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Thursday, May 17

17th May - US Open: Cool Runnings

Here are the US open briefings and select articles. Bank jogs are turning into bank runs. Bankia, the recently bailed-out bank is losing deposits and its stock is down 28% today. All eyes are turning to the ECB, though Germany promising to backstop everything could also help. Germany will not do that, and probably will not allow printing - yet. So kiss your TARGET2 receivables goodbye?

 For more of my thoughts and article links, see last night’s US Close: European Roller Coaster and remember to follow ‘MoreLiver’ on Twitter and Facebook.  

Daily US Opening News And Market Re-Cap – RanSquawk / ZH
Frontrunning – ZH
The Lunch Wrap – FT
EM New York headlines – FT
Daily Press Summary – Open Europe
  David Cameron: Eurozone “either has to make-up or it is looking at a potential break-up”
Overnight Summary – Bank of America / ZH

Morning MarketBeat: Stocks Still Stuck in Rut – WSJ
Broker Note Briefing: Wednesday – WSJ
Morning Take-Out – NYT
AM Dear Dairy – Macro and Cheese
US Open: – Marc to Market
The T ReportTF Market Advisors
  From Idiosyncratic to Idiotsyncratic. Greece and HY ETF’s

Pre-market Commentary – Marketwatch
Pre-Market Trading – CNNMoney          
Pre-Market – NASDAQ
US Equity Preview – Bloomberg
Earnings & Events – The Street
MarketCurrents – Seeking Alpha

Debt crisis: live – The Telegraph
The Euro Crisis Blog – WSJ
Tracking Europe’s Debt Crisis – NYT
FX Options Analytics – Saxo Bank
European 10yr Yields and Spreads – MTS indices

Follow ‘MoreLiver’ on Twitter or Facebook.  

Not a Greek ProblemKrugman / NYT
We need a conversion experience here, not in
Athens, but in Berlin and Frankfurt. Otherwise, the game is almost over.

Eurozone Banks Nearly Collapsed, Says ECB DirectorHITC
A senior executive at the European Central Bank has admitted eurozone banks were on the brink of collapse last autumn.

Europe's New Normal: It's Here, It's Unclear, Get Used to ItForeign Affairs
The eurozone’s troubles – including the possibility of Greece’s exit from the union – no longer qualify as a crisis. What looks like significant instability is really just the slow-motion settling of the continent’s new economic order.

The Eurozone crisis: Fiscal fragility, external imbalances, or both?
Unsustainable debt along Europe’s periphery is bringing the euro to breaking point. But this column argues that this is not simply the result of fiscal ill-discipline. After 2010, the Eurozone crisis went from a fiscal crisis to a balance-of-payments crisis – with different prescriptions for policy.

Hume on hold? Consequences of not abolishing EZ national central
The EZ crisis reveals critical flaws in the Eurozone’s design. This column argues that failing to abolish national central banks left the door open for national interests to interfere with the natural workings of the financial system and Hume’s adjustment mechanism. This flaw – and the omission of a European Banking Authority with real teeth – will come back to haunt Europe in the months and years to come.

The Running of the Bank DepositorsThe Reformed Broker
This is what a bank run looks like, this is how it sounds and how it feels.  It's been happening in Greece in slow-motion for three years now, but the fact that Spain is seeing a run on Bankia ($1 billion euros pulled since Wednesday), which was just bailed out last week, means that the pace has quickened.

European Commission should be EU government, says Germanyeuobserver

Nationalized Spanish Bank Plummets On News Of Bank RunZH
Oh, Bankia.alphaville / FT
Down 28% in one day

Moody's Warns Spain It Will Downgrade "More Than 21" Spanish Banks – ExpansionZH
Google translation The rating agency Moody's announced this morning that the Spanish bank announced in the next 12 hours, as by law, a reduction in its credit rating could affect more than 21 entities. According to several sources, the statement will be released expected at nine in the evening.

