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Thursday, August 18

18th Aug EARLY - S&P, SEC drawing fire

Notice the Swedish model - they made the bank owners pay

Summary: U.S. federal and state regulators are taking a very close look at Europe’s biggest banks’ U.S. branches. SEC destroying evidence, S&P’s role in housing crisis investigated. Soros indirectly suggests China is propping up the Euro’s exchange rate.

Views: as we are still in the muddle through-phase and the costs of global banking crisis is obviously unsettled, it is a good idea to look at the historical fiscal costs of taking care of the bust banks. 15-25% would be my take on the final price tag. 


EURO CRISIS

There are no innocents in this story. All countries share blame.
Second-best: In Defence of PIGS – The Telegraph

“The ECB must be empowered to purchase distressed sovereign debt as the need arises, the EFSF must be able to issue Union-bonds to the scale required to relieve the ECB when required, and the link must be broken between single loans and national public debt.”

“In the absence of a sustainable policy solution, ECB buying is the only viable stopgap”

“How do you get the German taxpayers to write these checks? It may be easier politically to have the Germans bail out the ECB than the Greeks and the Irish, but that may ultimately be what happens, and the economic effects may be similar.”

Comments on yesterday’s UBS analysis and alphaville FT comments
How Eurobonds might “work” – Pragmatic Capitalism


China will defend the Euro, because it wants a viable alternative currency to the U.S. dollar. “There is a mysterious buyer that keeps propping up the euro.”
Soros: Crisis is not over – The Globe and Mail


FINANCIAL CRISIS
Matt Taibbi’s piece is politically probably the most important text in months




On the SNB, Once more – Zero Hedge

GDP, housing, manufacturing, employment, retail sales, personal incomes, profits
7 things that make me worry – Pragmatic Capitalism

“There is no question that S&P incorrectly rated mortgage securities, but that was just their "opinion". This investigation is apparently focused on if the analysts wanted to downgrade the ratings, but they were overruled by managers. If so, S&P might lose their first amendment protection and then be open to lawsuits from investors.”



Dallas Fed’s Fisher states that the Fed should never enact such asymmetric policies to protect stock investors, believes FOMC colleagues share this view.
No more Bernanke Put? – the trader


EMERGING
“We have not owned a Chinese bank, and I don’t see owning one any time soon,” said Jain, who oversees about $15 billion, including three funds that beat 99 percent of peers this year, data compiled by Bloomberg show. “If you look at the accounting, I don’t see how anyone could put a penny there.”



OTHER
Natives are getting restless, or Ich bin ein Berliner