MoreLiver's Daily: 23rd Apr - Merklande? Hollkel? Homer?

France, Holland, Greece…Obviously this is an economic disaster and I have been at the front of the queue screaming about misguided economic ideologies in Europe that have led, and continue to lead, to this situation. However, it doesn’t take much of an imagination to realise that this has the potential to become something much more sinister than just ugly looking charts and that is my real concern.

Democracy Could Destroy the Euro – TIME

Upcoming elections in France and elsewhere will likely show massive popular resistance to the austerity policies needed to save the common European currency

Eurozone Austerity by the Numbers – The Street Light

Today Eurostat released its official tally of the budget deficits recorded by the EU and eurozone countries during 2011

Gloom and doom pervades the Euro Zone – The Big Picture

French elections, PMIs, Spain’s GDP contracting, ECB states it has done enough.

Europe Slumps To Three-Month Lows As Spain Nears 2009 Lows – ZH

ZH’s usual daily roundup of market movements in European session

The euro-zone threat – Free exchange / The Economist

A fairly deep euro-zone recession would be less pleasant to handle—it would take most of the steam out of America's recovery, for instance—but it wouldn't represent a disaster. A euro-zone disaster would, however. That still looks unlikely, if only because euro-zone leaders, including the ECB, seem crazy enough to allow this mess to drag on but not quite crazy enough to permit another Lehman-like episode.

Roubini takes on the ECB – MacroScope / Reuters

It was fun to watch. Nouriel Roubini, NYU economist and crisis personality, was one of just five carefully selected individuals at a large gathering in the IMF HQ1 building’s towering atrium who actually got to ask questions of the policymakers on stage.

Europe’s Austerity Backlash Gathers Steam in Merkel Test – BB
French President Nicolas Sarkozy lost the first round of his re-election bid and a revolt against extra spending cuts in the traditionally budget-conscious Netherlands propelled Prime Minister Mark Rutte’s coalition toward an early breakup.

Sovereign debt stats in the stocks – alphaville / FT
It’s all about stock-flow adjustments, or SFAs — the curious cases when a government’s stock of debt increases without a corresponding change in its deficit to explain it… one possible cause often seems to be a government’s desire to make transactions without any immediate effect on worsening its deficit.

France and Frankfurt – Project Syndicate

Financial markets nowadays are much more aggressive than they were in 1981. There is no possibility of a two-year period of experimentation. The result will be very intense pressure for a rapid redesign of European institutions, with the risk that the outcome will lack credibility – less a U-turn than a dead end.

Growth will save us? You bet! – Golem XIV

There are so many reasons for believing that the European ‘recovery’ plan is not working now and will continue to not work no matter how long we are forced to subsidize it…I and others have said for well over a year that Spain had been hiding debts in its regions. This turns ou to have been true. A recent report by Carmel Asset Management paints a very ugly picture.

Barclays’s Montagne Says Euro Will Weaken to $1.25 – BB (mp3)

Credit Ag’s Chatwell Says Sub 2% Yields Will Not Last – BB (mp3)

IMF’s Lipton Says European Firewall 'Reasonably Sized' – BB (mp3)

EURO CRISIS: FRANCE

French election: Five things that you’d never hear in the U.S. – Wonkblog / WP
Unadulterated bashing of the financial industry, Very high taxes on the wealthy, Competition over who can pass stricter financial regulation, Policies to limit CEO pay, Even the far right is against free enterprise.

Hollande-Dazed and Confused – MarketBeat / WSJ
Sarkozy has been a linchpin of the Franco-German alliance that called the shots in Europe. If he goes, it will rescramble the political math. Francois Hollande, the man who finds himself the front-runner for France’s presidency, is no fan of the austerity brigades. The creation of a Merklande coalition (or Hollkel perhaps?) doesn’t seem like the first thing on his to-do list.

Pledges from Sarkollande – alphaville / FT
RBC’s summary of candidate pledges and policies.

Wonkbook: Can a French Socialist save the euro zone? – Wonkblog / WP

Hollande has also promised that, if elected, he will renegotiate the treaties governing the austerity targets across Europe. Some think this will doom the euro zone. Others think it's the only way to save it. The answer matters for more than just the future of Europe. It might decide the American election, too.

EURO CRISIS: NETHERLANDS

Dutch Political Mess: Another Leak in the Eurozone’s Dike – MarketBeat / WSJ

Alastair Newton, political analyst at Nomura, had been flagging the situation as the Netherlands as a potential risk for the markets. He notes that it may be months before an election is held in the Netherlands, which could add to the already growing uncertainty in Europe.

Netherlands at core of the crisis – MacroScope / Reuters

A Dutch debt auction on Tuesday will provide another test of investor appetite following Monday’s selloff.

EU commission: Dutch crisis no reason to dodge rules – euobserver

In terms of the bigger picture, the Belgian economist added: "We all thought that only the [eurozone] periphery is showing cracks - Greece, Portugal, Spain, Italy. But now the Netherlands are wobbling too, while Italy in fact is holding on quite well."

Charles Wyplosz Says Netherlands May Break Ranks – BB (mp3)

EURO CRISIS: PIIGS
Eight of Ten Largest Stocks in Spanish Ibex Index Below Liquidation Value; Madrid Rejects Regional Budgets Representing 32.5% of GDP; Treasury Warns of "Immediate" Intervention – Mish’s

What happens in a eurozone breakup when Spain exits the Euro?...Capital flight is indeed underway and that flight will continue to pressure Spanish equities until it stops. Capital controls may be just around the corner.

Mr Rajoy, the figures don't add up – El Pais

Economists argue that Spain's draft budget underestimates pension costs and overestimates extra revenue from tax hikes

As the periphery sinks, the core follows – Pragmatic Capitalism

The core’s customer base (mainly the periphery) is weakening under austerity and slowly sucking the life out of the core. Now the Euro crisis will start to kick into a more interesting phase because the phase it’s absolutely not going to kick into is the phase where they all grow out of this….

Spain's pains increase chance of 2012 rescue to more than 50% – Saxo Bank

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Monday, April 23

23rd Apr - Merklande? Hollkel? Homer?