The finalists have been selected in the competition to write the best paper on how to leave the euro. These papers will be discussed in the media in the coming days. They might even show up in market prices. Even though no-one currently thinks that an euro breakup is imminent, markets will give some (low) probability for any plan actually happening, and discount current prices by that guesstimate of the future prices. So remember to take a look at the finalists.
News And Market Re-Cap – RanSquawk / ZH
The euro zone today – MacroScope / Reuters
The Lunch Wrap – alphaville / FT
EM New York headlines – beyondbrics / FT
Morning MarketBeat – MarketBeat / WSJ
Morning Take-Out – DealBook / NYT
Morning Take-Out – DealBook / NYT
EZ Crisis Daily Press Summary – Open Europe
Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ
FX Options Analytics – Saxo Bank
EURO CRISIS
What Wolfson Did Next – Edward Hugh / EconoMonitor
The first thing that needs to be said about the initiative Wolfson has taken, in offering a 250,000 pounds stirling of his own money to anyone who was able to offer practical solutions to the current Euro crisis, is bravo. Also: Five Visions of How to Solve the Euro Crisis – DealBook / NYT
The time bomb no one can defuse – Gideon Rachman / FT
This should be a great time to be a eurosceptic. The sceptics predicted the single currency would not work. They would love to gloat. Instead, they face a dilemma. For now the sceptics are being told that they must do everything possible to keep the euro together – or risk economic Armageddon.
But Richard Koo, Nomura’s mild-mannered chief economist, begs to differ. He argues that Europe’s leaders have misdiagnosed their economic crisis and is forecasting a return to wintry conditions. At a time of collapsing private sector demand in several member states, the eurozone’s obsession with slashing public spending will only aggravate its problems, he suggests. Its fiscal compact is more likely to kill the patient than cure it.
Both Target2 and ISA balance have risen considerably since the outbreak of the crisis. We address the differences and similarities between ISA and Target2 imbalances and argue that without a well-functioning interbank market only two options remain: mounting or discounting.
The disappearing Spanish GC repo market – alphaville / FT
Thanks to Mario Draghi’s double installment of 3-year LTROs this year and last, it’s been a while since we’ve had to worry about dysfunctions in the European repo market....
French political leaders on both sides are uncertain about their aims and strategy. As the crisis reveals the inadequacies and fragilities of the euro as a currency, a first option is to aim at a more integrated “euro union” around common supervision of, and crisis resolution for the banking sector, a fiscal union involving a partial mutualisation of government debt, and whatever political integration is needed to give democratic legitimacy to fiscal and banking supervision. The second option is, for essentially political reasons, to oppose any additional transfer of sovereignty and keep monetary union as it is – despite the risk that a fragile Eurozone might stumble further under market assault.
Will Greek CDS ever trade again? – Felix Salmon / Reuters
it’s far from clear that Greek CDS will even start trading after the 60 days are up. It turns out that while Greece managed to swap its old domestic debt into new bonds quite seamlessly and easily, the same’s not true of Greece’s foreign bonds.
OTHER
When looking for assets vulnerable to the next crisis, don't fight the last war – Sober Look
The problem markets/asset classes for the next crisis may therefore be those that did well during the recent economic shocks.
The PMIs, the ISM, the S&P 500, and the sand in the face – alphaville / FT
On Monday, the US did the playground equivalent of kicking sand in Europe’s face, picking up all the toys, and then running away laughing.
On Monday, the US did the playground equivalent of kicking sand in Europe’s face, picking up all the toys, and then running away laughing.
OFF-TOPIC
The Web’s Best 2012 April Fool’s Jokes – Digits / WSJ