Summary: Hard to say which is worse - French banks or the Greek government? Or perhaps the impotence, denial and wishful thinking of the political leaders from the core EZ countries is still the worst. A third update coming up later today.
Quote of the day: “If you have to prove you are worthy of credit, your credit is already gone.” – Walter Bagehot
Views: Terrible luck with markets, tweeted earlier: Sell EURUSD atm 1.3590,stoploss 1.3630 (stopped out), after that Sell EURUSD at the market 1.3615, stop 1.3715. Spot currently at 1.3646, session high 1.3710.
EURO CRISIS
Excellent collection of charts and some discussion on bank balance sheets
** Credit Update – Crash Tests for Dummies – Pragmatic Capitalism
Good overview of CDS prices
Credit: The Pressure Is Building... – The Short Side of Long
Quick overview of bond yields and spreads over Germany
Citigroup’s Buiter says: “As soon as Greece has exited, we expect the markets will focus on the country or countries most likely to exit next from the euro area.”
** If Greece can leave, anyone can leave – alphaville / FT
“Unlike Merkel and Sarkozy, Trichet is not constrained by short-term political concerns, and the ECB has access to an almost unlimited resource: the power to print euros.”
Q&A on Greek default – BNY Mellon
“Please help Greece become part of the free world. Like other Arab countries, Greeks find themselves under occupation. No there has been no invasion from hostile foreign armies. The occupying army is none other than the enemy within, the Greek state supported by the guard.”
Message to the Free world,Troika, EU, Merkel and all the forces of progress,Read carefully. – Wired and Ready
Banks (French)
Banks were very quick to deny some of the claims in this article.
Zut alors! The French bank sell off continues – alphaville / FT
Zut alors! – The French bank sell off… (Part deux) – alphaville / FT
“French bankers are among the brainiest, most ruthless bankers I have met. And, without naming names, they are also among the rudest individuals I have encountered”
“Ms. Lagarde had broken the secret code of silence among Europe’s top bankers — a silence she herself had kept for far too long when she was a politician.”
China’s “help”
Chinese whispers, the Italian bond non-reaction – alphaville / FT
Chinese bond purchases won’t help – alphaville / FT
“Like a wise investor, Beijing will have seen the risks involved and will have decided it is better, where the euro is concerned, not to put so much money where its mouth is.”
China Is Not Going To Save the Euro – The Source / WSJ
STOCKS
“Over the last 50 years, the real returns from equities have been lower than those from bonds in Germany, Japan and Italy.”
Equity investing: Buy, hold, regret – Buttonwood’s notebook / The Economist
OTHER
Gold forward curves inverted – cash-hungry banks
Anything for collateral…? – alphaville FT
FX volatility report – tradingfloor.com
Mental Models, Arrayed on Charlie Munger’s Latticework – The Psy-Fi Blog
This could also include Greece.
EU plans suspension of non-compliant Schengen nations – euobserver.com
Lehman Brothers: three years of denial – The Guardian