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Tuesday, April 10

10th Apr - This kind of dance can never last

Plenty of commentary on how the central bank put is dead, the age of leveraging and kicking the can is finally over. Time for a correction in the markets? Could be launched by bureaucrats launching speculation about QE3 or LTRO3?  If the Spanish yields go above 6% and stay there without a policy response, I would be very risk-off. But for now... I don't know...everyone is negative already. All the important risk meters are flashing and obviously there is an end to the can kicking at some point. But this week?

Weekly Support (weekly summaries, reviews and what's ahead)
Weekender: Euro Crisis (important)
Weekender: Economics (somewhat boring)
Weekender: Trading & Markets (interesting, but not important)
Weekender: Off-Topic
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Markets – Between The Hedges
The Closer – alphaville / FT

Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ
Tracking Europe’s Debt Crisis – NYT
FX Options Analytics – Saxo Bank
Hazards, moral and otherwiseFree exchange / The Economist
Euro-zone leaders—core-country politicians, ECB officials, and so on—want desperately to ensure that the periphery faces consequences for "bad" behaviour. So great is their determination to accomplish this, however, that they have severed any relationship between the actions of an individual euro-zone member and the reaction in debt markets.

It is the eurozone that is turning Japanese...or maybe we all areMacrowonders
Wild ride with charts and narrative of the anti-inflationary politics.

Is Europe's recession spreading beyond the Eurozone?Sober Look
Of all the European economies, Sweden was supposed to be fairly insulated from the Eurozone problems, particularly given its decent debt to GDP ratio of 37% and export oriented economy.

Spain's spreads breaking away from other risk indicatorsSober Look
Typically Spain's bond and CDS spreads move in tandem with risk measures such as VIX or SovX WE (MarkIT Western European index of sovereign CDS), etc. But this time around, the widening has outpaced these other measures.

LTRO Failure Full Frontal As Spain 10 Year Approaches 6% AgainZH
Nice and very quick chart attack.

Spanish debt – a house of cards?Oxford Economics (pdf)
5 page analysis from 5-Apr.

Spanish and Italian banks underwater on their LTRO-funded bond purchases?Macrowonders

Collateral withdrawal symptomsalphaville / FT

Volatility At World's End: Deflation, Hyperinflation And The Alchemy Of RiskArtemis / ZH
Artemis Capital Management’s 18-pager discussing the tail scenarios. Must-read, when you have time.

Debts that can’t be paid, won’t beCredit Writedowns
But as economies have been financialized, creditors have gained political power – and also the power to disable realistic academic discussion of the debt problem. What they fear most of all are thoughts of how to avoid today’s arrangements that have given them a free lunch at the rest of the economy’s expense. (full pdf)

Bank money: Tearing up notesButtonwood’s / The Economist
Countries are generally trying to tackle their debt mountains the hard way, through austerity. But it will be amazing if, within the next few years, a few do not try the (apparently) easier route of inflating the debt away.

When Virtuous Cycles Turn ViciousCredit Writedowns
Barring a fresh ECB initiative, it is difficult to see how officials break the vicious cycle.

Eurotrashing, againalphaville / FT
Nomura: The West is in the midst of a multi-year era of declining living standards, in large part as a direct consequence of central bankers and their bubble blowing machines… When the current post-2008/09 bubbles burst, central bank ‘puts’ and the arrogance we perceive that still persists in some parts of the financial sector will hopefully be consigned to the deep freeze box for a very long time.

Chartocopia: OECD Snapshot of the WorldThe Daily Capitalist
The OECD just came out with its “Interim Assessment” of the major economies within the OECD (34 countries). (see the article for quickie or download the whole thing.)

Dealing with debtFree exchange / The Economist
The IMF is now releasing chapters from the April edition of its World Economic Outlook and one of them—chapter 3—is quite a nice discussion of the impact of household debt on economic recovery. (see chapters 3 and 4 on IMF)

Should There Be an FDA to Approve Financial Products?Minyanville
Aaron Brown: There are two reasons to dislike this proposal: theory and practice. In theory, the goal is a bad one. In practice, the proposed agency is designed to resemble the FDA, which is the poster child for regulatory capture. (okay, the topic isn't relevant, but there simply isn't a bad text from Aaron)

CHF: Houston - We have a problem, in SwitzerlandBruce Krasting
CHF: The SNB as victim of a decentralised market structurealphaville / FT

Make Yourself UsefulThe Reformed Broker