My thoughts coming up in today's later post. Meanwhile, enjoy the following daily briefings and articles:
News – BTH
News – The Trader
Morning Briefing – BNY Mellon
Portuguese markets are sending some worrying signals.
Portuguese markets are sending some worrying signals.
Daily – Danske (pdf)
Market Preview – Saxo
Press digest by Reuters: FT
Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ
EURO CRISIS: GENERAL
"New Treaty, Same Old Flaws" – Economist’s View
But the agreement shows that we have learned very little from the previous experience. We insist on maintaining a system that does not work and that only provides a distraction to other economic policy issues that, if we try hard enough, we might be able to solve.
EU Targets Bank Bonuses That Fly in the Face of ‘Morality’ – Businessweek
Michel Barnier, the European Union’s financial-services commissioner, said he may propose tougher rules on banker bonuses that go against “all reason, common sense and morality.”
This is not a rift, it's an open feud. The only reason it's not bigger is Cameron would rather deal with Sarkozy than Sarkozy's challenger François Hollande.
Does this mean the eurozone crisis is over? Absolutely not.
EURO CRISIS: PIIGS
Germany has signaled it has had enough and will not throw another 130 billion euros down a rathole… Complicating matters for Merkel, France does want a deal, and Sarkozy stepped in to support Greece.
The Eurocrats are petrified of a Greek insolvency because they know it risks spilling over into Portgual and the rest of the continent. Sovereign defaults tend to be contagious — look at Latin America in the 1980s. But since a default in Greece is inevitable at this point, best it get done sooner rather than later. The German press has worked this out; it remains to be seen how long Europe’s technocrats can remain in denial.
Europe's politicians are losing touch with reality. Greece is broke, and yet Brussels wants to send the country billions in new loans, to which there is growing opposition within the coalition government in Berlin. Rescue efforts are hopelessly bogged down by bickering over who will ultimately step up.
The brutal truth is that financial markets are pricing in a Portuguese default at some point in the next five years. They predicted the same fate for Greece last year, having concluded that a €110bn EU-IMF aid plan, arranged in May 2010, was insufficient to extract Greece from its debt trap.
EURO CRISIS: ECB / LTRO
European Sovereign Supply and LTRO – Credit Writedowns
Some argue that the LTRO will give banks a liquidity buffer to protect from the contagion of a potential disorderly default in Greece. Yet, the pressure Portugal has been under this month, especially since the S&P downgrade warns the ostensible firewall has been breached. The take away seems countries need the LTRO and investor confidence, especially investor confidence.
Investors: De-mystifying the Central Bank Balance Sheets – A Dash of Insight
One of the many reasons that individual investors are scared witless (TM euphemism by OldProf) is a complete misunderstanding of the role of central banks and a distortion of current policies.
OTHER
Honey, I Shrunk the Market – derivatiViews
ISDA: By year-end, the industry has to meet the challenging objective, laid out by the G-20, of trading all “standardized” derivatives transactions on electronic platforms, where appropriate, and clearing them through central counterparties (CCPs). Increasingly, this task is looking extremely ambitious.
DIVERSION
Revenge of the Nerd – The American Conservative
It’s Ray Bradbury’s future—we’re just living in it.