9th May - You Shall Not Leave!

Evening links, dear friends. Follow ‘MoreLiver’ on Twitter or Facebook.

Coupled: Portugal and Spain

News – Between The Hedges

Markets – Between The Hedges

Recap – Global Macro Trading

The Closer – alphaville / FT

Physical – A View From My Screens (new!)

Tyler’s US Summary – ZH (new!)

TV: Bloomberg, CNBC, BBC

Debt crisis: live – The Telegraph

Europe Crisis Tracker – WSJ

Tracking Europe’s Debt Crisis – NYT

FX Options Analytics – Saxo Bank

European 10yr Yields and Spreads – MTS indices

EURO CRISIS: GENERAL

LI(E)BOR Friendo'd; European Liquidity Corzined – ZH
Relatively large drop in USD basis swap prices

Europe's Stigmatized Banks On The Verge Of Crucifixion – ZH
Only this time there can be no quick collateral-type response as money-good assets are few and far between.

France Goes to Hollande – Project Syndicate

Michel Rocard: the Socialists now control not only the presidency and the government, but also a majority in the Senate, all of the regional presidencies, 55% of the country’s departments, and most major cities’ town halls. In less than two months, they may control a majority of the National Assembly as well, implying a concentration of power that has never before been seen in modern France.

Steering Clear of the Euro Precipice – Project Syndicate

Yannos Papantoniou: A growing chorus of European and world opinion is pushing in the direction of more growth-oriented policies. The resistance will be strong. Time, however, is running out. The next few months are critical for the eurozone’s future.

The Euro-Zone Becomes the Twilight Zone – Robert Brusca / ZH

You can impose austerity for a year or two… But not for a generation. In that sense Europe has no plan for Greece, or Spain or for Portugal. Its attempt to bully Greece by withholding funds it already agreed to advance them is act of desperation. It is an admission I think of how dangerous dissolution of the euro would be. Since there are no rules no one knows how it would go. You can be sure that given the risks, the remaining EMU members would make things as hard as possible on Greece to make them an example that would keep others from leaving.

European Voters Have Rejected Austerity—So What Happens Next? – TIME
What Europe needs is not one solution, but a mix of them—austerity plus structural reforms plus a short-term growth stimulus. That will entail a level of policy flexibility and coordination so far missing from the euro zone.

Corruption report highlights political party funding in EU countries – euobserver

European nations are not doing enough to fight corruption and bribery, according to an annual report released on Wednesday (9 May) by the Council of Europe (CoE). In the EU alone, corruption costs an estimated €120 billion annually.

MEPs divided on whether to punish EU agencies – euobserver

MEPs on Thursday (10 May) are to vote whether to punish three EU agencies for having used public money for questionable purposes and for tolerating conflicts of interest in top management.

Martin Wolf: What Hollande must tell Germany – FT

Nomura’s Newton Says Hollande Will Side With Germany – BB (mp3)

EURO CRISIS: SPAIN

The Pain in Spain is Mainly, well Everywhere – TF Market Advisors

I don’t think we will see a serious rebound in Spanish and Italian yields until the ECB intervenes. They will need to step up and draw a proverbial line in the sand. My guess is that won’t occur until 6.25% on the Spanish 10 year. Once they do step in, watch out a big gap better on the bonds. Just as there are no natural buyers, there will be no natural sellers.

Get Ready for the Spanish Bailout – EconoMonitor

Moreover, with economic indicators showing Spain sinking further into recession, a turnround in the country’s economic performance would require a significant shift in policy: monetary easing by the ECB, a weaker euro, fiscal stimulus in the core, less front-loaded austerity in the periphery, more international firewalls and debt mutualisation.

Spain's Bank "Bailout" A Complete Dud: Allows Banks To Opt-Out – ZH
The "difficulty" will be in convincing the Spanish population, of which nearly 25% is unemployed, and of whose youth more than half has no job, that taxpayer money should be used, instead of promoting job programs and fiscal stimulus (as worthless as it may be), rather to bailout Spain's banks, all of which will end up being direct beneficiaries of hundreds of billions in Spanish taxpayer funds. Another problem: this "additional capital" does not exist

Spain's troubled banking system is pulling sovereign debt down with it – Sober Look

That means that the periphery spreads are not widening at the same rate. The markets have singled out Spain as the key risk for the Eurozone. In particular market participants are becoming increasingly concerned with Spain's banking system

Audit Shows Spain's Bankia Short 3.5 Billion Euros; PP says "We Must Help Bankia, It Has Deposits for 10% of GDP" – Mish’s

Bankia audit confirms that the accounts of 2011 are inflated.... Looking for a reason for that spike in Spanish sovereign bond yields today? Now you have it.

Spain readying to nationalize Bankia: report – MarketWatch

Bankia, en route to partial nationalization – alphaville / FT
The Bank of Spain confirmed late on Wednesday that Bankia’s parent company has asked for a state loan to be converted into shares

Bank Of Spain Formally Nationalizes Bankia, Says Insolvent Bank Is "Solvent", Adds There Is No Cause For Concern – ZH
"In any case, BFA-Bankia is a solvent entity that continues to function quite normally and customers and depositors should have no concern."

Spain nationalises Bankia as euro crisis escalates – The Telegraph

Spain has nationalised crippled lender Bankia in a dramatic move to contain the esalating crisis and restore faith in the country's management.

EURO CRISIS: GREECE

Tsipras Plans to Nationalize Banks, put Moratorium on Debt Payments, Cancel Bailout, Halt Additional 11 Billion in Troikas Mandated Austerity Measures; Spanish Bond Yields Back Above 6% - Mish’s

Given that no changes are acceptable to the Troika, Greece's days in the Eurozone are numbered. It will be a good thing for Greece (albeit initially very painful), once they finally get the nerve to tell the Troika to go to hell.

Perfect Storm: Part 2 – Macro Man

a) 70% of Greece's debt is now made up of official loans already disbursed: EUR 140bn. b) The ECB owns EUR 40bn of Greek bonds. c) Greek banks currently repo EUR 140bn with the ECB.

No way out – Free exchange / The Economist

Yes, a depreciation would boost the competitiveness of Greek exports, but I'm not sure that would matter much in the chaos following on an exit. Both people and capital would make a mad rush for the exits once it became clear that Greece would be leaving.

Oh, Greek moratoria (redux) – alphaville / FT
The eurozone is afraid of sunk costs crystallising right now, i.e. writing down the existing bailout loans. So great is this fear that it outweights the prospective costs of making future bailouts and Greece not paying these back either.

Germany's Roadmap For A Greek Return To The Drachma – ZH

German paper Handelsblatt has a three-part article worth reading. Tyler comments: The only question is now that the return of the Drachma appears set, how long before the "Greek case" metastatizes to Spain, which is already roughly where Greece was about a year ago, with the bank sector now effectively having seized up, and the only question is how soon until the sovereign debt has to get the "PSI" treatment.

Greek Coalition Talks Still Deadlocked – TIME

Legal & General’s Grodski Says Greece to Depress Euro – BB (mp3)

Banco Bilbao’s Frank Says Greece May Push Euro to $1.25 – BB (mp3)

OTHER

Citi's Buiter On Plan Z: Unleash The Helicopter Money – ZH

Andy Xie: Nothing Left for a Vanquished Virtuous Cycle – Caixin

Europe and America have run out of monetary tricks and emerging-market support, leaving their economies on the brink

Summary Briefing – BNY Mellon

The ECB’s stance on the issue appears resolute.  Joerg Asmussen said yesterday that “Greece needs to be aware that there are no alternatives to the agreed bailout programme."