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Monday, December 19

19th Dec - A Man and a Midget

Source: Wiki
Good morning! Past weekend’s two deaths have put me in a surprisingly good mood. No-one will miss the Dear Leader – except (maybe) his family and lovers of status quo. Of course, succession plays are always question marks and what the markets really don’t want right now is more uncertainties. Risk-off in Asian equities and nervous meetings in White House's situation room and whatever they have in Beijing and Seoul.

Many will miss Havel, including me, but in a way he became immortal long ago. His peaceful, intellectually honest approach set an example that is now quoted and remembered as he has passed away. Havel's way is something that the world needs right now maybe more than ever.


I ended in second place  (Hold'em NL)
You can follow me on Twitter and Facebook and email me for suggestions and requests. The weekly previews/summaries, calendars and my and others' thoughts on the 'Sarko trade' were on my Weekender post. As the show-off that I am, please notice how lucky I get in poker and how many pdf-files I have.
 
– MoreLiver



News (Mon morning) – BTH
News – The Trader
EM headlines (Mon morning) – beyondbrics / FT
Morning Preview – Saxo Bank
Danske Daily Danske Bank (pdf)
Morning BriefingBNY Mellon
  review of the year part 1
FX option vols – Saxo
Markets Live – alphaville / FT
Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ

EURO CRISIS
Is Finland Really A Closet Member Of The Eurozone Periphery?A Fistful of Euros

Europe’s Three No’s in Two Parts: Part I Credit Writedowns
1) no ECB sovereign backstop, 2) no European joint bond and 3) no euro zone break up.

Europe’s Three No’s in Two Parts: Part IICredit Writedowns
Many economists and investors see a binary outcome of the European debt crisis: either the ECB backstops the sovereign/there is a European bond, or the euro zone breaks up. Instead, we think that the continuation of what can be called “muddling through” is the most likely scenario for the period ahead.

Downward SpiralForeign Policy
Europe's crisis is morphing again -- for the third time in only 12 months -- and the implications for the global economy are even more complex, unsettling, and troubling.

Political Realities Threaten To Split The EurozoneTestosterone Pit
If this scenario were to play out, the Eurozone could crack into groups of countries: one clustered around Germany, another around France, with a few countries perhaps falling by the wayside. The EU too might fissure as Britain and a few other countries drift away.

Can Italy survive the financial storm?Daniel Gros / voxeu.org
If Italy is too big to fail and too big to save, how can it save itself? This column suggests a survival strategy. The Italian households should finance their own government by buying its debt, and the ECB should prevent a collapse of the Italian banking system.

Remember Greek PSI?economistmeg
If a PSI deal is not agreed with significant take-up by February, Greece could face a hard default.

Imagining a brutal post-euro worldPragmatic Capitalism
You are asleep, tucked snugly in bed in New York. It is 2:00 a.m. on Monday morning. Suddenly the phone rings, and it’s the office cell phone. You are shocked out of bed. Your heart is racing. When that phone rings at that time of the morning, it cannot be a good thing.

ECB
Goldman's Take On TARGET2 And How The Bundesbank Will Suffer Massive Losses If The Eurozone FailsZH
GS: It is only if one or several countries were to decide to leave the Euro area that the imbalances would lead to potentially significant losses beyond the risk already reflected in the current generous liquidity provision through the ECB.

Draghi warns on eurozone break-upFT
Mario Draghi has warned of the costs of a eurozone break-up, breaching a taboo for a president of the ECB, even as he sought to play down market expectations about the ECB’s role in combating the sovereign debt crisis.

Stark and Draghi on the hatersalphaville / FT
What the ECB is hoping to achieve from the LTRO? Interfluidity: The ECB would have the power to manufacture fiscal crises for a misbehaving state at will, and with marvelous deniability.

EU vs. UK
EU Leaders Endlessly Play "Ring-Around-the-Rosie"; Finance Ministers Seek IMF Funding Deal; EU demands £25bn lifeline from the UKMish’s
Furthermore, if the UK does not pony up, I strongly suspect they will not be alone. Finally, any nation that does pony up on the basis it is a "loan" should have full expectation the word is really "gift" as defaults are coming.

