BIS report from yesterday states the increased capital requirements for the European banks were a stupid idea. The eurocrats wanted to increase the confidence, which they perhaps managed to do - but simultaneously they decreased the financial activities of the banks. The idea was to save the economy - not the looks! Also LTRO gets a word in today's links.Sarkozy is trying his best to look more socialist and more right-wing than either of his competitors. How sad. More Europe is probably the answer even for the little man's issues. I just realized that 'Merkozy':
- They see themselves as the reincarnation of Mitterand and Kohl, uniting the Europe
- They see themselves losing elections, unless they roll the blame on everyone else and look irreplaceable
- They want to minimize their domestic losses from the little European experiment and try to get everyone else involved and picking up the bill.
News – Between The Hedges
Euro Crisis Press Summary – Open Europe
New Open Europe report: How to safeguard free movement in Europe; Sarkozy appeals to hard right by threatening to suspend EU open border policy and calling for a “Buy European Act”
Markets – Between The Hedges
Recap – Global Macro Trading
Debt crisis: live – The Telegraph
Europe Crisis Tracker – WSJ
EURO CRISIS: GENERAL
Dear EBA, the central banks and emerging markets have got this – alphaville / FT
The central bank’s bank says those new European bank capital requirements DID dampen lending, prompt asset sales, and generally give everyone more to worry about in the past few months.
The central bank’s bank says those new European bank capital requirements DID dampen lending, prompt asset sales, and generally give everyone more to worry about in the past few months.
Finland’s still got a secret – alphaville / FT
On the secret collateral agreement between Greece and Finland
On the secret collateral agreement between Greece and Finland
What Europe Could Have Learned From the U.S. Bank Bailout – DealBook / NYT
As part of the bank recapitalization plan that went along with the 2009 bank stress tests, American regulators chose not to express its target as a ratio, since it can crimp lending… By contrast, American regulators stated in 2009 that banks had to hit a certain dollar amount of capital. As a result, banks could not achieve their capital targets by reducing assets.
As part of the bank recapitalization plan that went along with the 2009 bank stress tests, American regulators chose not to express its target as a ratio, since it can crimp lending… By contrast, American regulators stated in 2009 that banks had to hit a certain dollar amount of capital. As a result, banks could not achieve their capital targets by reducing assets.
The euro crisis thus offers Europe an opportunity to reestablish trust. Its national leaders need to reestablish the trust of their constituents by offering them straight talk. EU member states need to rebuild their trust in one another. And European countries facing the need for wrenching structural reforms need to restore social trust at home.
Mark Grant On The Increased Risks of Owning European Sovereign/Bank Debt – ZH
For those of you who are more aggressive and want a bigger play then I suggest shorting the debt or equity of the European banks. My best picks here are Spain, Italy and France.
Is Sarkozy's tough talk on EU open borders hot air? – Open Europe
In a sudden turn of events, Sarkozy has replicated Hollande’s tactics, calling for a withdrawal from the Schengen treaty on open borders, if no serious reforms are undertaken.
Sarkozy threatens to end EU passport-free travel – euobserver.com
EURO CRISIS: PIIGS
Nouriel Roubini interview on CNBC
Brussels Presses Spain for Budget Details on How Spain Will Reduce Deficit to 3% of GDP; Threatens 2 Billion Euros Fine – Mish’s
Spanish unemployment exceeds 23% with youth unemployment at 49%. Austerity measures to further reduce the budget deficit from 8.5% to 3% over two years simply are not realistic.
Risk of Eventual Greek Default Remains High Despite Bond Exchange – Research Recap
Moody’s: any future debt restructuring will involve not only losses for private-sector investors, but also likely include official sector involvement, with an accompanying escalation in political risks.
EURO CRISIS: ECB, LTRO, TARGET2
LTRO names n’ numbers, revisited – alphaville / FT
UBS: We (have) discussed…how usage approaching 10% of a bank’s funded book could represent a tipping point beyond which counterparties and investors would likely regard the bank as one unlikely to be run as a typical private-sector enterprise.
LTRO names n’ numbers, revisited – alphaville / FT
UBS: We (have) discussed…how usage approaching 10% of a bank’s funded book could represent a tipping point beyond which counterparties and investors would likely regard the bank as one unlikely to be run as a typical private-sector enterprise.
Spanish and Italian (SPIT) banks dominated the use of the ECB's LTRO facilities, while Finland/Germany/Luxembourg (FINGEL) banks took only modest amounts... but the rise in the ECB's deposit facility shows that FINGEL dominated the additions while SPIT increased only very marginally...
FED PREVIEW
FOMC preview – Danske Bank (pdf)
FOMC Preview – MarketBeat / WSJ
OTHER
Japan's Debt Disaster and China’s Non-Rebalancing Act: Economic Toxic Brew Portends Currency Crisis – Mish’s
Every country in the world understands the need for global trade rebalancing. Yet, politicians have done nothing but take stances that mathematically cannot work… This economic toxic brew will simmer until the pot explodes in a massive currency crisis at some unknown point down the road.
Global liquidity peak spells trouble for late 2012 – The Telegraph
The global liquidity cycle has already rolled over. Assuming that no fresh action is taken, world economic growth will peak within a couple of months and then fade in the second half of the year - with grim implications for Europe’s Latin bloc.
Daily FX Trading Activity: $4.7 Trillion – ZH
From the BIS report.
3 Charts On Not Buying The 'Global Recovery' Risk Rally – ZH
Economic positive surprises, US import volume, world trade volume
Cigars: Smoked and Layed – Macro Man
As even large debt restructurings seem viable without CAC’s, the developed CDS market is actually pricing catastrophic NPV haircuts, as small NPV reduction will not guarantee a payment.
CDS Disclosure – TF Market Advisors
Maybe seeing the CDS disclosure would help people understand the product better (which would be good for the market as a whole) and investors could skip the articles based purely on hype that do nothing to help make informed decisions.
PODCASTS
Berenberg’s Schulz Says Greek Economy in 'Free Fall' – BB (mp3)
Lloyds's Lolay Says Euro Crisis ‘Far From Resolved’ – BB (mp3)
Rathbone’s Chillingworth Sees Euro Falling Against USD – BB (mp3)
Japan one year after the tsunami, Greek bailout and boss’s e-mail style
OFF TOPIC
A New Financial Glossary – The Daily Capitalist
Butt-Head Astronomer – Letters of Note
Late-1993, renowned astronomer Carl Sagan learnt that Apple's forthcoming computer, the Power Macintosh 7100, had been given a codename of "Carl Sagan"
Six Tips on Writing from John Steinbeck – brain pickings