For my three regular readers in Croatia, please remember my post Msg to Croatia & Guide to naked beggars.Vote wisely next weekend. Two articles linked below.Markets are in a risk-on mode ahead of the PSI- and treaty results. Remember what I told you about markets driven by news? Or earlier today on Merkel's end game posture? I think it will soon be time for another "buy the rumor, sell the news".
MoreLiver’s Daily is now on paper.li
To the links:
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| They are cheap - unless something bad happens. |
Recap – GMT
FX option vols – Saxo
Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ
EURO CRISIS: GENERAL
The Importance of the Mario Brothers – Marc to Market
Both Draghi and Monti seem to recognize the limitations of the German narrative that fiscal profligacy led to the crisis. Both recognize the role played by private sector borrowers and lenders and this has been largely absent from the official debate.
Presenting Where The Recycled Euro-Ponzi Cash Goes – ZH
Outtakes from a Goldman Sachs’s research note: One of the standout observations when looking at debt levels in Europe is how different they are, both between countries and also between different parts of economies.
Austerity is a pain. So is tight money – Free exchange / The Economist
When it comes to austerity in Europe, therefore, the criticism is in part justified: it is harmful. Growth-promoting reforms probably have a better return on (political) investment. But it is important to point out that monetary policy is a major counteracting force to austerity, and failing to use it appropriately should not be blamed on austerity policies, but on the ECB.
Likely scenarios 1) The EUR will survive but will be changed in 2012 in that some countries will leave the Eurozone 2) The EU will survive with austerity, end of circularity and United States of Europe and finally the most likely 3) print money, make presentations, ignore facts and end in panic.
EURO CRISIS: BANKS
The EBA 9% rule and the Eurozone crisis – alphaville / FT
Recapitalisation of an undercapitalised banking system will, over the intermediate term, merely fund the necessary asset contraction, just as it did in Japan
Recapitalisation of an undercapitalised banking system will, over the intermediate term, merely fund the necessary asset contraction, just as it did in Japan
Who did, and didn’t, tap the three-year LTRO – alphaville / FT
EURO CRISIS: TREATY
Only In Europe – ZH
The entire fiscal treaty is toothless from the ground up as every breach of deficit targets will always be attributed to “exceptional circumstances”…
The entire fiscal treaty is toothless from the ground up as every breach of deficit targets will always be attributed to “exceptional circumstances”…
1) Water down the treaty so that it does not have to be voted on 2) Change the rules of the treaty later quietly, after the fact, with majority rule votes or other procedures
Finnish Minister Pours Cold Water on Merkozy Treaty; 4th Treaty Draft Underway; ECB Considers Alternatives to Bond-Buy Program; Unresolvable Questions – Mish’s
Merkel is bright enough to understand this. However, like all politicians she does not really care about governance. She is more concerned about her legacy. She does not want the Eurozone to collapse under her watch.
EURO CRISIS: CROATIA
Croatia will hold a referendum on Sunday (22 January) to decide whether to become the 28th EU member state.
As European Union Beckons, Allure Fades for Wary Croatia – Mish’s
Bureaucrats can and will cram this down the throats of Croatians, because they, not Croatia will benefit. Bigger salaries and benefits await representatives of the European Parliament. There is absolutely no reason for Croatia to join now, especially as the UK ponders an EU exit. Nonetheless, if recent polls are correct, it seems likely.
Bureaucrats can and will cram this down the throats of Croatians, because they, not Croatia will benefit. Bigger salaries and benefits await representatives of the European Parliament. There is absolutely no reason for Croatia to join now, especially as the UK ponders an EU exit. Nonetheless, if recent polls are correct, it seems likely.
EURO CRISIS: ECB
ECB Stands to Recover Nearly All of Its Lehman Loans – DealBook / NYT
An effort of more than three years to unwind Lehman assets will recover almost all the 8.5 billion euros, or $11 billion, that the central bank stood to lose
An effort of more than three years to unwind Lehman assets will recover almost all the 8.5 billion euros, or $11 billion, that the central bank stood to lose
Monthly Bulletin January 2012 – ECB (pdf)
Statistics Pocket Book January 2012 – ECB (pdf)
The Interplay of Financial Intermediaries and its Impact on Monetary Analysis – ECB (pdf)
EURO CRISIS: PERIPHERY
Sliding Greek Bond Reality Challenges "Debt Deal" Hopium – ZH
Includes JPMorgan’s comments. If the deal is close, why are the bonds trading lower?
Portugal getting further help from the IMF and the ECB via the central bank’s bond-buying programme isn’t necessarily a positive since it effectively subordinates existing bond-holders to claims by the two institutions.
Money Supply Figures Suggests Italy Headed Into Depression; Non-Performing Spanish Loans Hit 134 Billion Euros, 7.51% of All Loans, Highest in 17 Years; Eurozone Unemployment Charts – Mish’s
Greece is going to default and Portugal will soon follow. The ECB is attempting to fence off Italy and Spain, but the only way it can do so is by buying massive quantities of Italian and Spanish debt (and doing so puts Germany and France at risk when the setup blows up).
OTHER
Putin to oligarchs: watch out – beyondbrics / FT
Expect more of this in the run-up to the March presidential election where Putin’s challengers include oligarch Mikhail Prokhorov. This could be tricky time for business in Russia, including foreign investors.
Expect more of this in the run-up to the March presidential election where Putin’s challengers include oligarch Mikhail Prokhorov. This could be tricky time for business in Russia, including foreign investors.
What’s Breaking the FX Risk Trade? – The Source / WSJ
Last year risk-off meant higher dollar, yen, core bonds and gold and lower euro, stocks, commodities, and commodity currencies. Euro is now out of this loop. Because of positive structural shifts – or easy monetary policy?
Non-Predictions 2012 – Commodities – Macro Man
Platinum will not under-perform silver, copper is not going anywhere., oil vol will not disappoint.
Asia-Pacific Portfolio Managers Discuss PIMCO’s Cyclical Outlook – PIMCO
We expect emerging Asia growth below the market consensus due to its less aggressive policy responses compared to 2008-2009.
DIVERSION
Davos’s status levels – Felix Salmon / Reuters
Hologram badge is da best!
The increase in Afghans leaving for Europe fuels a lucrative business in fake passports and Taliban death threats
Julian Assange Interview – The Rolling Stone