EU demands £25bn lifeline from the UKThe Telegraph

Is Britain About To Scuttle The Last Ditch "Plan Z" European Bailout?ZH

VIEWS
Deutsche On QE3, It's $800bn Or Bust!ZH
the current dislocation suggests another full QE2-style package of about $800bn is already priced into the market

Bob Janjuah Answers The Six Biggest Questions Heading Into 2012ZH
Nomura: a recovery is expected into H2 on rather modest policy easing globally. However, it is precisely at this point that some important transitions will occur, as already referred to – the US, China and, indeed, the shaping of the EU’s new governance structure.

The bull case for stocksHumble Student of The Markets
I have been quite bearish in these pages lately. As an antidote and to help me think critically, I outline what could go right for the markets in 2012, along with the risks - CB liquidity injections, QE3, ECB’s stealth QE (LTRO)

CHINA
China’s real estate bubble may have just poppedChovanec / Foreign Affairs

China: Hard Landing in Sight?Chovanec / EconoMonitor

The No. 1 Problem of the Chinese EconomyGordon Chang / Forbes
The leadership either underestimates the crisis, believes they cannot do much or political transition interferes with efforts. It could be late 2014 before new leadership is functionable.

China: Lots of News, Signifying Nothing NewPettis / EconoMonitor

Will China Break?Krugman / NYT
I hope that I’m being needlessly alarmist here. But it’s impossible not to be worried: China’s story just sounds too much like the crack-ups we’ve already seen elsewhere.

THE MAN & THE MIDGET
Remembering Vaclav Havel (1936-2011)Chovanec / EconoMonitor

Exit Havel: The King leaves the Castle (2003)The New Yorker
On his last weekday in Prague Castle as the President of the Czech Republic, Václav Havel taped a brief farewell address to the nation and then took a telephone call from George Bush.

The Intellectual and PoliticsVaclav Havel / Project Syndicate
Václav Havel, who died on December 18, was that rare intellectual who, rather than forcing his way into politics, had politics forced upon him. In 1998, while serving as President of the Czech Republic, he offered the following reflection on the benefits and dangers of his career path.

Politics and TheatreVaclav Havel / Project Syndicate
In March 1997, while serving as President of the Czech Republic, Václav Havel – who died on December 18th -- offered the following assessment of the intersection of politics and playwriting in his life.

Václav Havel’s Life in TruthJiří Pehe / Project Syndicate
he was one of the last of a now-extinct breed of politicians who could lead effectively in extraordinary times, because their first commitment was to common decency and the common good, not to holding power. If the world is to make it through its various crises successfully, his legacy must remain alive.

Keep on Rockin' in the Free World Reason
How the Velvet Underground and Václav Havel built a blueprint for toppling totalitarians and other censors

Kim Jong-il “Is Dead”The Diplomat

What Comes After Kim Jong-il?The Diplomat
The reported death of North Korean leader Kim Jong-il is already leaving people wondering about whether his son, Kim Jong-un, is ready for power.

Alone In the Dark (2003)The New Yorker
Kim Jong Il plays a canny game with South Korea and the U.S.


OTHER
The systemic risk revealed by MF Global’s collapseBarry Ritholtz / WP
The details are complex, but follow them through to the end and you will see all of the problems of our system — political corruption, excess leverage, focus on short-term profit at the expense of survival — in one sordid affair.

Efforts to Shed Light on High Frequency Tradingallaboutalpha
CFTC’s year-end meeting discussed how to define and classify HF trades for monitoring their impact

Who runs Russia? FT
Organised crime has long been big business in the country. But are mafiosi now enjoying protection by the state?

Risk Pragmatics Quantivity
Review of Aaron Brown’s Red-Blooded Risk, my old piece here. Buy it on Amazon!

Household’s beliefs and financial decisionsKézdi & Willis / voxeu.org
How to ordinary people form their beliefs about the economy? These beliefs then shape the decisions they make and can, if widely held, prove to be self-fulfilling. This column looks at surveys of ordinary people in the US and finds that the beliefs people hold and the reasons behind them vary almost as much as the outcomes they try to predict.

DIVERSION
A Curated Linkfest For The Smartest People On The WebSimoleon Sense

Is It Irrational To Give Gifts?Farnam Street

The Science of Why We Don’t Believe ScienceFarnam Street