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Tuesday, May 22

22nd May - US Open: Another Summit Eve

Here are the US open links plus plenty of article links on euro crisis. All eyes on the Wednesday's EU summit that is hoped to present some plans to solve the current mess. As Germany will not budge, all they will have to show for the meeting will be some pocket change for infrastructure project bonds and a possible easing of the budget constraints. I don't see how this would help anyone, as the project bond amounts will be small and what the periphery lacks is definitely not more construction. Budget constraints have already been broken, giving permission to do it after the fact is hardly earth-shattering stimulative action. 

Before ECB prints and backstops, the show will go on. Meanwhile, ELA lending from ECB to Greece is calculated to have passed the 100 billion euro mark.

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Daily US Opening News And Market Re-Cap – RanSquawk / ZH
Frontrunning – ZH
The Lunch Wrap – FT
EM New York headlines – FT
Overnight Summary – Bank of America / ZH
Daily Press Summary – Open Europe
  France and Germany set for showdown over eurobonds and Schäuble's candidacy to lead the Eurogroup;Vincenzo Scarpetta: Eurobonds are no easy fix for the euro crisis

Morning MarketBeat: Stock Bounce Could Be Fleeting – WSJ
Broker Note Briefing – WSJ
Morning Take-Out – NYT
AM Dear Dairy – Macro and Cheese
US Open: Correction within Correction – Marc to Market
The T Report – TF Market Advisors

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

All eyes on Wednesday EU summitMacroScope / Reuters
EZ bonds, ECB’s bond purchases and union-wide bank deposit insurances are opposed by the Germans. Probably only EIB capital increase and some project bonds come out of the summit.

Merkel Heads for Debt Showdown With Hollande at EU SummitBB

What is the long-term euro vision?Hugo Dixon / Reuters
The crisis has demonstrated that the current system doesn’t work. But a headlong dive into a United States of Europe would be bad politics and bad economics. An alternative, more attractive vision is to maintain the maximum degree of national sovereignty consistent with a single currency. This is possible provided there are liquidity backstops for solvent governments and banks; debt restructuring for insolvent ones; and flexibility for all.

The not-so-creeping process of de-euroisationalphaville / FT
The de-euroisation continues and is, in Italy at least, getting faster… these charts show foreigners running away from Italian liabilities in March at their fastest pace ever, and illustrate just how quickly the LTRO sheen has faded.

The Euro Awaits Its VerdictProject Syndicate
Simon Johnson, : These countries may eventually decide to leave. And, even if they don’t make that choice, fear of such exits can easily become self-fulfilling. The euro system was designed to deliver prosperity and stability for all. It has clearly failed for some countries, and it may fail for many. Severe mismanagement by European politicians has caused damage that will last for decades.

Germany: Never a borrower or a lender beCapitalists@Work
The EU says the Grexit firewall is ready. But It's not even properly agreed. And even if it was ready, it's too small. What is really needed is an end to the crisis. Not just words about how the euro is for ever and no one is quitting and everything is in hand. A real gesture is needed.  That has to come from Germany. And it's going to cost Germany. But that is the price for the Euro.

The Confiscation Conundrum in EuropeTestosterone Pit
Corporate tax rates are trending down, while personal taxes and VAT are going up, with the total share of taxes over GDP increasing.

‘Cranky Extremists’ – The Bully-boy Chorus begins.Golem XIV
The banks and our present rulers have agreed between them that the decisions made, not just by elected leaders, but also those colossal decisions taken by unelected ‘experts’ at central banks and financial quangos, to print or borrow money in order to bail out the private banks and their private debts – decision made without any recourse to the people-expected-to-pay (the public) and often without even a public discussion, that those decisions should be legally binding and irreversibly above the will of the people.

An Irish referendum in the shadows of GreeceDanske Bank (pdf)

Completing the euro project: The day after tomorrowECB
José Manuel González-Páramo, Member of the Executive Board of the ECB, London, 18 May 2012

Greek Voters Need to Look Beyond the Lies of Bloomberg, Merkel, ECB, IMF, Ekathimerini; Greece Nightmare Coming or Already at Hand?Mish’s
Greece and Iceland are not the same. Iceland has exports and a work ethic. However, the facts show that Iceland recovered far faster because it had the courage to default, telling eurocrats where to go. Simply put, Greece has nothing to lose and everything to gain bu exiting the euro, the exact opposite of what Bloomberg and most of mainstream media would have you believe.

German bank tables plan for parallel Greek euroeuobserver
Germany's financial giant Deutsche Bank has floated the idea of a "geuro" - a parallel currency allowing Greece to devaluate while staying in the eurozone if an anti-bail-out government takes over in Athens.

Why A Greek Exit Could Be Much Worse Than ExpectedTIME
More than one kind of damaging domino effect is possible if Greece is forced to abandon the euro… Think of what it would mean for the other countries in the euro zone. How could the Italian government persuade its people of the need for higher taxes or the Spanish government explain soaring unemployment if Greece were obviously better off outside of the euro zone. Result: The entire European Union might unravel, with financial consequences many times greater than those resulting from Greece alone.

Forget The "Bazookas": Here Come The "Tomahawks" And "Howitzers" - An R-Rated Walk Thru The Greek EndgameZH
Allowing the Greek people to access all their Euros physically, while still holding the option to default on June 17th, is insane. She and the ECB would NOT be acting in the best interest of the Eurozone if they let this happen - there would be 300b in Target2 losses to split up between 16 member NCBs if the Greeks choose to leave after taking out all the Euros. If she gives the directive to shut off the ELA early she will at least keep the Target2 losses to 150b.

Secret Central Bank Aid Props Up Greek BanksFT / CNBC
By scouring ECB and national central bank statements analysts, have since pieced together more details. Analysts at Barclays, for instance, reckon Greece is now using €96 billion in ELA, with Ireland accounting for another €41 billion and Cyprus €4 billion. If correct, total ELA in use has exceeded €140 billion — more than 10 per cent of the amount lent to eurozone banks in standard monetary policy operations.

Time to plan a velvet divorce for the euroGideon Rachman / FT
As I read the umpteenth article on the “Grexit”, a phrase from the film ‘Marathon Man’ ran around my head. In this cult-thriller, Laurence Olivier plays a war criminal turned dentist who tortures Dustin Hoffman by drilling through his dental nerves without anaesthetic. As he does so, he asks repeatedly “Is it safe?”

Is the euro ending or beginning?bruegel
In the end, the leaders at that time – especially German Chancellor Helmut Kohl and French President François Mitterrand and his successor, Jacques Chirac – set forth to sea in a light vessel. On the economic front, they agreed on only a bare-bones Economic and Monetary Union built around monetary rectitude and an unenforceable promise of fiscal discipline. On the political front, they did not agree at all, so the creation of a European polity remained stillborn.

Life after the euroSober Look
This tells us that the only way such an exit is even possible is by restructuring the euro liabilities by re-denominating them into the domestic currency. Such restructuring would be akin to default, but at that point trying to make claims against these nations in foreign courst may be futile.

Weekly Market Comment: Liquidation SyndromeHussman Funds

20 European stocks to consider in crisis timesSaxo Bank

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