This Is The Greek ELA Borrowing CapacityZH
JPMorgan: Greek banks have a maximum of €130bn of remaining loan collateral which allows for a maximum of €65bn of additional borrowing from Bank of
Greece’s ELA. This corresponds to around 40% of Greek bank deposits which stood at €170bn as of the end of March

ECB Stops Loans to Some Greek Banks as Draghi Talks ExitBB

Possible Endings for the Greek DramaA Dash of Insight
My current guess includes the following: 1) The eventual outcome will include a bit less austerity because of recent election results 2) European leaders will manage to avoid the very worst outcomes; and 3) The nature of the political process leads to eleventh-hour solutions, permitting everyone to fear the worst as long as possible.

Debt crisis: Greek euro exit looms closer as banks crumbleThe Telegraph
A tsunami of capital flight from Greece threatens to overwhelm the authorities, forcing the country out of the euro before fresh elections in June.

BizDaily: Greece and GermanyBBC (mp3)
An adviser to the German government, Professor Christoph Schmidt, tells Lesley Curwen that Greece must stick to the terms of its bailout agreement, despite fears that Greek voters will reject austerity in next month's elections. But Giorgios Christides, the economics editor of the United Reporters news website, explains why there are contradictions in the attitude of the Greek electorate. And Julia Pittam reports on the Cambridge MBA students who are having a laugh with improvisation classes.

Cost of Greek exit from euro put at $1tnThe Guardian
UK government making urgent preparations to cope with the fallout of a possible Greek exit from the single currency

Is the ECB trying to push Greece out of the euro? We’re not so sure…Open Europe
Now, that’s not to say that the ECB is not annoyed by the lack of progress in the Greek bank recapitalisation but we all know that the correlation of these events does not mean causation.

The Problem with the Eurozone’s Throw-Greece-from-the-Train Plan Is that its Timing Can’t Be ControlledEconoSpeak
…no legal procedure by which Greece can be expelled from the EZ; therefore the strategy has to be one of making retention of the euro so ruinous for Greeks that they will exit on their own volition.  The mechanism is the Target system through which euros are transferred from one national central bank to another.

Greece’s predicament: Lessons from
Greece’s economic and financial crisis is quickly deteriorating and there is no strategy – or even a coalition government – to figure out what to do next. This column looks at the lessons from Argentina’s default in 2001 and argues that Greece’s road to necessary economic reforms, fiscal sustainability and recovery may be even more daunting.

In QE3 waltz, Fed again steps toward easingMacroScope / Reuters
Expectations for a third installment of quantitative easing, the much-debated QE3, had ebbed with improving economic data in the first quarter – but are now flowing anew.

Gloom ContinuesKiron Sarkar / The Big Picture
Summary views. Greece,

We Are About To Have Another 2008-Style CrisisChris Martenson / ZH
This time I am expecting a coordinated central bank action that will involve most or all of the major central banks of the OECD: Japan, UK, US, and Europe….Regardless, more printing is on the way, because the alternative is the utter collapse of the entire Western banking system. And quite probably a few governments, too.

*RoRo and the carry trade’s fight backalphaville / FT
There have been rumours of the so-called carry trade’s demise knocking about for a little while now, but HSBC think it is staging a quiet comeback and taking a chunk out of RoRo’s (Risk on/Risk off) importance in the FX markets.

Notes From Ira Sohn Conference Presentations 2012market folly
Notes from the Ira Sohn Conference 2012The Reformed Broker

Chart: air cargo volume points to sharp decline in global industrial productionASA

Fitch attempts to tally the cost of Basel IIIalphaville / FT
The ratings agency had a look at the 29 global systemically important financial institutions (or G-SIFIs, a horrible acronym for banks listed at the bottom of this post), which as a group represent $47tn in total assets, and estimated that they might need to raise roughly $566bn in common equity in order to satisfy the new Basel III capital rules

BRICs hit by capital outflowsSober Look
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