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Thursday, December 15

15th Dec - Oh là là, Messieurs Noyer & Chirac!

Very interesting long-term trend.
Joke of the Day: Jacques Chirac found guilty of corruption – two-year suspended prison sentence
  

News (Thu evening) – BTH
Recap (15-Dec) GMT
FX option vols – Saxo
Markets Live – alphaville / FT
Debt crisis: live – The Telegraph

Then to today's links:

EUROCRISIS
FRANCE VS UK
Is that a CA/GDP% in your pocket, or just happy to see me?
Bank Of France's Noyer Says Britain Should Be Downgraded, Not France – ZH
when you have the head of one central bank doing all he can to throw another central bank under the bus, that's pretty much game (theory) over

Downgrade nationThe World / FT
Noyer is right to note that Britain’s public finances look pretty rotten. But one reasons for not downgrading Britain – at least, not just yet – is that Britain has its own central bank, monetary policy and printing press.

France Braces for Debt-Rating Cut as Noyer Takes Aim at U.K.Businessweek

ECB
Speech by Mario Draghi 15-DecECB
No signs of QE.

Let there be credit claim collateralalphaville / FT
Goldman Sachs on the soon-to-be accepted collaterals. It will be of lower quality, of course.

More on the collateral crunchalphaville / FT
In other words, the collateral crunch facing banks continues — and that’s despite the ECB widening the eligibility criteria for collateral used in its funding operations last week. In the world of top quality eurozone collateral markets, meanwhile  – namely German bonds — things are getting even more stressed.

Germany, Not ECB, Must Buy BondsMarketBeat / WSJ
The Bundesbank as Europe’s lender of last resort is an unacceptable but unfortunately unavoidable end game for Berlin… This is why the Bundesbank, via the ECB, is desperate to get the IMF, China or anyone else on board. Bringing in an outside investor gets Germany off the hook.

Europe’s central banking issues, Report from Paris 3David R. Kotok / The Big Picture

How big could the Sarko trade go?alphaville / FT
Morgan Stanley research note: Adding together the various sources of potential demand for the December tender, we get a number that could be around €160bn-€250bn, with a further potentially large take-up at the February 3-year tender.

BREAKUP
A Euro Breakup: The Problem of Euro AssetsPIIE
The critical unanswered issue is what to do about euro assets that are the liability of a pan-European authority, notably the European Central Bank (ECB).

The Euro in a Shrinking ZoneProject Syndicate
This means that the eurozone is beyond saving; the euro will survive, but the zone will shrink. The only question is the scale, timing, and manner of its breakup. Greece, and probably other Mediterranean countries, will default and regain the freedom to print money and devalue their exchange rates. This will send shock waves throughout the world. But sometimes shock waves are needed to break the ice and start the water flowing again.

Doug Kass Rips Off a Primal Scream at EuropeMarketBeat / WSJ
Like I give a crap about a bunch of German leaders who are intransigent and dogmatic in policy and are dangerously bullying the rest of the EU? As for the French, they are governed by a bunch of socialists in the Senate — they don’t believe in capitalism to begin with.

Presenting Kyle Bass' Analysis On Shortening Collateral Chains; Or The Gradual Evisceration Of Shadow BankingZH
As European leaders press forward with failed attempt after failed attempt to suppress borrowing costs, control spending, reduce deficits and prop up what the markets have already told us is a broken monetary system, the data tells us that the citizens of the most troubled and profligate nations are losing confidence in the Euro dream. Trust has been lost, confidence in the system is being lost, and the ultimate consequence of this break down - sovereign defaults —are imminent. We continue to move ever closer to a great restructuring of sovereign debt.

GLOBAL CRISIS
Where's the point of no return for debt? Wonkblog / WP
Moody’s did some calculations couple of days back.

It’s the balance of payments, stupidalphaville / FT
Bank of Canada’s governor thinks the ”Minsky moment” has arrived, speech below:

Growth in the Age of DeleveragingBank of Canada

Fragile and Unbalanced in 2012Project Syndicate
The outlook for the global economy in 2012 is clear, but it isn’t pretty: recession in Europe, anemic growth at best in the United States, and a sharp slowdown in China and in most emerging-market economies.

OTHER
Vladimir Putin's Divided Russiareason.com
It will come as news to the prime minister that Russia may not endure him forever.

Asset Allocation and Risk Management in a Bimodal WorldPIMCO
Fat tails and negative skewness in the distribution curve can arise from the mere possibility of multiple equilibria – even if both equilibria individually appear normal. Once markets arrive at a resting place among different equilibria, they tend to become trapped due to a variety of restraining forces.

DIVERSION
Google Zeitgeist 2011: How the world searchedGoogle

Finance, Physics, and the 300-Year Journey to the Black-Scholes Equation, A Story of Genius and DiscoveryAmazon
Did you know Fischer Black studied almost anything but finance at an early stage, and experimented with psychedelics? Got jailed during Harvard years and the dean came to pick him up?