I have avoided the obvious temptation to linkfest and follow the Greek election. I believe it does not matter who runs the country. They are broke, and they are unable to pay their debts now and in the future. The only thing a "pro-austerity, pro-EU" government could do is to allow more pretending to take place. And boy, will they all pretend soon that Greece is recovering...Credit markets are signaling that the probability of some sort of debt mutualization has increased in the past couple of weeks. Alternatively, it is a sign that the end-game is starting. Either way, Germany ends up paying. France is a complete joke. Come on - lowering the retirement age to 60 years? I had high hopes on Hollande - that he would be a closet rationalist. In reality he seems to be just another somewhat crazy left-winger. I am very, very pessimistic on the Europe's outcome. Perhaps the ECB will print, and perhaps this can go on for a year or so... but what about the economy, what about the unemployed, the discontented? Is saving the euro and avoiding bank failures so important? Do they really want to have revolutions in Europe?
GENERAL
Stuxnetting the Eurozone's Trust – The Psy-Fi
Blog
Markets and
investors have long been possessed of a peculiar and unsubstantiatable notion,
that the problems of the Eurozone are solvable as soon as people come to their
senses and start engaging with financial reality rather than political theatre.
Deutsche
Bank’s scenarios
The Bang! Moment is Here – John
Mauldin / The Big Picture
The ECB
Explained - How to Prevent a Bank Run - The Distant End Game - The Bang! Moment
is Here
Europe Will Splinter Regardless of Greek Election Outcome; "France Has At Most Three
Months Before Markets Make Their Mark" says German Official – Mish’s
Understanding the European Crisis Now – NYT
Nice 5min
quickie for “dummies”. Yes, it does discuss TARGET2 as well
What do you get when you mix politics with
fundamental principles of economics and accounting? The answer is politics… What
do you get when you mix politics with fundamental principles of economics and
accounting? The answer is politics.
A Strong Case for Monetisation of On-Going
Budget Deficits in European Periphery Countries – EconoMonitor
Viable policy options for economic challenges
facing euro area – CIGI
Full
presentation pdf
The Deleveraging Story of Eurozone Banks Since
2008 – EconoMonitor
Europe’s banks are raising their capital-asset ratios to meet regulatory
requirements. Many fear that this will trigger a contractionary shrinking of
assets. This column presents new evidence that much of the ratio increases
since 2009 have come fro new capital rather than reducing exposure to the real
economy.
Discusses
TARGET, the futility of internal devalutions, and the need for some to exit
The Merkozy Contagion Diet: Before and After
Photos – TF
Market Advisors
Two
pictures. So much of what the EU has done
over the past 2 years has created contagion risk rather than removed it.
Eurepo curve inverts further – Sober Look
Capital flight out of Eurozone seen in foreign
deposits at the ECB
– Sober
Look
Austerity Kills: How the EuroCrisis is Being
Used to Break the Social Contract – naked
capitalism
Preventing a Eurozone bank and bond run – voxeu.org
Whether the Greek elections this weekend
trigger the Eurozone’s first exit or not, the possibility of exit is now firmly
on the table. But where are the plans for this highly complex operation that
could, if mishandled, cause untold economic damage in Europe and beyond? This column, by a
Wolfson Prize finalist and a Nobel Laureate, sketches the core elements of one
such plan.
The Eurofiscal Corruption Contest – The
Portuguese Entry – Golem
XIV
A Global Perfect Storm – Project
Syndicate
Unfortunately, Germany resists all of these key policy measures, as it is fixated on the
credit risk to which its taxpayers would be exposed with greater economic,
fiscal, and banking integration. As a result, the probability of a eurozone
disaster is rising. And, while the cloud over the eurozone may be the largest
to burst, it is not the only one threatening the global economy.
Euro area’s situation - analysis, challenges
and solutions – BIS (pdf)
Christian Noyer, Governor of the Bank of France
and Chairman of the Board of Directors of the Bank for International
Settlements, at the Montreal conference: "Demographic shifts - threats or
opportunities?", Montreal, 11 June 2012.
The present state of the euro-area sovereign
debt crisis – BIS (pdf)
Andreas Dombret, Member of the Executive Board
of the Deutsche Bundesbank, at the Bank of America Merrill Lynch Global Macro
Conference, London, 12 June 2012.
Heterogeneity in a monetary union: What have we
learned? – BIS (pdf)
Peter Praet, Member of the Executive Board of
the ECB, at the 14th ECB and its Watchers Conference, Frankfurt am Main, 15 June 2012.
ECB, TARGET2
ECB Ready to Play? – Tim
Duy’s Fed Watch
Draghi blinks.
After dropping the ball and holding rates steady at the last meeting,
ECB President Mario Draghi is signalling he is ready to get back into the game.
Don’t fear Target2. Fear its opponents. – Felix
Salmon / Reuters
Casino Bar Shall Remain Open: ECB "On
Standby" Promising Liquidity for Greek Election Fallout; Bank of England Launches Two New Stimulus Packages – Mish’s
GERMANY
On The Brink Of What? – Edward Hugh / Fistful
of euros
This situation can end in either of two ways.
The Euro can disintegrate, or full political union can be put in place. In
either case Germany’s debt burden will increase.
5-year bond yields are going down while credit
default (CDS) spreads are going up…I’ve got a short list of things that might
be coming into play here besides the risk of a German default.
German sovereign CDS widening is a troubling
sign – Credit
Writedowns
Merkel’s options: Pay, inflate, or else… – alphaville
/ FT
How Charles Dumas of Lombard Street Research gets from this poor
performance in Dutch retail sales recently…to a (possible) eurozone endgame.
If the eurozone splinters, it will have been an
avoidable disaster. After all, the ECB has already gone to great lengths to
shore up the continent’s financial system. Now, the choice lies with Germany, which can save the monetary union if it allows for policies aimed at
debt relief and growth, not just slashing deficits.
Albrecht
Ritschl is professor of economic history at the London School of Economics and
a member of the advisory board to the German ministry of economics: Old myths die hard, and the Marshall Plan
is one of them.
SPAIN
The T Report: Banco de Ponzi – TF
Market Advisors
either the creation of a United States of the Euro Area, or to failure and disintegration of the Euro. There
will be no middle path, so the stakes are now very high for all involved.
If the timing was meant to reassure markets
over the viability of Spain in the days before
the Greek elections, then the content of the IMF’s latest report card on the
country may do the opposite.
Deutsche Bank: "The Spanish
Recapitalization Is Not Working" - A Market Shock Is Required – ZH
GREECE
What Is Going Through The Heads Of Greek
Executives Right Now
– ZH
Greek Election Cheat Sheet – ZH
The Greek Decision Has Grown Spanish Branches – ZH
RBS’s Gallo Sees `Tail Risk’ of More Greek
Elections – BB (mp3)