Here are the ending week's best reads collected to one post, in case you missed some of them. Greek Exit Collection from last Sunday is also topical. I'm on Twitter, Facebook, and paper.li
EURO CRISIS: GENERAL
'The Greatest Danger to Merkel Bears the Name Hollande' – Spiegel
Angela Merkel's decision to campaign on behalf of French President Sarkozy has infuriated the German opposition, with some warning that it could damage German-French ties. But German commentators say that the bigger threat is posed by Sarkozy's Socialist challenger Francois Hollande.
Polls suggest that in the first round of balloting in late April, Sarkozy is trailing his Socialist challenger Hollande 31%-24.5%...There are two things that appear to be scaring investors about the prospects of a Hollande victory: what he is saying and the implications for the Paris-Bonn axis.
The status quo, even with ESM and fiscal compact, is unstable and unsustainable. The market lull must be used by leaders to prepare the next steps.
Moody's adjusts ratings of 9 European sovereigns to capture downside risks – Moody’s
Press release, with reasonings separately for each country.
The timetable for Europe (though arguably vulnerable to amends)
On balkanisation and credit claims – alphaville / FT
Citi’s Buiter: In fact, we think the February 9 decision brings the Eurozone much closer to the position of the Rouble Zone following the collapse of the Soviet Union.
Citi’s Buiter: In fact, we think the February 9 decision brings the Eurozone much closer to the position of the Rouble Zone following the collapse of the Soviet Union.
EU report: Twelve countries at risk of new economic crises – euobserver.com
According to Il Sole 24 Ore newspaper, Italian Prime Minister Mario Monti, a former EU commissioner, put pressure on the college of commissioners to water down the language of the report ahead of a treasury bonds sale in Rome on Friday. Full pdf here, and alphaville / FT
Capital markets have failed because no one wants to admit they have. If you can’t admit you have a problem, you can’t get on with finding an evolutionary alternative to the current failed premise.
Germany Must Decide What the European Union Is For – View / BB
Today one wonders, what did Germany think “political union,” which it both argued for and proclaimed, ever meant? Germany pressed harder than anybody for the end of the nation- state in Europe, yet its policy is guided now by the conviction that German taxpayers should on no account be asked to support their fellow European citizens in Greece.
Today one wonders, what did Germany think “political union,” which it both argued for and proclaimed, ever meant? Germany pressed harder than anybody for the end of the nation- state in Europe, yet its policy is guided now by the conviction that German taxpayers should on no account be asked to support their fellow European citizens in Greece.
EBA may ease rules if bond yields stay low-Enria – Reuters
European banking regulators may ease demands on capital buffers for banks should a recent drop in sovereign debt yields prove lasting, Italian daily Corriere della Sera on Saturday quoted the chairman of the European Union's sector watchdog as saying.
Those haircut-heavy credit claims – alphaville / FT
On the ECB’s new policy of easing national central bank’s collateral policy: the range of assets differs by country. Spanish banks can’t pledge mortgages to their central bank, but Irish banks can. Accepted currencies also vary. Austria only accepts euro-denominated claims while Spain allows those “denominated in euro or in major foreign currencies”
51-page document, dated 9-Feb from a deniable source
Greek Endgame in Sight – Credit Slips
1) seeming shift in the attitudes of European leaders, 2) dramatic, but unsurprising deterioration in economic and social conditions in Greece, 3) rich Greeks have already taken their wealth abroad
I remain curious why he is allowed to say that default is chaos without a shred of evidence, and countless examples to the contrary. His job, the reason the EU instated him as puppet was to do their bidding, yet every statement he utters in an effort to get that accomplished is treated as “gospel” truth.
…it is not going to be the final word in this Greek debt crisis as the drama will develop into a full blown Greek Tragedy by May/June.
The only questions that remain to be resolved are these: have all of the parties begun preparations to mitigate the ultimate impact of an outright default by Athens? And will the ECB be sufficiently aggressive in combating the inevitable speculative attacks on the other members of the euro zone periphery, which are almost certain to ensue, once Greece is “resolved” one way or the other.
