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Wednesday, November 30

30th Nov - Nothing to see, move along

Today's fourth fifth post - that's how it is nowadays. Time has compressed, more headlines and volatility in a week than in a normal year. It is the bipolar rapid cycling between inflationary and deflationary scenarios, appetite for risk switching on and off in a blink of an eye. Notice the RED link on quant factors towards the bottom of the post.

News (Wed evening) – BTH
Recap (30-Nov) Global Macro Trading
FX option vols – Saxo
Markets Live – alphaville FT
Debt crisis: live – The Telegraph
EZ crisis Live blog – The World / FT
  
EURO CRISIS
The next strategic target: De Gaulle’s EU legacyvoxeu.org
The ECB seems to be in the background during this crisis – almost helpless due to Treaty obligations and dogmatic adherence to old monetary theories. This column argues that quite the opposite is true. The ECB is a full-blooded political actor engaging in a strategy aimed at forcing EU political leaders to embrace fiscal rectitude and a quantum leap forward in European integration. (I've featured this earlier, but perhaps on the second try you will read it)


Credit Writedowns Weekly Report, Vol 1 Issue 2: Solutions in Europe?Credit Writedowns
Linked summaries of CW’s previous posts on the crisis. Some very good material, but most it has been featured here previously.

Austan Goolsbee on why the euro zone won’t surviveWonkblog / WP
Former director of Obama’s Council of Economic Advisers and an economics professors at Chicago University’s Booth School of Business opens up in an interview.

How, exactly, could the IMF bail out Europe?Wonkblog / WP
The advantage, for Europe, of taking this route is that all 187 member countries would be liable for any IMF loans handed out to help backstop Europe’s sovereign debts.

Questions Of ConfidencePaul Krugman / NYT
Second, the monetary story is a lot more concrete. The ECB’s readiness to raise rates despite low core inflation and high unemployment tells you a lot about the likelihood that it would choke off the modest rise in inflation needed to make the eurozone adjustment feasible.

When the Euro Was Good for GermanyThe Street Light
Given that, this data suggests that the euro enabled Germany to enjoy increased investment income of perhaps €30 to €40 billion per year, or between 1% and 2% of GDP. The Netherlands also enjoyed an income boost of up to 2% of GDP during the best years of the 2000s, while the euro helped France to earn higher investment income equal to perhaps 1% per year. Are these figures large enough to justify substantial additional spending by Germany to keep the eurozone intact? I have no idea.

Armies of the unemployedFree exchange / The Economist
Among young people, those under 25, rates of joblessness across the whole of southern Europe are startling. In Greece, 45% of young people were unemployed as of August, which is the last month for which data are available. In Spain, the rate is 49%, up sharply from a year ago. In Italy, youth unemployment is 29%; in Portugal, it is 30%. Even in France, 24% of young people are without employment.

Europe Crisis Timeline: Maastricht to PapandreouBB

OTHER
Goldman Turns Bearish: Squid Releases Top Trades For 2012... And It's Not PrettyZH
Long discussion of the following trade ideas: 1) Buy protection on iTraxx Europe Xover, 2) short 10y German Bunds 3) Long EUR/CHF 4) Long Canadian equities vs. Japanese equities, FX unhedged 5) Long July 2012 ICE Brent

Maybe it really is different this timeGoldman Sachs &Nomura (pdf)
Quant meltdown presentation from June 2009

Is The Risk-On Rally Real?ZH
Charts and talks, ‘Tyler’ says no.

DIVERSION
Researcher’s Video Shows Secret Software on Millions of Phones Logging EverythingWired

The Certainty of Memory Has Its Day in CourtNYT
“That’s one of the striking findings of the studies,” said Daniel Schacter, a psychology professor at Harvard. Whether an event is real or imagined, “many structures involved in the coding and retrieving are the same.”

Lunch break: How to get to MarsWonkblog / WP

Into the LightEsquire
Married businessman, world-class athlete, CIA agent. Then he decided that he wanted his eyesight back. Article from June 2005