I posted some of my thoughts on yesterday's post. After I've reviewed and updated the scheduled events, I will write more on the euro crisis. I don't think the current muddle-through of "wait til the fiscal treaty" will work and the pressure will be back on in the coming days.
That would force the eurocrats to try more of the same old medicine: summits, grand plans and veiled threats, with the ECB denying its role as a lender of last resort or bank bailouts, while simultaneously doing more lending and bailouting than US and China combined. Funnily enough, the politicians will be promising a lot and not delivering, while ECB will be promising nothing and delivering everything. The utter stupidity and lack of reciprocity of this stealth wealth transfer annoys me a lot.
The US "recovery" is not going to be enough to turn around the European situation. In treatment programs of addicts, "recovery" means the patient has stopped substance abuse, but the patient is still considered an addict. That is probably how one should view all the players right now. They say one thing and do the exact opposite. In short, all they can and will do is relapse - time after time.
The US "recovery" is not going to be enough to turn around the European situation. In treatment programs of addicts, "recovery" means the patient has stopped substance abuse, but the patient is still considered an addict. That is probably how one should view all the players right now. They say one thing and do the exact opposite. In short, all they can and will do is relapse - time after time.
- MoreLiver
Daily 5-Jan – Danske (pdf)
Market Preview 5-Jan – Saxo
Morning Briefing 5-Jan – BNY Mellon
FX option vols – Saxo
Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ
EURO CRISIS
Euro area: “What to watch” in the coming months – Danske (pdf)
A stark reminder of the north-south eurozone divide – Humble Student of the Markets
As the effects of these cutbacks start to wind their way through these economies, will unemployment go up or down? How long before the elites are faced with a political backlash?
Understanding Eurozone debt developments by nation – Gianluca Cafiso / voxeu.org
2011 was the year the Eurozone began to buckle. The weight of debt taken on following the global financial crisis two years earlier proved too much for some member countries. This column examines how debt-to-GDP ratios increased over that period, the reasons why some economies fared better than others, and what may be in store for debt in 2012 and beyond.
French minister stokes divisions on EU financial tax – euobserver.com
Leonetti's language - that French and German leaders "Nicolas Sarkozy and Angela Merkel have decided it" - will do little to assuage fears in smaller EU countries that the duo have hijacked power in an EU system which is supposed to work on the basis of consensus among the 27 member states on sensitive issues such as taxation.
Which Euro Bank is the next Lehman? – Fintag’s
It is nobody's interest for a Euro Lehman to happen but it is well known many Euro banks are zombies. They died a while back and are surviving on fabricated assets.
ECB/Fed Support for the European Banking System – 750 billion USD, and counting – Credit Writedowns
The ECB has acted as a sovereign debt buyer of last resort in times of crisis…ECB support for the banking system in the form of collateralised liquidity and wholesale funding is not temporary but structural and permanent in nature… The ECB will of course vehemently deny this but investors should understand that such denial is mainly out of political reasons
US immune from eurozone contagion so far – Gavyn Davies / FT
Many economists (and I include myself in this) are beginning to feel very uneasy about the ability of central bank balance sheets to absorb these shocks in an unlimited manner. This has never been tried before in anything like comparable circumstances.
Many economists (and I include myself in this) are beginning to feel very uneasy about the ability of central bank balance sheets to absorb these shocks in an unlimited manner. This has never been tried before in anything like comparable circumstances.
VIEWS
Since the end of November we have seen a growing disconnect – primarily between equities and other asset classes. Ideas: Short equities, short 20+ year treasuries or Long volatility, short 20+ year treasuries
Stock Prices versus Implied Inflation – The Aleph Blog
The short answer is “yes, inflation expectations have driven stock valuations for the last nine years.”
The burden we leave our grandchildren – Pragmatic Capitalism
What we leave to our grandchildren is a certain standard of living. Whether that standard of living is better or worse than ours is up to us. Remember, the burden on a sovereign currency issuer is always inflation and not solvency.
Lots of charts and Jeff Harding’s own view, which is just as gloomy.
2011 / 2012
Bespoke Investment Group and Forecasting Follies – A Dash of Insight
links to their reports
The Big Hedge Fund Stories from 2011 – Simon Kerr
Big name retirements, prosecutions, winner from euro crisis, quants come back, closing to new capital.
DIVERSION
A real mission impossible – FinanceAddict
When I worked in banking not so long ago, it was actually cool to be “old school”. It was just another way of saying that one would try to balance the bank’s interests with that of the corporate client’s. To make neither too little money off of them, nor too much.
Violinists can’t tell the difference between Stradivarius violins and new ones – Discover
Apollo 11 lunar landing told through data – FlowingData