The morning
regulars and select article links. See last night’s long post
and my commentary.
News
roundup – Between The Hedges
News
roundup – The
Trader
The 6am Cut
London – alphaville
/ FT
Debt
crisis: live – The
Telegraph
The Euro
Crisis Blog – WSJ
FX Options
Analytics – Saxo
Bank
European
10yr Yields and Spreads – MTS indices
Danske
Daily – DanskeBank
(pdf)
Chinese media report that China has no plans to
introduce large-scale fiscal stimuli. Spain downgraded for the
third time in a month by smaller rating agency Egan-Jones. ECB rejects
unorthodox Madrid plan to recapitalize Bankia.
Market
Preview: Eurozone confidence indicators eyed – Saxo
Bank
European markets are seen opening lower amid
lingering concerns over the Spanish banking sector. The European Commission
meets today to set its economic strategy for the region. Eurozone confidence
indicators and US pending home sales are also due.
Morning
Briefing: Back to the Future – BNY Mellon
Price action in recent weeks has carried a distinct echo of late July and early August 2008.
Price action in recent weeks has carried a distinct echo of late July and early August 2008.
EURO CRISIS
On Europe's Economic Malpractice, Misdiagnosis, And Biased Maltreatment – ZH
The ongoing challenges in Greece, Spain, Italy and other European countries could be considered either economic malpractice or misdiagnosis. It actually doesn’t really matter which at this point… It is tempting to say that policymakers should follow the Hippocratic Oath and “First, do no harm.” Sadly, the situation in Europe is beyond that simple recommendation.
The ongoing challenges in Greece, Spain, Italy and other European countries could be considered either economic malpractice or misdiagnosis. It actually doesn’t really matter which at this point… It is tempting to say that policymakers should follow the Hippocratic Oath and “First, do no harm.” Sadly, the situation in Europe is beyond that simple recommendation.
Drachma! – Kotok / The Big Picture
Since reintroduction in 1832, all modern
Grecian drachma forms have ended badly.
The single exception WAS the exchange of the drachma for the euro in
2001. That chapter of Greek history is being re-written now.
Why The ECB Will Print – The Daily
Capitalist
I think Merkel will get weak-kneed and bless
whatever the ECB will do in an “emergency.” Remember the EU and eurozone are
political constructs, not economic. She’ll sacrifice German thrift for German
guilt. It would be a rare situation where collapsing EU economies wouldn’t
bring about political change which would favor printing over austerity. France and Greece have already proven
that.
French Socialism, Take Two: Hollande,
Moscovici, and European Utopianism – Foreign
Affairs
Far from an improbable, uncharismatic
president, Francois Hollande has been working quietly for decades as the bearer
of a clear -- if utopian -- vision shared by many Europeans. He has studied the
failures of the Fifth Republic's only other socialist leader, François Mitterrand, and is determined
not to repeat his mistakes.
On April 1st, 2011, Portugal's 10-year spread to Germany went above 5% for the first time. Two weeks later Portugal formalized its request for assistance from the EU/IMF. Yesterday, Spain's 10-year spread to Germany exceeded 5%.
“Greece will not default on the troika because
the troika is paying themselves,” said Thomas Mayer, a senior advisor at
Deutsche Bank in Frankfurt. “Why are we doing it like this?” Mr. Mayer said. “Because we’re Europe.”
Stubborn Stupidity, Fantasyland Thinking,
Hopeless Bluffs – Mish’s
If this was a bluff by Rajoy, it was a very
poorly conceived one. The ECB had no choice but to call it, given its
disastrous position of Greek garbage on its balance sheet. The ECB simply
cannot afford to load up on Spanish garbage for fear Spain will do as Greece threatens to do:
default.
OTHER
China Has No Plan for Large Stimulus to Counter Slowdown – BB
If the stimulus is small, China’s economic growth will be much lower – ASA
If the stimulus is small, China’s economic growth will be much lower – ASA
Japanese Bond Curve Inverts For First Time Ever
As 3Y Cash Is Now King – ZH
3 year Japanese government bond (JGB) yields are trading below 1 year JGB yields… and interestingly this is occurring as EUR-USD basis swaps (short-term USD funding at a premium for European entities) jerks to crisis levels again...
3 year Japanese government bond (JGB) yields are trading below 1 year JGB yields… and interestingly this is occurring as EUR-USD basis swaps (short-term USD funding at a premium for European entities) jerks to crisis levels again...