Another huge post for a headline-driven day. We had the G20 meeting, where Barroso is showing all the classic signs of denial and panic: Like the European mess would be the fault of the Americans. He is not speaking to the European electorate. His bullshit will not work on heads of states. Still no admission from anyone that the euro is flawed.
Meanwhile, the European Parliament is acting delusional by their recent proposal to end the reign of credit raters. Could someone please point out to them that they are idiots and should not try to act like they understand anything, or that what they think has any importance whatsover?
3 scenarios for Spain & Italy: 1. current Muddle Through works; 2. Full Troika Bailout; 3. Full Monty of fiscal/banking/political union *** Muddle Through is failing as Spain & Italy are on verge of losing market access. Thus 2 other options are Full Troika Bailout or Full Monty *** Full Monty is fiscal union with E-bonds, banking union w EZ-wide deposit insurance, growth compact, less fiscal austerity, political union *** Full Monty unacceptable to Germany. Thus if Muddle Through likely fails with Spain/Italy losing mkt access Full Troika Bailout only option - Source: Nouriel Roubini's Twitter feed
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News –
Between The Hedges
Markets – Between
The Hedges
Recap –
Global Macro Trading
The Closer
– alphaville / FT
Market
Commentary – A
View From My Screens
Tyler’s European Summary – ZH
Tyler’s US Summary – ZH
Hope Of
Bernanke Ex Machina Drives Low Volume Equity Surge As Gold Defies QE Dream
Debt
crisis: live – The
Telegraph
The Euro
Crisis Blog – WSJ
FX Options
Analytics – Saxo
Bank
European
10yr Yields and Spreads – MTS indices
EURO CRISIS
Subordination Vs Moral Hazard – ZH
Goldman discusses these two sides of the same
coin as it notes subordination is explicit when the ESM intervenes (and also
with the ECB's SMP) but a little less obvious in the ERF (though still as painful) which
is, we note, perhaps more appealing to keep the masses unaware.
Euro zone whack-a-mole – Wonkbook
/ WP
I have to be honest: I'm really looking forward
to the day when Wonkbook's top story can routinely be something other than
"Europe: Still a huge mess."
It seems clear that the German Constitutional
Court ruling on the Greek bailout in 2010 was quite explicit in terms of its
meaning: According to this court ruling Target 2 and various other forms of the
ECBs lender of last resort programs are unconstitutional
Humpty Van Rompuy Has Fallen Off The Wall – Mark Grant
/ ZH
When you see the next, new, new fanciful plan
floating around in the wind don’t be alarmed and don’t be taken in by the
pretty colors. Unless Germany agrees to something it will not be happening and Germany will not, cannot without severe political consequences, agree to the
demands of their needy neighbors.
The tactless Mr Cameron & the eurozone
blame game – The
World / FT
David Cameron is taking a break from irritating
the Germans. Instead, he has decided to piss off the French.
MEPs challenge code of conduct loophole – euobserver
A loophole in the European Parliament's code of
conduct enables lobbyists to continue to fund MEP non-business-class flights
and pay for hotel accommodation of up to €300 a day without disclosure.
EURO CRISIS: NO TO CREDIT
RATERS
Europe Launches Ban On All Policy Criticism By Scrapping Use Of Rating
Agencies – ZH
The EU has just voted to scrap the use of ratings agencies in the next step on the road to a ban of all policy criticism.
The EU has just voted to scrap the use of ratings agencies in the next step on the road to a ban of all policy criticism.
No rating outlooks please, we’re European – alphaville
/ FT
Something voted on by Members of European Parliament, or MEPs, still must go to the Council for approval and, quite often, amendment.
Something voted on by Members of European Parliament, or MEPs, still must go to the Council for approval and, quite often, amendment.
I Come Not to Praise Rating Agencies, but to
Bury Them – TF
Market Advisors
There is only one reason that ratings are
market moving – because the regulators have made it so. If it wasn’t for
regulations based on ratings, the power and influence of the rating agencies
would drop immediately.
EURO CRISIS: RUMOR OF THE DAY
Exclusive to all newspapers, EFSF/ESM
bond-buying – alphaville
/ FT
The newest German plan likely won’t work. If it
even exists. – Wonkblog
/ WP
It's Just Impossible – Mish’s
And For Today's Market Ramp Rumor Du Jour We
Have... – ZH
In other words, the ESM will take place of the
ECB's SMP. With the only difference that the ECB can print money, while the
unfunded ESM will at best rely on the murky details of repo lending. Same
subordination either way, of course. Also, the whole no-bailout-clause thing
embedded in the Lisbon Treaty... they were just kidding about that. 85 million Germans will
understand
EURO CRISIS: ECB
ECB lending by country – Sober Look
The risks of dysfunctional money markets – alphaville
/ FT
If that’s the case, then lower (unsecured)
interest rates might not be passed through to the periphery, making the repo
rate that much more important as a target of central bank intervention.
EURO CRISIS: PIIGS
Do not be misled by the 2.6% rally in Spanish
equities today or the 11 bp decline in 10-year bond yields. Spain's problems are still
growing, not diminishing.
Spain Sells 1 Year Bills At Record Post-Euro Yield, ING Says Spain To Need €250 Billion
More; German ZEW Implodes – ZH
The political price of not saying the word
"bailout"
– El
Pais
Mariano Rajoy's version of Spain aid package draws
mockery and mistrust
Here's Why Spanish Bonds Are Rallying – ZH
the marginal bid on Spanish bonds is in fact
once again the CDS-bond arbitrage trading community.
LCH Raises Margins Costs For Most Spanish Bonds
– ZH
Effective from close 21-June
Effective from close 21-June
Getting to a Grenegotiation – alphaville
/ FT
There’s excitement in Greece today. It may be the
day Greece finally gets a government!
Jakobsen Says Greek Exit Will Force Resolution – BB (mp3)
BRICS
Russia: oil price down,
capitalism up? – alphaville
/ FT
Will Russia move ahead from being a resource producer?
Will Russia move ahead from being a resource producer?
First
balance of payments deficit quarter expected, first since 1992.
EMs to the IMF: it’s time – beyondbrics
/ FT
with China and others stumping up this week for the IMF’s warchest, are the major emerging markets finally about to get a bigger say in the Fund’s management?
with China and others stumping up this week for the IMF’s warchest, are the major emerging markets finally about to get a bigger say in the Fund’s management?