Hello there! During the weekend I put online the Weekender - Poker face of eurocrats with review/preview stuff and an editorial on Sad Sarkozy, and a Best of the Week. In this post there are links to 2012 outlooks by both GS and CS. If I would read only two today, BNY Mellon’s morning brief and BTH’s news collection would be kings. I’m on Twitter, Facebook and you can always email me for suggestions and requests. News – BTH
Morning Briefing – BNY Mellon
Danske Daily – Danske Bank (pdf)
Market Preview – Saxo Bank
FX option vols – SaxoMarkets Live – alphaville FT
Debt crisis: live – The Telegraph
EZ crisis Live blog – The World / FT
EURO CRISIS
Do Eurozone leaders finally ‘get it’? Not quite yet – Charles Wyplosz / voxeu.org
This week’s announcements by German Chancellor Angela Merkel and ECB President Mario Draghi that the Eurozone is taking steps towards a closer fiscal union seem to be calming markets and restoring confidence in the decision-making of Eurozone leaders. This column argues, however, that the devil is still in the detail.The Paradox Of Merkelism And ING's Not-So Grand Bargain – ZH
Research note from ING: “ING: Break Up. Pay Now Or Pay Later. The Paradox Of Merkelism - Risky Caution”
Research note from ING: “ING: Break Up. Pay Now Or Pay Later. The Paradox Of Merkelism - Risky Caution”
The Merkelian Reich – Macro and other market musings
I am less certain than the author that a Merkelian Reich would really lead to better monetary policy given the vast differences in the European economies. The Eurozone is not an optimal currency area and Germany has consistently shown itself to care more about domestic monetary conditions than European monetary conditions.
Decoding Euro-moralizations – Kantoos Economics
if you are blaming [insert country] exclusively, for instance, it is very likely that you are moralizing… if you criticize the other side of moralizing, you often come close to moralizing yourself, if only by offering a counter-moralization of your own… if you point out moral obligations (on both sides!), if only in suggestive sentences or headlines, you come close to moralizing, and need to be very careful.
Action from euro leaders required this week – Danske Bank (pdf)
An array of critical events is due in the coming week. Market expectations have been building up over the past week which have helped fuel the rally in sovereign bond markets.
ECB to surprise next Thursday? – The Big Picture
The risks are high, but I believe that Euro Zone politicians understand that, including, most importantly, the Germans. As a result, the odds favour a positive outcome – however, I will watch very, very carefully – it is the Euro Zone after all.
Flash: IMF could attempt to build a third line of defence – Danske Bank (pdf)
It looks as though the IMF will attempt to create a third line of defence against the European debt crisis by increasing its involvement and sending a clear signal that in a worst case scenario the IMF will be able to help cover the finance requirement of Italy and Spain. However, for this commitment to be credible the IMF will need to boost its resources substantially.
This is why relinquishing policy control to a creditor class rarely has gone together with economic growth and rising living standards. The tendency for debts to grow faster than the population’s ability to pay has been a basic constant throughout all recorded history.
From this perspective, the proposal to use the IMF as a conduit for ECB resources (thereby circumventing restrictions imposed by European Union’s treaties), while providing the ECB with preferred-creditor status, would exacerbate the Fund’s exposure to risky borrowers. This arrangement could be seen as an unwarranted abuse of Fund seniority that, in addition, unfairly frees the ECB from the need to impose its own conditionality on one of its members.
No, Dylan Grice Did Not Say Germany's Unwillingness To Print May Lead To The Rise Of Another Hitler – ZH
SocGen’s recent analysis by Dylan Grice suggested that it was not the Weimar inflation, but the following deflation that gave us Hitler. Now he backtracks and corrects himself.
Irrelevant Merkozy – A Fistful of Euros
Bilateral agreements over full intergovernmental treaty-change? Still 17 countries to negotiate, agree, ratify and implement – it will take time. At the same time, bank crisis can escalate very rapidly.
But this is where Germany now is. It must either immolate itself and dismantle the Bismarckian state for the cause of EMU, or prepare to finance an orderly withdrawal from monetary union (with the Finns, Dutch, and Austrians) so that the South can breathe again and hope to recover.
Ten days of secret planning to rescue markets – Reuters
Britain orchestrated this week's bold move by central banks to stave off a cash crunch in global markets, helping drive a plan that began to take shape around 10 days ago.
German Finance Minister Hatches "National Redemption Fund" Scheme to Kick the Debt-Can Another 20 Years – Mish’s
Bear in mind the idea is progressively harder for countries already under extreme difficulty with various austerity measures imposed to pay back French and German banks. This is another one of those dead-on-arrival ideas that might even be agreed upon, but will never succeed.
Time to Bring Out the Howitzers – John Mauldin / The Big Picture
Employment Up But Not Enough, The World Slips into Recession, Central Bankers of the World, Unite!, New York, Hong Kong, Singapore, and Cape Town, And My Conference
Fiddling as the euro burns – The Telegraph
It is, said the foreign minister whose country holds the EU presidency, "the edge of a precipice the scariest moment of my ministerial life."
EMERGING
China will not simply bail out Pakistan with loans, investment, and aid, as commentators watching the deterioration of relations between the United States and Pakistan seem to expect. Rather, China's involvement will closely reflect Beijing's own priorities and evolving risk assessments.
Portfolios are increasingly dominated by the investment theme, even if they solely consist of broad-based index funds, and everyone roots for their current investments with all the delusions that fandom implies. Nervous investors that sell the trend early, and miss a subsequent rally, are derided by chest-thumping bulls. Professionally, the pressure to remain bullish is intense.
6th Dec (Ashura) possible flame date, Syria falling in Dec, Bahrain possibly next, Iran military action probably in Jan/Feb
OTHER
Goldman Releases "Strategies For Stagnation" – ZH
US Portfolio Strategy 2012 Outlook Strategies for Stagnation, full scribd link
The decline of “safe” assets – alphaville / FT
Excerpt from Credit Suisse’s 2012 Global Outlook, full report linked to in FT’s long room (reg required)
Excerpt from Credit Suisse’s 2012 Global Outlook, full report linked to in FT’s long room (reg required)
Stephen Roach on the IMF bailout, Chinese banks and US consumers – Credit Writedowns
MS’s Roach video interview and summary text
John Paulson: the "Risk" in Risk Abitrage, Guideline for Any Arbitragers – Gurufocus
Includes a link to a pdf from Paulson.
DIVERSION
A Curated Linkfest For The Smartest People On The Web! – Simoleon Sense
The Minds of Machines – Philosophy Now
Namit Arora considers the complexity of consciousness and its implications for artificial intelligence.
How to Use Google Search More Effectively – The Big Picture
Rap in the Capital: Hip-Hop Tehran-Style – Frontline