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Monday, August 22

22nd Aug EARLY - Germans say no to eurobonds


Summary: stocks down in Asia & Europe, strong no to eurobonds from Germany – a poll showed 76% of voters against and 15% in favor. Ban on shorting not working, and probably will not be renewed. Today’s links are heavy on the euro bonds. 

Views: bear leg on in stocks. Greek bond yields and CDS prices have been pushing up recently, and given how they have failed in austerity plus calls for collateral breaking up the already linedup bailout tranche, I'm expecting bad news. Epic fail-time soon?


EURO CRISIS
Short piece: eurobonds will not work, and are not politically possible
Eurobond points – Marginal Revolution



Nice look at the political background of the euro and low probability of eurobonds


CB’s marketcap is now below 10bn, German government put 10bn into it in 2009

From Between the Hedges, German headlines:
The German Finance Ministry: Eurobonds would cost Germany in higher interest rates as much as $3.6 billion in the first year and double in the second, in the tenth year, the extra costs would reach 20 billion euors to 25 billion euros. – Der Spiegel

Head of CSU party (in coalition with Merkel’s party): opposes eurobonds. CSU turned a blind eye to ECB bond purchases, but won’t collectivize debt – Wirtschaftswoche

Merkel’s economic adviser: rejects eurobonds (short-term relief and long-term problems), would cost Germany's taxpayers a two-digit billion sum  – Euro am Sonntag

Economy minister: no to Eurobonds as long as the current coalition government is in power. Higher interest rates to Ger, threaten growth – Bild am Sonntag

Merkel’s party member and premier of the state of Hesse: financial transaction tax depends on it also being applied to U.K. Tax would threaten more than 70,000 jobs in Frankfurt – Passauer Neue Presse
Head of IFO institute: no to bonds, pooling does not decrease debt burden, everyone must pay their own debt - Handelsblatt


FINANCIAL CRISIS

Full research piece on scribd from Aug16th
The Convulsions of Political Economy UBS Investment Research



Merkel-Sarkozy meet, other leaders do not even mention the massive housing bubble, fuelled by spectacularly dodgy banking, recycling a massive trade surplus, that led to a huge recession



Worth reading, the good, the bad and the ugly points of the previous and current week

No end in sight
FDIC Bank Failures – The Big Picture

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Full research piece on scribd
US Weekly Kickstart – Goldman Sachs