The best links from the ending week's posts. Previous 'Best'.
Previously on MoreLiver’s:
EUROPE
CDS BAN
How much of the “improvement” in peripheral EZ
sovereign creditworthiness is actually due to the CDS short selling ban? – Bond
Vigilantes
The
EC can claim "success" in CDS regulation – Sober
Look
FRAGMENTATION
European Union Exit? Concerns
Grow for Britain – NYT
Now, with
the euro zone almost three years in crisis, British public opinion has
hardened. The overwhelming majority of Conservative lawmakers are euro
skeptics, and many privately favor withdrawal.
The euro is heading for a
permanent state of depression – The
Telegraph
If the euro
survives in its current form, then Mario Draghi, president of the European
Central Bank, will surely have earned his place in the history books as one of
the chief architects of its salvation.
The Dynamics of Eurozone Disintegration – EconoMonitor
The Euro is
a currency sui generis. A deficiency in the monetary setup of the EZ dooms the entire
Euro endeavor to failure. Ever more monetary and fiscal assistance in the
course of the OMT and the ESM operations is the result of rational political
decision-making. Without fundamental reforms of the EZ institutional setup,
however, these policies will eventually only serve to increase the probability
of an exit from the EZ core.
What if the eurozone breaks
up? – Nordea
(pdf)
The
analysis explores four eurozone break-up scenarios: i) Greece leaves the euro,
ii) several countries in difficulties leave, iii) Finland exits on its own
accord, and lastly iv) the entire eurozone splits up into two or breaks up
altogether.
Cross Border Lending and
Imbalances in Euroland – EconoMonitor
The
immediate cause of the crisis was the imprudent lending of (mostly) European banks
(just as the US crisis was caused by imprudent
lending of US banks), but the lasting flaw in the EMU is the separation of
fiscal policy from currency issue. As I’ve said before, if there is an
“imbalance” in Euroland, it is one of power, not trade flows. With the
Austerians in power, there will not be the capacity to mount a sufficient
fiscal response to end the crisis.
The
Complete 'Advanced' Economy Sovereign Ratings Cheat-Sheet – ZH
Citi: We expect that Moody’s will place France on a
ratings review for a possible downgrade (ie Negative Watch) in the next 2-3
quarters, largely because of the fiscal program and weak economy. Moreover, we
also expect that S&P will likely place the UK on
Negative Outlook in the next 2-3 quarters (in line with Moody’s Aaa Negative
Outlook). We also expect that Portugal will be
downgraded over the next 2-3 quarters due to continued recession plus the
probable need to extend its Troika programme.
BANKS
Euro-zone banks not about to
boost a recovery any time soon – Nordea
The results
from the ECB’s latest bank lending survey (Q3) only add to worries that credit
growth is not going to support an economic recovery any time soon.
Euro
area bank lending: Halloween edition – alphaville
/ FT
Euro
area credit tightening – Danske
Bank (pdf)
GREECE
Two more years of extend and
pretend? – Open Europe
Total cost
of extension: €28.5bn, how? 1. Interest rate reduction, 2. Increased short term
debt issuance and further austerity, 3. Rescheduling debt (extending the length
of Greek loans), 4. ECB forgoing interest and/or profit, 5. Bond buybacks, 6.
Write-down original eurozone bilateral loans… We expect a short term stop gap
programme to be created with a mixture of option 1 and 2. This is likely to be
the most painful for Greece but the easiest for the creditors
to swallow. Unfortunately, this will add to Greece’s debt burden rather than reduce it,
Putting
a new drachma in historical perspective – alphaville
/ FT
Revising
the Greek bailout: Two more years of extend and pretend? – Open
Europe
The German bloc will have to
take its bitter medicine in Greece – The
Telegraph
My guess is
that Mrs Merkel will be forced to admit to the German nation that contingent
liabilities are turning into real liabilities long before her elections.
Elusive Greek deal – MacroScope
/ Reuters
Eurogroup
head Jean-Claude Juncker looked forward to a final settlement at the ministers’
face-to-face meeting on Nov. 12.
Not Exactly The Greek Orthodox – ZH
The IMF has
suggested that Europe take the pain and Europe is refusing and so the IMF may decide not to fund and leave the nations
on the Continent to their own designs. Any extensions in terms will require
another $40 billion give or take and some countries might actually refuse to
participate as a matter of national politics.
SPAIN
The
Spanish Bad Bank Emerges, Confirms Real Estate Absolute Disaster – ZH
Full presentation on Spain’s new bad
bank, e.g. haircuts of 80% on foreclosed land
Spain's unrealistic expectations – Danske
Bank (pdf)
The Spanish
government expects the recession to come to an end by mid-2013. In an
environment of fiscal tightening and sliding house prices, that appears to be
wishful thinking. Even if Spain manages to deliver the anticipated
-0.5% growth in 2013, this does not justify the government’s expectations that
the unemployment rate should decline slightly in 2013. It is simply at odds
with the empirical evidence. We expect that the Spanish economy will contract
1.5% or more in 2013, that Spain will miss its fiscal target and
that the unemployment rate will rise to at least 26.5%.
UNITED STATES
Election update - political uncertainty to continue – Danske Bank (pdf)
Election update - political uncertainty to continue – Danske Bank (pdf)
America's Most Expensive Storms – NPR
Sandy round-up – alphaville
/ FT
ASIA
Billions in Hidden Riches for Family of Chinese Leader – NYT
Billions in Hidden Riches for Family of Chinese Leader – NYT
Family has
at least 2.7 billion USD.
MARKETS
Seasonally Affective
Investing Disorder
– The
Psy-Fi Blog
It
shouldn’t therefore be particularly surprising that we’re unconsciously
affected by environmental conditions: there was a time, not so long ago, when
nothing else mattered. Now, cosseted by
central heating and air conditioning, we’re remote from our material world but,
it turns out, for investors our material world is not remote from us.
Intraday
Share Price Volatility and Leveraged ETF Rebalancing – SSRN
Over the last few years, market watchers and
regulators have been concerned about leveraged ETFs' role in driving up end-of-day
volatility through their daily rebalancing activities…Given the predictable
patterns of leveraged ETF rebalancing demands, we also explore the implications
for strategic trading and for leveraged ETF tracking errors during periods of
large market swings.
New Financial Forecasts:
Still waiting for Spain and Greece…. – Nordea
(pdf)
or read the
summary.
G10 Weekly: Monetary policy –
To infinity, and beyond – Nordea
(pdf)
The
assertion that central banks can create and control inflation under current
circumstances isn’t necessarily wrong, but definitely arguable.
How
Central Bank Policy Impacts Asset Prices
SocGen's charts and comments.
Part 1: Equities – ZH
Part 2: Bonds – ZH
Part 3: FX – ZH
Part 4: Commodities – ZH
IN FINNISH
Näin kriisillä "tienaaminen" köyhdyttää Suomea
– Jan
Hurri / TalSa
Eurokriisin tähän mennessä hölmöimpiä väitteitä on, että
Suomi jotenkin tienaisi kriisillä. Moinen möläys sulkee silmät tosiasioilta –
ja on mahdollisimman väärä. Suomi ei ole tienannut eikä tienaa tällä kriisillä
euroakaan, vaan kärsii parasta aikaakin isompia menetyksiä kuin moni muu maa.