (or Why Repo May Blow Up the Financial System Again) – naked capitalism
From a leverage point of view, it’s the haircuts that matter. The ‘run on repo’ comes in two stages a) widening haircuts b) hedge funds pulling their assets from the PB. The effect of the run is magnified if the (London-style) Prime Brokerage agreement allows the PB to rehypothecate all the hedge fund’s assets.
MF Global’s Risk Officer Said to Lack Authority – DealBook / NYT
DIVERSION
2011 in Lego: the year's news - in pictures – The Guardian
"Decision was rational. I put it into a model" says Hungarian Economics Professor who took Mortgage in Swiss Francs, then Clobbered on 40% Currency Move – Mish’s
In case you need further proof that economics professors are frequently clueless about economics.
Global history? – Understanding Society
So global history is, in part, a framework within which the historian avoids privileging one regional center as primary and others as secondary or peripheral.
Internet access and use in 2011 – eurostat (pdf)
Almost a quarter of persons aged 16-74 in the EU27 have never used the internet
The rebel Chinese village of Wukan, which has driven out the Communist party, has resorted to smuggling in food past a police ring of steel which has cut off its population of more than 20,000.
Alter Ego: Portraits of Gamers Next to Their Avatars – brain pickings
The real humanity of virtual worlds, or what imaginary public personas reveal about private personhood.