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Thursday, January 26

26th Jan - Risk-on lasted four weeks the last time

My BS is bigger.
Nothing terribly special. General feel-good after easier-sounding Fed and Apple's astounding quarterly earnings, but the Portugal is still there. I think we've seen this earlier: EURUSD (and US stocks) rallied the whole October on the idea that "Europe finally gets it", only to reverse quickly.  

After the Greece is solved, either by demoting it to "a country in Sub-Alpine African region" or by making the whole country pensioners without voting rights in European matters, Portugal is next. And I am not terribly convinced that the austerity measures in Spain and Italy can and will be solved by the constant recycling and leveraging of the ultimately German guarantee. Sometime soon, perhaps mid-Feb, another round of risk-off is coming. 

To the links: 
News – BTH
Recap GMT
Press digests by Reuters: WSJ, NYT
FX option vols – Saxo
Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ
Tracking Europe’s Debt Crisis – NYT
Davos Rolling Blog  – FT 

US MMFs versus the Eurozone, Part 2alphaville / FT
Fitch looks at the US’s exposure to the European crisis, sees mainly the repo as a problem. But did LTRO change this? And what happens next time when the money market funds become nervous about Europe?

With Hollande in the lead, France may be making a shift to the leftSober Look
Poll charts, some commentary.

The coming resolution of the European
Policy reactions to the Eurozone crisis are seen by many as short-sighted, incoherent, and driven by political expediency. This column disagrees. What we are seeing is a game of chicken among the key political and economic powers in Europe. As the crash looms ever closer, the right deals will be struck and Europe will emerge stronger and with its currency intact.

Why Europe’s crisis can’t be avertedFelix Salmon / Reuters
The result is likely to be a series of countries exiting the euro, and/or the “East Germanification” of much of Europe’s periphery: flows of money and human capital away from countries like Greece and Portugal, and towards the more prosperous countries with healthy economies and substantial trade surpluses.

Portugal, back in the framealphaville / FT
It was only nine months ago that Greek bond yields and CDS prices were at the levels of Portugal today… The worsening of the outlook mainly stems from a very large fiscal retrenchment planned for this year… current account deficit remains large… quarterly reviews of its adjustment program this year by official creditors. The first is scheduled for next month, with the others following in May, August, and November.

Bilaterally — yours?alphaville / FT
On the fact that if Greece defaults on any of its bonds, all EZ loans become fully and immediately payable. Possible for ECB to take a small loss? How to finance the transfers?

The Greater DepressionKrugman / NYT
The ongoing slump in Britain is now longer and deeper than the slump in the 1930s

The ‘QE-exit’ inflation paradoxalphaville / FT
What are the Fed’s exit plans from QE? What is the effect of even anticipating the Fed starting to unload positions? QE reversal might be an actual catalyst for inflation

EMEA WeeklyDanske (pdf)
Good potential for further gains in Polish zloty, Russian rouble and the Turkish lira.
the Turkish lira. Czech and Romanian CB rate decisions next week.

What future for economics?The World / FT
Roundup of the Future of Economics-panel, attendants Diamon, Stiglitz, Shiller, Arthur.

The 10 Keys To Selling AnythingThe Altucher Confidential

On Dumpster DivingLars Eighner
He worked as an attendant and ward worker in a mental institution from 1980 to 1987 before finding himself homeless for three years. Travels with Lizbeth (1993), the book that includes “On Dumpster Diving,” recounts these years. It began as letters to friends explaining his circumstances and evolved into a series of essays on equipment that he had found in the garbage.