Summary: Stocks in Asia fell in line of the US drop, and European stocks, especially banks, are now dropping more. Short sell-bans totally ineffective.
EURO CRISIS
Roundups
Many ‘minor’ problems and together surmountable.
"Not a Minor Complication" – Mish’s
“most dangerous time for Europe since World War II.”
Are we approaching the endgame for the euro? – New Economic Perspectives
“days like today are likely to look tame relative to what is in store.”
Mr. Market Had a Really Bad Day – naked capitalism
After Finland’s collateral requirement, also Austria, Netherlands and Slovakia are interested. Greece’s second bailout is therefore not 100% secure.
“Regulators are trying to guard against the possibility European banks that encounter trouble could siphon funds out of their U.S. arms, these people said. Regulators recently have ramped up pressure on European banks to transform their U.S. businesses into self-financed organizations that are better insulated from problems with their parent companies, a senior bank executive said.”
Fed Eyes European Banks – WSJ
“Look for this to be the source of the next "emergency" Merkozy meeting as Europe once again realizes that when you have 20 or so insolvent countries in the same union, things simply don't get done according to plan.”
“There is only one way a ‘balanced budget rule’ might work for the EA as a whole—each EA deficit country would have to run a countervailing surplus with the non-EA world.”
An absurd Merkel-Sarkozy summit – euobserver.com
“Oversimplifying a bit, you could read the Fed’s paper to suggest that the 2011 crisis, centered as it is around European governments and banks and symbolized by sovereign debt downgrades, is the next stage of that crisis unwinding – as Europe’s internal and external creditors find out that their AAA banks and governments aren’t as safe as they’d thought either.”
Fed providing liquidity to Switzerland’s central bank. Why not ECB, or is it almost broke? Who are the Swiss funding, not a PIIGS bank, perhaps a Swiss bank?
Cue Panic As Fed Resumes Liquidity Swap Lines, Lends $200 Million To Swiss National Bank, Most Since October 2010 – Zero Hedge
FINANCIAL CRISIS
All major U.S. banks are seeing influx of deposits, reserve levels at Fed at record levels. Not good for banks – a deposit is a liability on balance sheet, and not earning anything at the moment.
Very long and good look at the liquidity situation and the interbank stress
It’s the liquidity stupid! and why it matters again – Pragmatic Capitalism
“fraud is Wall Street’s business model, which is being supported by the government”
The Real Reason the SEC Has Been Shredding Documents For Decades – The Big Picture
Good quick graphs of the U.S. economy
They Call It “Stagflation” – The Daily Capitalist
OTHER
Diversification is not that effective when it comes to hedge fund investments
A ‘little dab’ might not do ya – allaboutalpha.com
Long-term charts of bond yields and stock earnings yields vs. future returns
How Reliable are Yields? - Econompicdata
Statistical look by JP Morgan funds
Bear Sell Offs, Bull Recoveries & Regaining 2007 Highs – The Big Picture
Guest post: Corruption may undo China’s economic miracle – beyondbrics FT
Being a pessimistic investor is an important state of mind but we need to keep things in proportion.
Triumph of the Pessimists – The Psy-Fi Blog
An illiquid bank that receives a liquidity shock sells assets to liquid banks in exchange for cash. Inefficiency of liquidity provision can be traced to asymmetrical information and increased volatility caused by trading assets to cash
(pdf) Liquidity Hoarding – Federal Reserve Bank of New York
“includes customised street signs, temporary currency and accommodation for 150”
Liechtenstein for hire at $70,000 a night – The Guardian