My suspicion is that the 120% debt target for Greece is largely a function of not wanting to suggest that Italy’s debt levels are too high…Greece is simply not competitive as part of a currency union with Germany – and it never will be. That means almost permanent fiscal transfers and a loss of Greek fiscal sovereignty. The political will necessary to support this solution does not exist. And so Greece will exit the euro zone
Greece still needs to identify 325mio of savings, provide assurances that policies will not be changed and complete the negotiations with Finland on collateral. Then the Eurogroup meeting, IMF assessment, ECB’s participation, EFSF…and then all the EZ governments have to agree. Total aid and debt forgiveness 340bn, about as much as Greece had debt at the start of the crisis.
Morning Briefing – BNY Mellon
If the Eurogroup approves the Greek package, they will do so with the full knowledge that it is no longer undeniably the least damaging option for the Euro-zone as a whole
UBS Counts The Nails In Greece's Coffin – ZH
UBS: Is Greece saved? No, but we could hope it is ring fenced.
UBS: Is Greece saved? No, but we could hope it is ring fenced.
Very nice collection of recent articles on Greece.
March 20th Bonds And The Latest Greek Headlines – TF Market Advisors
Europe is painting themselves into a corner (again). If they say they are going to wait for the Greek elections to figure out the long-term program, how can they not pay the March bonds? If they pay the March bonds and Greek elections go poorly, how do they explain to their citizens that they just threw away more money (especially as France will be going through its own elections).
The second Greek bailout: Ten unanswered questions – openeurope
Realistically only some of the open issues will be resolved in time, and Greece’s future will depend on whether AAA countries politically want to approve the bailout.
Welcome to Choose Your Own Troika Program For Greece! You are a junior member of the One World Government, and you have been given the job of coming up with a proposal to resolve the Greek crisis.
OTHER
Special report: The twilight of the Bond King – Reuters
(PIMCO’s Bill Gross) is the man who made bond investing sort of sexy - and now he may pay the price.
Macroeconomic model comparisons and forecast competitions – voxeu.org
Where were economists when the global recession hit? Or rather, where were their forecasts in the years before? This column argues that clearly some of the models were at fault. To correct this, it proposes a ‘comparative approach’ to macroeconomic analysis where models compete for the right to be taken seriously.
The Minotaur is, of course, a metaphor for the strange Global Surplus Recycling Mechanism (GSRM) that emerged in the 1970s from the ashes of Bretton Woods and succeeded in keeping global capitalism in a rapturous élan; until it broke down in 2008, under the weight of its (and especially Wall Street’s) hubris. Post-2008, the world economy is stumbling around, rudderless, in the absence of a GSRM to replace the Minotaur. The Crisis that began in 2008 mutates and migrates from one sector to another, from one continent to the next. Its legacy is generalised uncertainty, a dearth of aggregate demand, an inability to shift savings into productive investment, a failure of coordination at all levels of socio-economic life.
Another piece of the LTRO puzzle – alphaville / FT
Reserve Bank of Australia’s assistant governor notes that money supplies of major economies are contracting and also that velocity of collateral has dropped
Multiple topics: Gold, Fed monetary policy, LTRO, Greece’s bailout: The first of November 2011 will probably come to be seen as a key crossroads in the eurozone crisis – the moment when Jean-Claude Trichet handed the helm of the European Central Bank on to Mario Draghi.
Secular Demographic Shift To Impair Equity Multiples And Bond Prices – ZH
Credit Suisse takes a nice look at demographic horrors in line for the stock market.
Credit Suisse takes a nice look at demographic horrors in line for the stock market.
DIVERSION
Every World Press Photo Winner From 1955-2011 – Buzzfeed
Every year since the World Press Association gathers in Amsterdam to pick a picture of the year. Here's every photo that's won from the past 55 years or so. Powerful stuff. Hat tip Virpi K.