It looked like a rally day, but soured towards the end of the day. As the eurocrats are again drinking too much coffee (together with the famous "comb" pictured to the right) so that they would have the energy not to agree on anything , the world holds its breath. If you feel a bit intimidated by the photo, you should - the "comb" has crushed the spirits of numerous companies worldwide and made politicians what they are today.
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
Asian Morning
Briefing – BNY
Mellon
Attack of
the Killer E’s, Ease, and eeze – TF
Market Advisors
The
EFSF may or may not get a banking license, but the ESM definitely will.
Tyler’s US Summary – ZH
EUR crushes
commodities, slams Stocks
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
The Other Euro Flaw – ZH
UBS: The first was the absence of a fiscal transfer union… The second flaw of the Euro as a monetary union, which has received less media attention, is the absence of an integrated banking system backed by a credible lender of last resort (with the power of seignorage)
UBS: The first was the absence of a fiscal transfer union… The second flaw of the Euro as a monetary union, which has received less media attention, is the absence of an integrated banking system backed by a credible lender of last resort (with the power of seignorage)
1) EU banks are under-capitalized 2) Cross-country
differences in the size of too-big-to-fail banks call for cross-country differences
in minimum capital standards 3) The minimal capital ratios in Basel III are way too low 4) The quality of bank
capital matters, along with the quantity 5) Unpersuasive arguments about the
effect of higher bank capital requirements on economic growth and the single market
BlueCrest Capital's Michael Platt on European
Crisis & How He's Trading – market
folly
The problem is you can make a pretty sensible
argument for almost any outcome in Europe. It could be a run on the banks very quickly. The Greeks could end up
staying in for a little bit longer. They could vote to take themselves out.
There could be a eurobond. The whole situation could be overtaken by events. We
could have bank runs in Spain. We could have LTRO.
We could have a concerted bond-buying action from the ECB.
What austerity looks like around the world – Wonkblog
/ WP
Some countries, like Italy, are relying heavily
on tax increases. Others, like Spain and Greece, are relying far more
heavily on spending cuts
EURO CRISIS: EURO BONDS
Eurobonds - Nationalism Meets Federalism – Mark
Grant / ZH
In fact, Eurobonds are the crux where
Federalism comes head to head with Nationalism and where the rhetoric gives way
to actualization.
Feint and Parry and the Three No's – Marc
to Market
Germany cannot agree on a jointly guaranteed bond now. It is the fruit of
fiscal integration not a means to that end. Putting the cart before the horse
would jeopardize Germany's strategic interests.
Europe is scrambling madly for a solution
acceptable to everyone, but the only solution that works is the one no one
wants to hear: a breakup of the eurozone.
New Push for Eurozone Bonds – Calculated
Risk
Summaries
of three recent articles
Credit Ag’s Chatwell Looking for Hints of a
Euro Bond – BB (mp3)
Pimco’s Clarida Says Euro Bond Would Take 5 to
7 Years – BB (mp3)
Eurozone exposures charted – alphaville
/ FT
Nomura’s latest
risk estimates for other eurozone countries
Depressing eurozone summary du jour – alphaville
/ FT
UBS: The risk is if Target II ceases
to function. This, it should be noted, would have to be a deliberate action by
central banks. However, there is a (distant) precedent in the USA.
These pdf’s
from FT alphaville’s Long Room (free registration
required)
Greeks embrace some new myths about life with
the euro – Reuters
In a land of ancient myths, modern Greeks have
created some of their own about their near-bankrupt country's future as an
integral part of a Europe that will never kick them out.
Greek ELA growth poses increasing risks for the
Eurosystem – Sober
Look
The ECB is not openly discussing this, but
these ELA euros are coming from TARGET2, further raising GoB's liability to the
rest of the Eurosystem… In case of a possible
re-denomination, the ability to recover ELA collateral with any material value
will be quite minimal.
ELA Does not Stand for Exaggeration, Lies and
Assumptions – Marc
to Market
However, part of what is happening in Greece is that the banks are
in the process of being recapitalized under the second aid package. An 18 bln
euro payment to them is expected by the end of the week. This will help reduce
the ELA borrowings.
Behind closed doors: a Greek tragicomedy – The
World / FT
These
transcripts (made public by the president’s office) would make you roar with
laughter – if you weren’t weeping in despair at the petty-mindedness, stupidity
and shamelessness of some of Greece’s politicians.
Greek political poll tracker – MacroScope
/ Reuters
Interactive
charter of recent polls
Stocks Slump, Papademos Says Greek Exit Risk is
‘Real’ – MarketBeat
/ WSJ
Time to pull the plug? – Free exchange
/ The Economist
It is perfectly fair to acknowledge and worry
about moral-hazard concerns now, as it was then. It is nonetheless clear that
setting those concerns aside and preventing disaster is the best policy course.
OTHER
OECD Economic Outlook May 2012 – OECD
Global economy recovering, but major risks
remain. (Euro area flat in 2012, growth elsewhere) Webcast
of press conference, handout,
presentation, full document (252 pages, only online view)
Japan is on an unsustainable path with more downgrades on the way. Given
global investors' concerns about sovereign debt, it's only a matter of time
before rates begin to rise, tipping the "unstable equilibrium".
The US economy has so far
proven resilient to the European crisis and the main risk does not come from
slow euro area growth but from financial spillovers.