6th Jun - US Close: ECB Stood Still

ECB did nothing. Hopes are on Bernanke’s address tomorrow. Heavy rumors that Germany is setting up a bailout of the Spanish banks, but this could also be announcement games. I stick to my original view (risk-on during the early part of the week, risk-off towards the weekend)

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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

  Europe Rips As Money Grows On German Trees Again

Tyler’s US Summary – ZH

  Form Worst To First - S&P Has Best Day Of 2012 Shortly After Worst

TV: Bloomberg, CNBC, BBC

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

EURO CRISIS

Brussels: 'Banks should pay for banks' – euobserver

proposals designed to change the too-big-to-fail rationale that has seen billions of euros of tax payers' money pumped into Europe's ailing banking sector.

When strategy is mistaken for stupidity, the curious case of eurozone politicians – alphaville / FT

Richard Barwell of RBS wishes to point out that policymakers aren’t idiots. They are rational actors acting on the basis of their particular ‘loss functions’. The behaviour dictated by those functions will determine the outcome of the crisis.

Let’s all play a game of “Soros says” – alphaville / FT

He doesn’t like modern economics all that much and thinks the eurozone is going down a road towards German empire, necessitated by Target2 imbalances, unless something extraordinary happens soon.

Mario Monti’s Nordic Dream – Project Syndicate

As the EU’s top competition official a decade ago, Mario Monti was regarded as a very Anglo-Saxon regulator. Today, he is the most Nordic prime minister that Italy has ever had – in a country where politics and society remain anything but Nordic.

Germany Grapples With Role in Rescue – WSJ

As Europe careens deeper into political and economic crisis, the immediate survival of the euro turns more than ever on a single question: Will Germany act?(very nice interactives)

Huge Nannycrat Conflict Coming Right Up; France Pension Reform Takes Giant Step Backward – Mish’s

So when is Merkel going to tell Hollande that France should be raising the age to 67? When is Merkel going to tell France that crop subsidies have to end? When is Merkel going to tell Hollande labor reform is needed and there needs to be a provision for firing workers easier?

From Krugmania to Draghia: Five ways to save the euro zone – Wonkblog / WP

new report from the analysts at ING, who outline six possible endgames for the euro zone.

Report: Rampant corruption is aggravating EU crisis – euobserver

Corruption and lack of transparency are endemic in the EU and have direct links to the financial crisis, a leading NGO says.

Panic has become all too rational – Martin Wolf / FT

Before now, I had never really understood how the 1930s could happen. Now I do. All one needs are fragile economies, a rigid monetary regime, intense debate over what must be done, widespread belief that suffering is good, myopic politicians, an inability to co-operate and failure to stay ahead of events.

The Restaurant At The End Of The Eurozone – Mark Grant / ZH

Now the group is once again at the table ordering lunch and desert has come and gone and everyone is sitting there looking at everyone else. No one is volunteering to pay the bill; no one knows who will pay the bill.

EURO CRISIS: SPAIN

EU Expects Spanish Bank Bailout Loans To Be Double The €40 Bn Previously Disclosed – ZH

Senior Spanish banking executives have put the figure at about €40bn, but EU officials have been looking at plans that are at least double that, according to people briefed on the discussions.

Germany finalizing face-saving aid deal for Spain – Reuters

A deal is in the works that would allow Spain to recapitalize its stricken banks with aid from its European partners but avoid the embarrassment of having to adopt new economic reforms imposed from the outside, German officials say.

EU, Germany exploring Spanish rescue, no request yet – Reuters

Germany and EU officials are urgently exploring ways to rescue Spain's debt-stricken banks although Madrid has not yet requested assistance and is resisting being placed under international supervision, European sources said on Wednesday.

The Fund in Spain? – The World / FT
Could the IMF help bail out Spain? Tricky one. As goes the EU, so goes the IMF, only more so.

Another Spanish Bailout Plan Taking Shape As Germany Folds – ZH

A deal is in the works that would allow Spain to recapitalize its stricken banks with aid from its European partners but avoid the embarrassment of having to adopt new economic reforms imposed from the outside, German officials say.

EURO CRISIS: ECB MEETING

Introductory statement to the press conference – ECB

Eurosystem staff macroeconomic projections – ECB (pdf)

ECB Leaves Benchmark Rate Unchanged – TIME

Draghi Sees Increased Risks to Economy – WSJ

Draghi Says ECB is Ready to Act as Growth Outlook Worsens – BB

It's your job to fix crisis, ECB tells governments – Reuters

No cut in June – case for summer cut intact – Danske Bank (pdf)

Count Draghi: Ten Points – Marc to Market

Draghi gives a new meaning to "behind the curve" – Sober Look

Draghi: Nobody can force Spain to seek bail-out – euobserver

Here’s How to Read Mario Draghi’s Poker Face – MarketBeat / WSJ

Draghi's on how to mend the euro: It's the politics, stupido! – The Economist

Hanging By a Thread and Inflation in Europe – TF Market Advisors

By doing nothing, he caused the Euro to sell-off, which as far as I can tell is inflationary. Europe seems to be in a perverse situation that printing money would actually likely help the Euro and thus be deflationary. I think he missed a big chance to implement some policy before the crisis has become full blown.

Doing Their Best to Destroy Europe – Krugman / NYT

I don’t think there’s any conceivable economic logic for the ECB’s decision. It can only, I think, be understood as some kind of refusal to admit, even implicitly, that past decisions were wrong.

The Urge to Punish – Krugman / NYT
This doctrine has an undeniable emotional appeal to people who are themselves comfortable. It’s also completely crazy given everything we’ve learned about economics these past 80 years. But these are times of madness, dressed in good suits.

OTHER

Morgan Stanley Sees QE3 Rally Lasting Hours Not Weeks – ZH

Drumbeat’s Getting Louder: the Fed Must Save the World – MarketBeat / WSJ

The rally: deal or no deal? – The Economist

One senses that the markets will respond to any official action that is perceived to be sufficiently substantial and, just as important, immediate. Plans for stabilising the banking system in five years' time are not going to do it.

Gold In Full Blown QE Mode – Global Macro Monitor

The yellow metal is up almost $100 since last Friday’s weak U.S. employment report.

A Central Banker Utters The Truth – Testosterone Pit

No-one is having fun at the moment.

Lloyds’s Schmidt Sees More Asset Purchases by Fed – BB (mp3)

RDQ’s Ryding Says Fed Will Extend Operation Twist – BB (mp3)

IMF Research Bulletin June 2012 – IMF (pdf)

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