EURO CRISIS: GENERAL
The Eurozone youth of today – alphaville / FT
UBS’s piece on youth unemployment. Underreported, very costly, cyclical, difficult to fix.
UBS’s piece on youth unemployment. Underreported, very costly, cyclical, difficult to fix.
The people have spoken. If it’s going to hurt soccer, the Hollande Tax is dead. And so the backpedalling process has started.
Will the eurozone's woes ever end? Arguably the bigger issue is the long term solution to Europe's problems - the presumption is that this will be achieved by what is known as "structural adjustment". But what does the term really mean - is it really all about making it easier to fire people? Justin Rowlatt talks to Ronald Janssen of the European Trade Union Confederation and Eamonn Butler of the Adam Smith Institute. Also, Indonesia is struggling with the cost of subsidising fuel for its citizens, especially against the backdrop of surging oil prices as the BBC's Indonesia correspondent Karishma Vaswani reports. Plus, Allen Stanford was knighted by the Antiguan government but has now been convicted of one of the biggest investment frauds in history - totalling some $7 billion, as the BBC's Nick Davies reports.
LTRO subordination of senior unsecured debt in the Euro bank funding market – ZH
According to Barclays, average encumbrance across banks has risen dramatically to around 21% of assets. German banks, which are actually less encumbered than in 2005, and those in Finland, which are roughly around the same levels, are the lone exceptions in the eurozone… This suggests that there could be on-going pressures on banks to reduce wholesale funding reliance via balance sheet shrinkage – the very thing that the LTRO was designed to prevent.
According to Barclays, average encumbrance across banks has risen dramatically to around 21% of assets. German banks, which are actually less encumbered than in 2005, and those in Finland, which are roughly around the same levels, are the lone exceptions in the eurozone… This suggests that there could be on-going pressures on banks to reduce wholesale funding reliance via balance sheet shrinkage – the very thing that the LTRO was designed to prevent.
Lending trends in Europe and the US are currently diverging. Indicators point to a further slowdown in the euro area, even though a credit crunch has so far not materialised. In the US, by contrast, the outlook has considerably improved in recent quarters and loan volumes are growing again.
EURO CRISIS: GREECE
Greek default still possible as bond-swap deadline nears – euobserver.com
Manic Depressive Markets Are Back – TF Market Advisors
It seems that all banks and most regulated entities are voting in favor of PSI – as expected. It looks like Greece and the EU will discuss the results tomorrow. I expect CAC’s to get done on Monday. It would be surprising, and controversial, if the don’t use the CAC’s and pay some holdouts at par. So after the Greek default the market will move on to Portugal, Ireland, and Spain.
Today's Greek debt swap deadline: A bullet-point overview – Saxo Bank
Steen Jakobsen: There is a small, tiny risk of not securing 67% participation, which will mean Greece will default outright tonight and chaos will ensue – but do not forget these markets are 99.8% driven by political pressure.
OTHER
SocGen: yen weakness hurts China’s economy – pushing them to consider devaluation.
Perspectives On A Printing Press Pause – ZH
Morgan Stanley: bullish sentiment, 'under-appreciated' risks, and 'tranquil' markets justify a cautious asset allocation.
TARP Charts! – Dealbreaker
The Federal Reserve has this new paper out about TARP that does a bit of highly suggestive eyebrow raising about some banks that shall remain nameless.
Goldman on sterilised QE – alphaville / FT
GS: Sterilizing may therefore be a low-cost way to avoid, or at least to hedge against, possible negative side effects of further easing action.
GS: Sterilizing may therefore be a low-cost way to avoid, or at least to hedge against, possible negative side effects of further easing action.
Why CAPM is useless – Saxo Bank
The reason we still care about Beta, standard deviation, VaR, alpha and multiple others, is because those measures are numbers, and human beings find a lot of comfort in numbers. But risk cannot be entirely quantified, there is a need for business sense and skeptical thinking when investing.
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