We also retain our rather gloomy forecast that a broad break-up of the euro will occur unless policymakers respond with a suitably bold and proportionate policy response – UBS 18th May
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| Exposure to Greece. IMF and private loans are extra... |
Posted
during the weekend:
News – Between
The Hedges
Markets – Between
The Hedges
Recap – Global
Macro Trading
The Closer
– alphaville / FT
Market Commentary
– A
View from My Screens
Market
Commentary – Marc
to Market
Tyler’s US Summary – ZH
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| Add at least €200bn to the firewall |
Debt
crisis: live – The
Telegraph
The Euro
Crisis Blog – WSJ
FX Options
Analytics – Saxo
Bank
European
10yr Yields and Spreads – MTS indices
EURO CRISIS: GENERAL
Four Reasons Why The Euro Is Not Crashing – ZH
UBS: 1) ECB has not yet done QE 2) EZ runs a current account surplus 3) higher oil prices have led to more petrodollars that are diversified to Europe 4) EZ banks selling foreign assets to shrink their balance sheets.
UBS: 1) ECB has not yet done QE 2) EZ runs a current account surplus 3) higher oil prices have led to more petrodollars that are diversified to Europe 4) EZ banks selling foreign assets to shrink their balance sheets.
Many
prominent politicians are calling for the introduction of jointly issued euro
bonds to help combat the European debt crisis. But research conducted by the
German government suggests that the bonds would face tough legal challenges,
and would cost Germany billions in additional borrowing
costs.
Dominique
Moisi: It is precisely at this
critical moment that it is essential to re-inject hope and, above all, common
sense into the equation. So here are ten good reasons to believe in Europe
JPMorgan: If
Germany would want to stop the crisis (for now) the
price would be one trillion euros, and if Germany pays half of it, its debt/GDP would rise above 100%.
But the reality of the euro zone is they lack
the two main mechanisms we used to respond to the 2008 financial crisis. We
managed our fiscal policy using Treasury bonds and our monetary policy using a
Federal Reserve that judged itself empowered to do whatever was necessary to
stop the panic.
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| China overdoing it |
EURO CRISIS: GREECE
Greek funny money, redux – alphaville
/ FT
Greece could issue scrip and have this circulate as “money” during a funding
stand-off with the Troika — without getting chucked out of the eurozone.
No one wins this game of chicken – Free exchange
/ The Economist
…the staffs of the European Commission and ECB
are preparing emergency scenarios for a Greek exit. Perhaps that's only
sensible and perhaps that's a part of the euro area's bluff. The upshot of the
preparation is to make an exit very nearly inevitable.
Perhaps Greece won’t leave the euro,
after all – Wonkblog
/ WP
You can’t have a good game of chicken without the prospect of a crash. But that also means that, with a few miscalculations, the whole thing really could end in disaster.
You can’t have a good game of chicken without the prospect of a crash. But that also means that, with a few miscalculations, the whole thing really could end in disaster.
Two main
scenarios: 1) Greece has a “second TARP vote” on June 17 2) Syriza
Wins and Greece Becomes Montenegro for a While
Forget 'GREXIT'; Meet 'GEURO' – ZH
Deutsche
Bank on parallel currency in Greece.
JPMorgan’s
charts on Argentina before and after their exit –
things did turn out for the better.
El-Erian Says Greek Euro Exit Probably
Inevitable: Tom Keene
– BB
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| Carry is a risk-on trade |
OTHER PIIGS
We know that huge current account imbalances
opened up when capital rushed to the European periphery after the euro was
created, and reversing those imbalances must involve a large real devaluation —
a devaluation that has barely begun.
Three stock
market charts. All of them are down, by the way.
The Elephant In The Room: European Capital
(Out)flows And Another €215 Billion In Spanish Deposit Flight – ZH
Citi’s excellent piece: …capital flight will stop only once there is decisive policy intervention. The longer investors have to wait for this, the more decisive it will need to be. Even a Euro area-wide deposit guarantee scheme might struggle to be credible if investors fear the incentives for redenomination are strong enough.
Citi’s excellent piece: …capital flight will stop only once there is decisive policy intervention. The longer investors have to wait for this, the more decisive it will need to be. Even a Euro area-wide deposit guarantee scheme might struggle to be credible if investors fear the incentives for redenomination are strong enough.
EU statistics office to double-check Spanish
deficit – euobserver