LTRO is the main event, but at this point it is even more over-hyped than last summer’s great EU Summit. I do not want to give the impression that the TROLOLO is not important - it serves a good, valid purpose (save the banks via stealth-taxing the general population), but there is more to it. For every personality type, the LTRO is a proof that they are right.
- Crazies: the governments are inflating their and banks' problems away. Buy gold and ammo!
- Permabulls: risk-on is the only game in town
- Idiots: Eurodream is alive and our leaders are working to find the solutions
- Left-wingers: the good government is saving the evil banks
- Right-wingers: the evil government is strangling the good banks
- Electorate sheep: I don't understand what is happening, so I don't care.
In reality, LTRO is just a side-show. It is not a solution and certainly not a lasting solution to anything. It just allows the crisis to go on for a bit longer, until a wall is hit or a true solution is found. Full union or break-up. Given these end-game choices, the larger the LTRO, the larger the eventual chance for a full union, as everyone's fates are tied closer together. A full union would be just a tiny, additional step at that point.
In this evening post some very fine themes but link material could be better. Spain and Portugal are not in a good shape and Ireland said it will hold a referendum on the fiscal compact. The treaty will not be ratified unless at least 12 member states ratify it. If there will be more countries putting the thing on the vote, the fiscal treaty is dead.
Two important posts in case you missed them: LTRO: The Ultimate Collection and Greek Exit Collection, including euro break-up analysis. I am on Twitter, Facebook, email and paper.li
News – Between The Hedges
Markets – Between The Hedges
Recap – Global Macro Trading
Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ
EURO CRISIS: GENERAL
Collective European Bonds Exist – Credit Writedowns
EIB and EU have both issued bonds collectively guaranteed by all the member states. Nobody is calling them Eurobonds. Why invent the wheel again?
the first major test of the EU's fresh new rules on budget discipline as it seeks flexibility from Brussels on its deficit targets.
Troika publicly quite happy, though the picture isn’t pretty.
EURO CRISIS: LTRO (also this)
The Final LTRO Preview - Bottoms Up – ZH
SocGen’s analysis final part
SocGen’s analysis final part
It Begins: ECB Calls For Bids In 3 Year LTRO – ZH
…the banks that are found to use the ECB's Discount Window should prepare for major stock pain, as the market, devoid of easy targets, focuses on them next as the European stigma trade becomes the hedge fund divergence trade du jour.
…the banks that are found to use the ECB's Discount Window should prepare for major stock pain, as the market, devoid of easy targets, focuses on them next as the European stigma trade becomes the hedge fund divergence trade du jour.
Differing views of LTRO results – The Big Picture
How the actual number can be interpreted in many ways.
Here’s What To Expect From Another LTRO – MarketBeat / WSJ
Barclays customer survey shows that European banks believe in smaller LTRO than other customer types – overblown expectations?
Barclays customer survey shows that European banks believe in smaller LTRO than other customer types – overblown expectations?
When 500 billion euros no longer pops eyes – Macroscope / Reuters
…a clear pattern has emerged in the forecasts of money market traders attempting to gauge their size. They have consistently underestimated the size of a given new loan tender the first time it is offered, only to overshoot on subsequent operations of the same maturity.
About the same share of participation expected as in December. Greeks have no collateral, but Italian banks enjoy wider collateral eligibility.
HUMOR It's time for the European equivalent of the US Non Farm Payrolls Lottery. Roll up and guess a number.
EURO CRISIS: GREECE
ISDA To Hold First Greek Default Determination Hearing On March 1 – ZH
Isda decides to decide on Greek credit event – alphaville / FT
Isda decides to decide on Greek credit event – alphaville / FT
ECB not participating in haircuts is starting to create problems. EIB also wants to avoid haircuts and ISDA is about to decide if there has been a credit event or not.
Greek Haircuts – The Big Picture
Just one very good chart.
EURO CRISIS: “DEMOCRACY”
Ireland to vote on fiscal compact, 12 states required for ratification
…the Treaty text states that ratification by twelve states is needed for it to enter into force, suggesting an Irish no is not a legal deal-breaker to the whole treaty.
The people and austerity – alphaville / FT
Ireland Calls Down The Furies With Referendum Vote – MarketBeat / WSJ
Ireland to hold referendum on fiscal compact – euobserver.com
Ireland to hold referendum on fiscal compact – euobserver.com
Ireland to conduct referendum on the Eurozone fiscal compact – A Fistful of Euros
Damn the Voters, Full Bailouts (and Existing Policies) Ahead – Mish’s
French President Nicolas Sarkozy will not hold a referendum claiming it's "too complicated". In reality, Sarkozy knows the referendum would be about him. Everywhere you look, it's a case of "Damn the Voters, Full Bailouts (and Existing Policies) Ahead". Politicians have decided, things are "too complicated to change".
OTHER *Weekly macro meeting: Mind the divergence! – Saxo Bank
Steen Jakobsen: …signs that we should be discrediting the present "feel good campaign" - divergence is now fully in the open, now we wait for the "Eureka!" moment when the markets realize the "falsehood" of the current paradigm.
JPMorgan’s Revenue-Per-Trade Breakdown – Dealbreaker
It’s the OTC products where the money is. But still a surprising piece to report.
Population of working age – Alpha Now / Thomson Reuters
How the Government is Robbing Pension Plans – Institutional Investor
Financial repression arrives not with a bang but with a whisper. “It is a very stealthy tax,” says economist Carmen Reinhart of the Peterson Institute for International Economics.
The modern, debt-based economy requires constant economic expansion if only to service all that debt. So what happens when the modern economy goes ex-growth and stops expanding? Iceland already found out. Greece is in the process of discovering. But we will all get a chance to participate in this lesson.
OFF-TOPIC
A Behind The Scenes Glimpse Into The Magic Of The Market – ZH
What the art of stage magic and finance have in common? (This was exactly why I posted the original Teller’s article)
What the art of stage magic and finance have in common? (This was exactly why I posted the original Teller’s article)
*The Filter Bubble: What The Internet Is Hiding From You – LSE
Google and Facebook are already feeding you what they think you want to see. Advertisers are following your every click. Your computer monitor is becoming a one-way mirror, reflecting your interests and reinforcing your prejudices.