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| SocGen's view on euro - source: FT |
Okay, we
again live in interesting times. On one hand we have the TBTF & TBTS Spain
(too big to fail or save). We have the balanced budget agreement that has been
and is broken by almost every country – and only three countries have ratified
it. We have French elections, and Hollande, the poll favourite, has promised to
break the pact and plenty of other things as well.
The
austerity pact is dead, and this means more debt. More debt means higher chance
of further bailouts. The bailout mechanisms have not been funded, so they would
have to be funded at a point when some countries are unable to even access
financing.
But thanks
to LTRO and fragmentation in the national central banks’ collateral policy,
monetary policy, banking and debt holdings, central banking is becoming more and more
nationalized. This is the plan B. I believe someone is planning to leave the
club – or to kick someone out. This is just a plan, a scenario, and the door is
currently being opened juuuust a little bit, inch by inch. When it is needed,
it will be ready. And it will be used.
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News – Between
The Hedges
Markets – Between
The Hedges
Recap – Global
Macro Trading
The Closer
– alphaville / FT
Debt
crisis: live – The
Telegraph
Europe Crisis Tracker – WSJ
FX Options
Analytics – Saxo
Bank
EURO CRISIS: GENERAL
Euro crisis is not over. Just how surprised should you be? – Also Sprach Analyst
Euro crisis is not over. Just how surprised should you be? – Also Sprach Analyst
As Paul Donovan of UBS said, Europe could be in a 5-year rolling
crisis, or as Wolfgang Münchau said, 9 years of strikes. Here, I also believe that the crisis will
continue until either a break-up of the Eurozone, or a fiscal union. The end result is clear, one way or
another. It is the path that is not
certain.
How Much Bigger Can TARGET2 Imbalances Grow?
Goldman Answers: "A Lot" – ZH
Goldman
Sachs: The ECB’s two 3-year LTROs should
have, all else equal, reduced the capital flight from periphery to core to the
extent that fears of an immediate liquidity crisis of the banking sector in the
periphery were a major driving force behind these flows. There is little
evidence, so far at least, for this. In any case, we think it is reasonable to
assume that genuine concerns about the solvency of peripheral banks are also
playing a role here and these concerns are unlikely to go away any time soon…
Euro bail-out funds lack oversight, auditors
say – euobserver
Scrutinised neither by national audit offices
nor by the European Parliament, the two eurozone bail-out funds amounting to
€700 billion lack democratic oversight and accountability, several auditors and
MEPs said on Tuesday
European turmoil, American collateral – The
Guardian
For the US, the risk of damage
from the eurozone's crises is not primarily economic, but political. But there
is opportunity, too
Key issues about the crisis and the European
response – BIS (pdf)
by Mr Jörg Asmussen, Member of the Executive
Board of the European Central Bank, at the Center for Strategic and
International Studies, Washington DC, 20 April 2012.
The situation in the euro area – BIS (pdf)
by Mr Christian Noyer, Governor of the Bank of
France and Chairman of the Board of Directors of the Bank for International
Settlements, at the Paris Europlace Financial Forum Luncheon, New York City, 23
April 2012.
EURO CRISIS: AUSTERITY & REALPOLITIK
Democracy Is Having Its Say – NYT
Tyler
Cowen: Today, very few countries in
the euro zone are capable of making credible commitments or binding agreements
with the others. Quite simply, democracy is having its say…The euro zone
probably was unworkable from the beginning, and now we are seeing why.
The T Report – The Day Austerity Died – TF
Market Advisors
The reality is that spending won’t solve
anything. It will grow debt faster than the spending can improve the economy… It
is no co-incidence that more and more sovereign debt is being funded by
institutions in that country. It is specifically to make leaving the Euro
easier.
Political upheaval all round? – alphaville
/ FT
What was supposedly agreed in Europe on Friday just ain’t gonna happen…only
three countries have actually ratified the new fiscal pact: Portugual, Greece, and Slovenia. So… perhaps fines will be narrowly escaped?
Euro zone goes Dutch – MacroScope
/ Reuters
one of the building themes – a backlash against
rapid, frontloaded austerity… Does the success of parties out of the mainstream
mean the political class have lost their electorates? If that’s true, then we
really are in an unpredictable new world though there has been little or no
sign of social unrest yet.
France votes to throw down the gauntlet to Europe – The
World / FT
The battle for France has a couple of weeks to run. After that, the battle for Europe will begin. Both Nicolas Sarkozy and his challenger in the French presidential election, François Hollande, are promising to save the “French exception” by radically changing the direction of the European Union.
