Here are
the “US Open” regulars and some select article links. The US is closed for the Memorial Day.
Earlier on MoreLiver's:
Daily US Opening – RanSquawk / ZH
Frontrunning
– ZH
The Lunch
Wrap – FT
EM New York
headlines – FT
Overnight
Summary – ZH
Today’s
Front Pages – presseurop
Daily Press
Summary – Open
Europe
New
German opinion poll shows majority believe euro membership carries more
disadvantages than advantages; Lagarde faces backlash over comments that Greeks
not worthy of sympathy
Morning
MarketBeat: Headline-Driven Markets Make Comeback – WSJ
Broker Note
Briefing – WSJ
US Open: Memorial
Day Update – Marc to
Market
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 Euro monetary system is flawed. It is a
system that was cobbled together for political purposes; and sadly it was set
up in such a way that each member state retained significant sovereign powers -
most importantly the ability to exit the system and default on debts in times
of stress. There is virtually NO federal power in the Union, as witnessed by the complete
breakdown of the Maastrict and Lisbon treaties.
What fiscal union and joint euro bond entail – ASA
In other words, those governments with
surpluses will have to give the money away in order to sustain their surplus
and others’ deficit, and it has to continue to do so forever, or else the
economies of both surplus and deficit countries will contract. Ask Germany if they would like to see this happening, and I doubt if they would say
“yes”.
The Fairness Trap – The
New Yorker
Rationally, then, this standoff should end with
a compromise—relaxing some austerity measures, and giving Greece a little more
aid and time to reform. And we may still end up there. But the catch is that Europe isn’t arguing just about what the
most sensible economic policy is. It’s arguing about what is fair.
After Eurovision Comes The Euroscramble: Europe's Latest "Silver Bullet",
"Secret" Bail Out Plan – ZH
"The bank scheme would see all eurozone
lenders forced to pay an annual levy to a deposit guarantee scheme set up as a
separate company. The company would be back-stopped with cash from the EU, the
ECB or the new ESM." Bottom line: the "silver bullet" plan is
"secret? because it is a total farce, and nobody could possibly present it
with a straight face for one simple reason - there is no source of money. No
hold on, there is - Germany. And as Merkel made it very clear, Germany will not fund it. Why? Because once it starts, it won't end.
German taxpayers face re-denomination loss from
TARGET2 – Sober
Look
…what would actually happen with these claims
should a periphery nation exit. The exit would simply result in a
re-denomination of some claims. There is no other way to do this. As loans to
Greek banks become drachma denominated, so will the claim on the Bank of Greece (BoG), with the
central bank separating from the Eurosystem. The Eurosystem was never designed
for an exit of a central bank, so this process would need to be cobbled
together on the fly - sort of the way the Greek restructuring was done. The
"exercise" may potentially set up a process for other nations exiting
the EMU.
Biz Daily: A stronger Eurozone? – BBC
(mp3)
Whose idea was this single currency anyway? We
speak to Graham Bishop, one of the founding architects of the euro, who
believes reports of its demise are greatly exaggerated. We hear from the brewer
SAB Miller on the role of big business in managing scarce global resources.
And Lucy Kellaway of the Financial Times reflects on parting shots; when
quitting your job, what's the best way to abuse your ex-employer?
The President of the Bundesbank Lashes Out – Testosterone
Pit
“Governments must take on their
responsibilities and not subcontract them out to monetary policy.” Aiming
squarely at Paul Krugman, he said, “In the US, certain people
believe that the ECB should buy more sovereign debt like the American Federal
Reserve. But we’re not a federal state, and the Fed doesn’t buy the debt of California or Florida.” And he vetoed in
advance any new Long Term Refinancing Operations (LTRO)
EURO CRISIS: SPAIN’S BANKIA
The ECB’s cooperation would have to be
solicited for this…The plan, viewed as highly unorthodox by analysts, involves
Madrid issuing Spanish government guaranteed debt to Bankia in return for
equity, with the bank then able to deposit the bonds with European Central Bank
as collateral for cash…Spain has not yet made any approach to the ECB on how
its capital-raising plan would work, according to an official familiar with the
situation.
Spain's Plans to Recapitalize Bankia Will Put Germany, ECB at Risk; When Does the Ponzi Scheme Collapse? – Mish’s
A Spanish government source says the plan is
float what amounts to junk bonds, pawn them off to the ECB and use the proceeds
to "recapitalize" Bankia. Of course the ECB (bankrolled by Germany) is at enormous risk were this preposterous scheme to actually happen. This
is what I want to know: When does Germany say it has had enough of these preposterous schemes?
Euro zone ying and yang – MacroScope
/ Reuters
Sources told us last night that Spain may
recapitalize stricken Bankia with government bonds in return for shares in the
bank…The ECB’s view of this will be crucial since the plan seems to involve the
bank depositing the new bonds with the ECB as collateral in return for cash.
Bankia going GUBU … but what about the rest? – alphaville
/ FT
Is Bankia, Spain’s fourth largest
bank, so unique? Nomura:
only BBVA, Santander and Sabadell (based on the buffer
provided by the asset protection scheme) would avoid needing to strengthen
capital.
A Spanish Farce – Macro Man
[Outside a Spanish restaurant] Spanish
Government [patting pockets] - "Hang on... Has anyone seen my credit
rating? I can't seem to find it"
OTHER
Martin Wolf: Lunch with the FT: Paul Krugman – FT
Is Chinese real estate nearing a tipping point? – alphaville
/ FT
China’s property developers — who last year contributed a collective 13 per
cent of GDP — seem determined to hang on.
Despite months of falling prices in most cities, completions are
powering ahead…
I am more concerned about the news flow out of China, which is likely to
deteriorate over the next few months - and none of the negative news has been
discounted by the market.
Australia’s and China’s connection