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Tuesday, June 5

5th Jun - US Close: Expected Sameness

USD basis swap near crisis lows ZH
Help request from Spain, but nothing official yet. Wednesday's ECB meeting, and to a much lesser extent the Thursday's speech by Bernanke are key events. I will post a collection of briefings for the ECB meeting tomorrow morning. 

It’s the exact opposite of the classic Monty Python bit, where three cardinals burst upon a scene and yell “nobody expects the Spanish Inquisition!” Everybody expects a Spanish extrication – a bailout, a rescue, some kind of save from some international or multi-national source. MarketBeat / WSJ

News – Between The Hedges
Markets – Between The Hedges
The Closer – alphaville / FT
Market Commentary – A View from My Screens
Tyler’s European Summary – ZH
  Europe Treads Water Awaiting UK's Return To Reality
Tyler’s US Summary – ZH
 Gold Wins As Financials And USD Deteriorate

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

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It is not Just Spanish Banks...Marc to Market
Given the rules of the engagement in Europe, if one is receiving assistance, one is not responsible to provide assistance to others. This gives a first mover advantage. If Spain goes before Cyprus, Cyprus perversely would have to assist it.

Europe's Mess: Time for the US to Clean It UpCNBC
It’s time for the US to express its dismay at the lack of progress and to begin corralling world resources to incentivize Europe to solve its problems

The latest out of Europe, and an ECB preview alphaville / FT
Citi’s view on ECB’s available tools: we are going into the meeting expecting disappointment, but ready to be surprised if the ECB takes a more aggressive stance.

Goldman Previews ECB "Hope For Best, Prepare For Worst"ZH
We expect the ECB to keep rates on hold this Wednesday and also expect no announcement of further non-standard measures...but would come out in force if needed

Uncollateralized Trillion Euro Perpetual Zero CouponThe Big Picture
Very funny – and sad.

Nein! Nein! Nein! AgainThe Telegraph
Almost everything Angela Merkel is talking about already exists. She has dressed up an old arrangement as if it were new. The Commission knows this perfectly well. Everybody is pretending there was a ground-breaking deal this week to maintain appearances. This is the usual EU smoke and mirrors.

Schadenfreude Is a German WordTF Market Advisors
Is the German Pot Calling the PIIGS Kettle Black? – Debt is either Repaid or It Isn't – How much is Germany on the Hook For at the ECB? – How much is Germany on the Hook For via the EFSF and EU and IMF? – How bad will German Bank Losses Be? – How bad is the Target2 hit? – Countries in Glass Houses Shouldn’t Throw Stones

Germany - The Ultimate Doomsday PresentationZH
Germany's opportunity cost to preserving the status quo right now, is at a cost of hundreds of billions in the future, yet even that pales to the cost of letting it all fall apart. But this was a year ago, and out of headlines means out of mind.

Spain makes plea for EU aid for troubled banksThe Telegraph
Spain has admitted for the first time that it needs European Union support to prop-up its ailing banks, saying rising borrowing costs had shut the country out of bond markets.

Germany Ruling CDU Rejects Direct Spanish Bank AidZH
…flatly rejected the use of eurozone rescue funds to recapitalise Spanish banks directly. Instead they called on the Spanish government on Tuesday to decide urgently whether it will seek money from the €440bn European Financial Stability Facility according to the fund’s normal rules

Is something rotten in the state of Spain?El Pais
Spaniards are shocked and disappointed at the failure of the main parties and the country’s leading institutions to do something about the economic crisis

Memo of Understanding and other Red HerringsMarc to Market
The framing of the Greek election around the memorandum of understanding is such a red herring. There has been such deterioration of the economic conditions in Greece that the conditions and terms of its international assistance will have to be re-crafted in any event.

One-in-three chance Greece will leave eurozone, warns S&PThe Telegraph
There is "at least" a one-in-three chance that Greece will leave the eurozone, credit rating agency Standard and Poor's has warned.

Arms races and the real encumbrance problemalphaville / FT
Since the start of the US crisis of 2007, the race for safety has replaced one of the other two races that Haldane discussed: the race for returns, a catchy way to describe individual firms trying to maximise profits while setting the stage for the collective market failure that followed. (The other race, for speed, continues.)

Another Bear AwakensBruce Krasting
Swiss banker: money coming in from everywhere outside the US, but especially Russia

The Price of InequalityProject Syndicate
Joseph E. Stiglitz: America can no longer regard itself as the land of opportunity that it once was. But it does not have to be this way: it is not too late for the American dream to be restored.

Goldman On Housing's False DawnZH
the large number of residential properties that are "underwater"—meaning the borrower owes more on the mortgage than the property is worth—casts a long shadow on the sustainability of the housing recovery.

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