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Tuesday, September 13

13th Sep Early - Party like it's 1992


Summary: There is so much happening right now and as usual, there is a flow of analysis and reports after the weekend. Skim the short summaries, I’ve marked the most important reads with asterisks. You can check the calendar page, access bond- and CDS charts, and follow me on Twitter or email me

News roundups:
Monday’s Headlines – Between The Hedges
Tuesday Watch – Between The Hedges

EURO CRISIS
“Will Europe become a collection of pawns?  Or unify into a great nation?”

Link to full report from Morgan Stanley

“The Germans are in complete denial: they push for austerity and hate fiscal integration, ECB bond purchases and loose monetary policy – and don’t want to lose their trade surplus.”
** Europe, through the looking glass – Free exchange / The Economist

Roundup of themes and view from UBS

Best hope: throw away the hopeless countries, weaken the currency, recapitalize core institutions.

“It will take years to renegotiate and ratify new treaties, even assuming there is no blockage of the sort that beset the Constitutional Treaty. But the euro zone faces critical days and weeks.”
** Time is running out – Charlemagne’s notebook / The Economist

(pdf) Full e-book, 153 pages of articles

EMU breakdown would be deflationary

Negative forward curves signal hunger for dollar liquidity even greater than for gold

“You would not want to be short the Euro if we woke up some morning and found that the Euro members were narrowed down to France, Germany, Italy, Netherlands (and Belgium too).”
On FX - Shit or go Blind? – Bruce Krasting

Greece
Emergency bank funding from Greek central bank was up in July by €13.3bn. or 5.6% of GDP – and it increased in August.
** Sundry secret Greek liquidity – alphaville / FT

After $150bn of bailouts, consensus is that either Greece fails and leaves euro, or fails and stays in euro. Now the European unity is gone.
The euro crisis comes to a head – Felix Salmon / Reuters

"one more" tranche of bailout money.


Greece Won’t Default, Yet – The Source / WSJ

Italy
Italy’s bond auction coming today.
The ECB’s Italian Job – Daily Capitalist


Recession and crisis coming, change of leaders required

China is no white knight here.  They are trying to save their own skin.”

“We don't understand what Europe is. If your central bank doesn't buy your bonds, why should we buy them?”

Banks
Charts of bank leverage, bank assets, bond yield

The true problem is not the banking system. Europe is facing a crisis of government debt.

The defense plan of the bank in coming case against FHFA

Good roundup, views and links on the Independent Commission on Banking’s report

Nice ideas, needs some work — but is there enough legal basis?
Vickers harmonies – alphaville / FT


OTHER
PIMCO’s El-Erian: “The G-7 is fortunate that it is not required to justify the expenses of its meetings in terms of what is achieved. If it had to, these meetings would be more decisive and/or less frequent.”

Target2 offers useful liquidity monitoring tool: Netherlands Bank paper


DIVERSION
Summary of a HBR article, link to full article