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Thursday, February 9

9th Feb - A Greek Deal? For now?

BoE announced slightly more QE than expected, ECB did nothing but talked a bit about the coming LTRO and supposedly there is a deal now on Greece’s next bailout package. Of course, the stuff that the Greeks have pledged to do will not and cannot happen. What next, more bailout packages? Greece is the European version of the American debt ceiling fiasco. If the Americans are good at having bipartisan politics, we will soon have bipartisan Europe – but where will the rift appear, between the north and south, or Germany vs everyone else, or France & Germany vs. UK?

A convicted fraudster once told me, modifying the old Finnish saying "what you learn when young, you can when old":  
What you steal when young, you own when old.
Maybe we will see a full default after they have received the next bailout tranche? It is better to steal when there is something to steal, not when you have to. At least one Greek ex-minister was getting a kicking in the media for tax fraud and there is speculation that he was one of the takers for €120 million of bribes to buy German submarines. German export miracle at work here, baby!

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News – BTH
Markets – BTH
Recap – GMT

Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ
Tracking Europe’s Debt Crisis – NYT

Europe’s Tobin Tax Distraction Barry Eichengreen / Project Syndicate
Forgive my naiveté, but I have begun to think that politics rather than economics explains European leaders’ enthusiasm for a Tobin tax. Sarkozy can preempt a long-standing proposal of the Socialists in the run-up to this spring’s presidential election. By supporting Sarkozy, Merkel can get in return what she really wants: French support for stronger fiscal rules.

The Eurozone’s Fork in the Road Blejer & Yeyati / Project Syndicate
Today, the euro faces a fork in the road. One route, a currency area without sovereign backstopping, will lead to debt, currency crises, and the eurozone’s dissolution. The other, a monetary union with a proper central bank, internal fiscal transfers, and active, regionally-oriented monetary policy, will lead to a slow but steady recovery without default.

BoE does another £50bn QE, buying strategy changedDanske Bank (pdf)

Portugal in Deep TroubleEconMatters

Merkel's Official Denial "I will have no part in forcing Greece out of the euro"; Schäuble Starts Salami Tactics on German Participation, Calls for Vote Mish’s
Germany seeks to absolve itself of any guilt for what happens to Greece. It wants Greece to make the exit choice, while placing as many roadblocks as possible to force Greece to do just that.

Greece: Far From A Solution The Daily Capitalist
Prior agreements were also much heralded but the follow-through by the government was lacking. Every one is going on strike tomorrow… The Greeks don’t like austerity.

Analysis: what does the deal between the Greek political parties mean? Open Europe Blog
So, we are eventually one step closer to another bailout of Greece. The end to the uncertainty is positive, but in the long term it seems to be just another step along the wrong path.

Let Them Eat PSI TF Market Advisors
Supposedly the entire €130 billion bailout (or whatever number is currently being used) was in jeopardy over €300 million in pension cuts.  Again seems mind-boggling.

Is A Greek Uncontrollable Default Inevitable? ZH
Credit Suisse: the environment we currently observe, namely a low stress environment, is exactly the type where one would expect “aggressive” behaviour by any player. Therefore, we would not be surprised if a hard default by
Greece (i.e., a default where relations with the core break down, endangering the ECB’s considerable additional exposure) is being contemplated a lot more than it was just a few months ago.

Property Of Submarine Bribe-Collecting Former Greek Defense Minister Seized For Tax EvasionZH

Pimco’s El-Erian Calls Greek Agreement a Hard Sell – BB (mp3)
Rathbone’s Chillingworth Sees Better Case for GreeceBB (mp3)

ECB meeting: looking intensively at credit tightening riskDanske Bank (pdf)

“The only thing I can say today is that we cannot say anything,” he said helpfully. He did say that the ECB would not be prepared to lose money on its bond purchases. That would amount to the monetary financing of governments, which is forbidden.

Here be Draghi, on ECB collateralalphaville / FT
Rules for the LTRO at the end of the month.

ECB’s Governing Council approves eligibility criteria for additional credit claimsECB
Introductory statement to the press conferenceECB

Is The ECB's Collateral Pool Expansion A €7.1 Trillion Imminent "Trash To Cash" Increase In Its Balance Sheet?ZH
Goldman Sachs’ previous analysis on the available collateral for LTRO.

ECB Enters CLO BusinessZH
So they're pooling assets, slicing them up, and keeping the senior tranche for themselves.  What could possibly go wrong with that?

Guide To Markets - Market Insights 1Q 2012 J.P. Morgan (pdf)
60 pages of analysis goodies.

On BanknotesBruce Krasting
Bruce notices that there is a shortage of deposit boxes in Switzerland’s banks. What and who are filling them?