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Wednesday, May 30

30th May - EU Open: Spainout coming...

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
Emerging London Headlines – beyondbrics / FT
The 6am Cut London – alphaville / FT
Press digests by Reuters: FT, WSJ, NYT

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
Danske DailyDanskeBank (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 eyedSaxo 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 FutureBNY Mellon
Price action in recent weeks has carried a distinct echo of late July and early August 2008. 

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On Europe's Economic Malpractice, Misdiagnosis, And Biased MaltreatmentZH
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. 

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 PrintThe 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 UtopianismForeign 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.

Spain vs. Portugal - the countdown to zeroSober Look
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%.

Bailout Scam: Collecting Non-Interest on Non-Loans; "Because We’re Europe"Mish’s
“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 BluffsMish’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.

China Has No Plan for Large Stimulus to Counter SlowdownBB
If the stimulus is small,
China’s economic growth will be much lowerASA

Japanese Bond Curve Inverts For First Time Ever As 3Y Cash Is Now KingZH
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...

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