The battle for France has a couple of weeks to run. After that, the battle for Europe will begin. Both Nicolas Sarkozy and his challenger in the French presidential election, François Hollande, are promising to save the “French exception” by radically changing the direction of the European Union.
Commerzbank’s Schnautz Sees Growing Austerity
Divide – BB (mp3)
EURO CRISIS: PIIGS
The road back to competitiveness begins with
southern European wages falling relative to German wages. Germans are terrified
of inflation, so that leaves one option: southern European wages fall
dramatically while German wages stay steady. There are two ways for wages to
fall: (1) Everybody takes a partial pay cut, or (2) Some people take a 100%
pay-cut by losing their jobs.
It's important to note is that the outflows are
not just coming from Greek households. Corporate and foreign deposits have been
declining as well. Banks have become incapacitated as the run on the banking
system continues.
It really does seem to be All Spain All the Time, but
there is a reason. Unlike Greece, Spain makes a difference to
the eurozone. It may be both too big to allow to fail and too big to save.
Spain in recent days has taken center stage in the euro crisis. The country's
banks are threatened with collapse and the government in Madrid has not been
successful in efforts to get the national budget under control. Will the
country be forced to request aid from the euro bailout fund?
Spanish banks 1, Spanish mortgages 0 – MacroScope
/ Reuters
…given that Spanish lenders were among the
biggest taker of the ECB’s largesse
(officially known as LTROs, a
name only a central banker’s mother could love) the lack of trickle down is less than bracing. The suspicion is that Spain’s banks are holding back
on lending because of their wonky balance sheets…
Once upon a time in Italian banking – alphaville
/ FT
The sages of Barclays bid us to look away from
Italia. Like the depositors of that now sorrowful land have done, they implore
you to also find fortune elsewhere
EURO CRISIS: AUCTIONS
And a Spanish contrast… – alphaville
/ FT
Spain saw pretty good demand at its Tuesday morning auction
Summary Of Europe's Sovereign Bond Auctions – ZH
Spain, Netherlands, Italy, commentary + roundup of analyst views
Spain, Netherlands, Italy, commentary + roundup of analyst views
A Dutch auction and an old rivalry – alphaville
/ FT
Netherlands got its (very small) sale away in undramatic fashion following the
collapse of its government.
OTHER
FOMC Preview: Watch Out for ‘Fed Fakes’ – MarketBeat
/ WSJ
“We worry that the market could misread a hawkish intent into the information the FOMC will release on Wednesday,” write economists at Bank of America. “We thus caution investors to be wary of another such ‘Fed fake.’”
“We worry that the market could misread a hawkish intent into the information the FOMC will release on Wednesday,” write economists at Bank of America. “We thus caution investors to be wary of another such ‘Fed fake.’”
It's The FX Repatriation, Stupid – ZH
Citigroup: EUR strength (vs USD) is European institutions repatriating their foreign holdings – not ‘bullish on Europe’
Citigroup: EUR strength (vs USD) is European institutions repatriating their foreign holdings – not ‘bullish on Europe’
The Foreign-Exchange Traders’ Lament – MarketBeat
/ WSJ
The market isn’t wrong, it is just stupid! So said one veteran trader of the foreign-exchange markets, a statement that is no doubt echoed by many others who are frustrated with the lack of trending activity in the foreign-currency markets recently.
The market isn’t wrong, it is just stupid! So said one veteran trader of the foreign-exchange markets, a statement that is no doubt echoed by many others who are frustrated with the lack of trending activity in the foreign-currency markets recently.
IMF Roundtable on Global Economy – Charlie Rose
Lagarde +
others, 55 minutes
To bin or not to bin the FTT – alphaville
/ FT
It’s all gone a bit quiet on the financial transactions tax front but Algirdas Šemeta, the European Union’s tax commissioner, wants you to know that the idea is still very much alive.
It’s all gone a bit quiet on the financial transactions tax front but Algirdas Šemeta, the European Union’s tax commissioner, wants you to know that the idea is still very much alive.
What Happened To Peak Oil? – The
Capital Spectator
Fears that the world is running short of oil
aren't going away, but judging by the latest figures on global oil production
there's no sign that the peak oil factor is an imminent threat.
G-10 Macro Data Plunges To Worst In Six Months,
Turns Negative – ZH
Citigroup's Economic Surprise Index which
tracks the rise and fall of both misses and beats as well as better or worse
data…For the first time in over six months, macro data for the G-10 has turned
negative (with Europe having been there for a while and the US getting very
close) indicating significant weakness.
A Curated Linkfest For The Smartest People On
The Web! – Simoleon
Sense