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Monday, May 21

21st May - Extra: European updates

An extra update on mostly Europe, more in US Open post.

Previously posted:
Greece. Add  IMF, ELA and loans to (and from) private sector

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Europe: Waiting for the Next Shoe to DropCFR
Willem H. Buiter, chief economist for Citigroup, discusses the financial crises affecting the Euro zone. The above is the link for player, download mp3 here or read the transcript here.

Foreign Affairs Report: The Future of the EurozoneForeign Affairs
Huge collection of articles – recommended, read this later.

European Crisis: Your 1 Minute UpdateZH
Quick roundup by each country, mostly by Citi.

Contagion? What Contagion?EconoMonitor
The “epidemics” of today are partly different. On the one hand, just like the plague, they spread “by linkages”

Can This Really Be Europe We Are Talking About?EconoMonitor
So I ask myself, is this Europe we are talking about here, or is this some kind of dream I am having? Is this where all those high minded ideals of a European Community have lead us, to a Greece where the young people get locked in, like in the old days of the USSR, or locked out as in the days before Schengen. 

Schaeuble Seeks Crisis Resolution With France’s MoscoviciBB
German and French leaders meet this week (Wed) to map out a revised plan for the euro as the Group of Eight exposed disagreement on a rescue strategy, Greece lurched toward a possible exit and Spain’s budget deficit widened.

Keynes 1921 and the Euro CrisisKrugman / NYT
So here too we are repeating ancient mistakes. But why does nobody learn?

Could the Eurozone Crisis Cause Another Lehman Moment?naked capitalism
Krugman interview and discussion.

European bank runs and failure of Credit-Anstalt in 1931ASA
Disturbingly, what’s happening today in Europe reminds me of something happening more than 80 years ago, when bank failures triggered bank runs virtually in the whole of Europe…

Are concerns over a Greek Euro exit overdone?The Big Picture
However, a Greek exit will force the ECB to act. Citi estimates that the ECB will have to provide some E800bn in liquidity to mitigate a run on EZ banks in the event of a Greek exit. In addition, the ECB will lower interest rates, buy Spanish and Italian bonds (quite possibly other country bonds) in size and introduce QE, etc, etc, something which is necessary…I remain of the view that Greece is far too much of a problem and it’s ability to continue to create problems is way above it’s perceived threat. In addition, we all know that the Greeks will never comply – not a great precedent to the Irish, Portuguese Spanish and Italians. As a result, I feel that an exit by Greece in the next 12 months is a 75% certainty.

Greece – don’t call it a backtrack…alphaville / FT
…the bailout will have to be renegotiated anyway, whenever the Troika next sits down with a Greek government that can talk to it. That’s economic reality, whatever the Europeans are currently insisting.

Greece Can Go – But Avoid a Bigger Euro Break-UpEconomicsUK
From best to worst: 1. A ring-fenced Greek exit. 2. An extended muddling through. 3. A series of peripheral exits. 4. A bigger break-up.

G8 (risk, nothing there)
Obama presses EU leaders on growth – euobserver
G-8 Says Greece Should Stay in Euro as Differences Linger – BB
Merkel Resists G-8 Spending Pressure as Soccer Breaks the Ice – BB
Cameron Urges EU to Prepare for Greek Exit From Euro – BB
G8 growth talk leaves wary markets awaiting action – Reuters
The Hilarious G-8 Declaration Decoded – ZH
Ganging Up On Germany at the G-8 – Testosterone Pit

David Rosenberg: "Despair Begets Hope"ZH
Something tells me that we are just one recession and one last leg down in the market away from crossing over the other side of the mountain. And believe me, nobody is in a bigger hurry to get there, than yours truly.

By The Time Operation Twist 1 Is Over, The Fed Will Have Quietly Completed 40% Of Operation Twist 2 As WellZH