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Tuesday, February 28

28th Feb - Foreign language lesson


Finnish lesson! Lotraus (to lotr): to play or splash around with a liquid. Also slang for heavy drinking of alcoholic beverages. 

A recap post coming up around US close, but just a short update for now:

EURO CRISIS
EZ Crisis Press Summaryopeneurope
Merkel fails to obtain absolute parliamentary majority for second Greek bailout within her coalition; German Constitutional Court rules that 9-man special Bundestag EFSF Committee is “largely unconstitutional”

German MPs had two days to read a 726-page document on the Greek bailout. How long before they crack?Open Europe / The Telegraph

How much ECB liquidity morphine will banks demand?Saxo Bank
The delicately balanced internal politics of the ECB mean that Draghi will surely be hoping for a 'Goldilocks' take-up for LTRO2. Not too large, such that the Bundesbank becomes even more worried that small or medium-sized banks are being turned into liquidity 'addicts', (and that the pressure on fiscally errant governments to reform will be reduced too quickly), and not too small, so that the LTRO does not have the desired effect.

Statement by the EC, ECB, and IMF on the Third Review Mission to PortugalIMF
The program is on track, but challenges remain… The fiscal deficit target for 2012 remains within reach.

So Greece “Defaults” And Europe Moves OnTF Market Advisors
A year ago, Europe was adamant about no haircuts and no default.  I could never understand why.  Let Greece default, renegotiate terms, stay in the Euro and move on.  The key then, as now, was ensuring that banks that were solvent had enough liquidity.  Rather than take that advice, Europe proceeded to buy Greek debt, which not only failed miserably, but has complicated the situation.

Goldman: Germany Is Now On The Hook By €1 Trillion (Or 40% Of GDP)ZH
Goldman Sachs: Germany is the country that has pushed the most for
PSI in Greece in an attempt to foster future market discipline, but is also the one that has the biggest stake in conditional aid programs to the periphery and seen its ‘target 2 imbalance’ vis-à-vis the EUR periphery reach almost EUR 1trn on the latest count.

OTHER
Notes on the 2011 Berkshire Hathaway Annual Report, Part 2The Aleph Blog

Bill Gross On Football As Investing, And Why Everyone Now Plays DefenseZH
PIMCO’s March Investment Outlook letter plus short commentary by
Tyler

Marking shipping to marketalphaville / FT
Nomura’s analysis piece

The trade of half a decade: long gold, short Athensalphaville / FT
Deutsche Bank’s quickie, nice ones: Imagine a financial instrument that exposes retail investors to first loss in the event of a problem, swings around wildly from day to day and delivers virtually no returns to Western buyers for a decade. Would equities have got through the regulators?

Pension funding: Raiding the coffersButtonwood’s / The Economist
More fundamentally, the use of devices such as loans is a way of deceiving voters about the true cost of pension promises, which are similar to debts incurred by the government