Next stops in the opera are ECB (nothing expected), Spanish auction tomorrow and Italian on Friday. Somehow I feel that the whole Financial Transactions Tax is just a smoke screen to play on the electorate and the banks - something to keep everyone occupied and thus participating in the muddle through and not writing or caring too much about the stealth QE, the 'crazy collateral' parked to the ECB or the Greek PSI. Are the eurocrats getting ready to send money to Greece without the PSI? IMF is not going to do it, so perhaps even lower collateral standards on Greece would be the solution?
I had a view and links on Greece yesterday. The Calendar and the Best (added most viewed) pages have been updated. MoreLiver is on Twitter and Facebook, for suggestions and requests send a mail to "noproblemanon" at gmail.com.
Have a good one - MoreLiver
News 11-Jan morning – BTH
News 11-Jan – The Trader
Daily 11-Jan – Danske (pdf)
Market Preview 11-Jan – Saxo
FX 11-Jan – Saxo
FX option vols – Saxo
Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ
EURO CRISIS
Throughout the European debt soap opera, Europe’s leaders have expressed their willingness to “do whatever it takes” to restore stability and save the euro. This column argues that, too often, policymakers have in fact been “doing whatever it takes” to serve the banks.
Is a European Tobin tax likely to be efficient? – voxeu.org
An efficient European Tobin tax is unlikely to emerge if it is charged just on financial transactions. When deciding on the tax, a huge political distortion can occur, and possibly is occurring. We think that, as so far as a financial tax is aimed at curbing systemic risk rather than transactions, a more precise measure of toxicity should be adopted as the taxation basis.
Rehn backs 'smart' mutual debt fund – euobserver.com
The idea would see countries with a sovereign debt of above 60 percent of GDP - breaching single currency rules - pooling this excess debt into a redemption fund. The countries would be obliged to undertake structural reforms and growth-inducing measures and pay their debts back over 20 to 25 years.
Can financial innovations help the eurozone? – Felix Salmon / Reuters
For all that financial innovation has got itself a pretty bad name recently, there’s no shortage of people with bright ideas as to how to address the euro crisis. Robert Barro is one. He thinks the euro should be phased out entirely, and has a plan for how to do just that:
Kinda makes one wonder if they are really, really serious in the Greek government about balancing that budget within, say, the lifetime of anyone now in government.
ECB
ECB Preview by Goldman Sacs – ZH
No rate change or further non-standard measures, for now · More monetary stimulus wanted, but we don’t think it will come through further rate cuts · Which rate reflects the appropriate monetary policy stance? · What to do about the interest rate corridor? · Monetary policy in times of a broken transmission mechanism and why non-standard measures are the preferred instrument
No rate change or further non-standard measures, for now · More monetary stimulus wanted, but we don’t think it will come through further rate cuts · Which rate reflects the appropriate monetary policy stance? · What to do about the interest rate corridor? · Monetary policy in times of a broken transmission mechanism and why non-standard measures are the preferred instrument
ECB provides unsecured funding to banks to keep them from failing – Sober Look
Originally the ECB had a strict limit on how much "related party" unsecured debt they can accept as collateral (usually only 5%). But with the credit markets frozen in the eurozone and bank bonds maturing, the ECB had to relax these rules.
ECB Loans Stabilize Market, Don’t Provide Much Stimulus – Real Time Economics / WSJ
Markets will scrutinize the ECB’s quarterly bank lending survey later this month for further clues about how much funds are reaching businesses and households in the form of new loans.
OTHER
Very nasty speculation of what might have happened. It seems someone from inside the SNB finally woke up and skilfully played the Swiss media to work on Hildebrand’s expulsion. There is only one problem for the SNB: how to get out of the hole before the Euro blows up?
Quarterly Economic Outlook (Q1 2012) – Daiwa Capital Markets
There are myriad paths the crisis could take from here, but we have assumed that a “muddling through” scenario is the most likely outcome – certainly that is the revealed preference of euro area policymakers who have repeatedly failed to demonstrate an appetite for delivering a lasting solution to the crisis.
Alien Employers or: How I Learned to Stop Worrying and let the World Run a Current Account Surplus – MacroMania
Extension of the old joke: Instead of exporting vehicles to Greece, why don't German car manufacturers ship their cars to domestic German residents instead? The domestic purchasers could pay for the cars by issuing fake paper, just like their foreign counterparts.
Why US banks need a new business model – McKinsey Quarterly
Reg required. Many commentators blame Europe’s sovereign-debt crisis and fears of a double-dip recession. But three additional factors also weigh heavily on investors: the new bank capital requirements introduced under the Basel III international-banking regulations, the impact of new US banking regulations responding to the financial crisis, the Dodd–Frank Act, and the unwinding of consumer debt. All three undermine banking’s traditional business model.
DIVERSION
The Neuroscience of Looking on the Bright Side – SciAm
Scientists use "prediction errors" to understand the brain’s natural optimism
This photo slide show and the stories were surprisingly good. Give it a try!