November, 2010
The three ages of Greek government debt
Dead, deader — and eventually, stuffed inside the ECB/Greek banks.
Chart courtesy of Citigroup’s European banks analysts (click to enlarge):
Never mind bailout payment delays, that’s a real looming headache for Greek default risk in the future.
Money flow misallocation
What do you get when you cross US QE2 with a eurozone crisis?
Something like this chart:
That’s the difference between the US dollar and the euro overnight deposit rate — and you can see it’s been increasing in recent weeks,
Markets Live transcript 17 Nov 2010
Markets Live chat transcript for the chat ending at 12:20 on 17 Nov 2010. Participants in this chat were: Neil Hume, FT bryce.elder NHMorning rabble NHapologies for being late
Meanwhile, in China…
While the eurozone is transfixed on the unfolding problems in Ireland and other peripheral economies, ‘central bank action month’ continues in Asia, where China is galvanising its Asian neighbours — even more than usual — first with its ongoing stock market rout and also moves to introduce price curbs on consumer goods.
Es ist mir (Greek) Wurst [updated again]
If anyone was hoping Tuesday’s Austria-Greek kerfuffle was a slip of the tongue by finance minister Josef Pröll — it seems not. On Wednesday there are multiple reports that payment of Austria’s next tranche of Greek aid will be delayed until January.
That EFSF sense of urgency
Ireland may scream to the rafters that it’s funded until the second quarter of 2011 — but there’s a reason some eurozone leaders are pressing for it to tap Europe’s SPV.
The European Financial Stability Facility,
Dear RepoClear Member
LCH.Clearnet has doubled the margin requirement on members’ trading in Irish government bonds — just a week after this was lifted to 15 per cent.
Here’s Wednesday’s letter, which contains something of a disclaimer,
Further reading
Elsewhere on Wednesday,
- The human cost of the Irish crash.
- Securitisation has become “ETFisation.”
- QE2 and the undead, homicidal, zombie market.
- Senior secured bondholders vs senior secured lenders.
Pink picks, eurozone crisis edition
Comment, analysis and latest reports on Ireland and the eurozone debt crisis — as well as some other offerings — from Wednesday’s FT,
Charles Grant: The price of German leadership
The euro, the EU’s boldest and most ambitious project,
Snap news
Breaking pre-market news on Wednesday,
- LCH.Clearnet to double margin requirement on Irish bonds — statement.
- Northern Foods and Greencore announce plans to merge — statement.
- Actelion in “regular dialogue”
Statement by the Eurogroup on Ireland
It starts pleasantly enough (emphasis ours):
The Eurogroup welcomes the significant efforts of Ireland to deal with the challenges it faces in the budgetary, competitiveness and financial sector areas.
Further further reading
For the commute home,
- Germany and America, a tale of two recessions.
- Paul Calello, CEO of Credit Suisse during the financial crisis, has passed away.
- Andrew Ross Sorkin vs Felix Salmon on Steven Rattner vs Malcom Gladwell on Rattner vs Rick Wagoner.
The COP estimates putback losses
The Congressional Oversight Panel’s report for November carries the unappetising subtitle, “Examining the Consequences of Mortgage Irregularities for Financial Stability and Foreclosure Mitigation”.
Here’s the part of the report that estimates losses to the banks on putbacks:
A two-tiered bond market in Europe
You saw Europe’s two-tiered rates market, and were chilled.
Now see Europe’s possible two-tiered bond market, and be confused.
Away from the sound and fury (signifying… nothing?) of Irish bailout talk,
The doves respond, quietly
Policymakers who favored QE2 are under attack from various directions right now, from other countries accusing the Fed of manipulating the dollar to domestic politicos to right-leaning economists.
Two
When Irish bucks are passing [updated]
Step one:
RTRS-IRISH PM SAYS EXPECTS EURO FINANCE MINISTERS TO ISSUE STATEMENT AFTER THEIR MEETING TODAY
Step two:
RTRS-EURO ZONE SOURCES SAY FINANCE MINISTERS UNLIKELY TO TAKE A DECISION ON IRELAND ON TUESDAY
Stuck in the middle — one 8.5 per cent-yielding Irish 10-year bond.
Austria invades Greece CDS
To give a flavour of the Greek bailout’s new-found Danube risk — a spike in Greece five-year CDS to 950 basis points on Tuesday. Chart courtesy of Markit:
That’s nearly a 100bps rise intraday. Ouch.
Greek profligacy vs Austrian obstinacy
Tuesday is a big day for European markets, in case you hadn’t noticed.
And not just because eurozone finance ministers are meeting in Brussels this afternoon to talk all-things-Irish. Elsewhere in the currency union — both Spain and Greece had bond auctions earlier this morning.
Standing up for Ireland ♣
The irony of Ireland moving swiftly to trim its budget deficit — and still ending up as the new centre of a European crisis — makes good newspaper fodder. But there is something rather unfair about the island’s current predicament.
A far-sighted statesman
Ireland is no longer on the edge of Europe but is instead an Atlantic bridge. High-tech companies such as Intel, Oracle and Apple have chosen to base their European operations there. I will be asking Google executives today why they set up in Dublin,
Markets Live transcript 16 Nov 2010
Markets Live chat transcript for the chat ending at 12:32 on 16 Nov 2010. Participants in this chat were: Neil Hume, FT bryce.elder NHHola Rabble NHwelcome to ML NHand another 60mins or so of action packed markets chat
A collateral conundrum for Irish banks [updated]
Some more on the funding plights of Irish banks, which’ve hoved into view over those bailout non-talks between Ireland and Europe.
We know that Irish banks increasingly need central bank liquidity in order to survive being shut out of funding markets,
Dear Chancellor…
It’s letter writing time again at Threadneedle Street.
Following the announcement by the Office for National Statistics that CPI inflation in the 12 months to October was 3.2 per cent, the Bank will at 10.30am this morning publish a letter from the Governor to the Chancellor,
The new Xstrata? [updated]
JPMorgan’s hyperactive M&A banker Ian Hannam has been uncharacteristically quiet over the past few months.
And now we know why. He’s been working on a deal to create a “new London-listed resources champion”.
Rethinking the ECB exit – yet again
This is not a good sign.
If the European Central Bank had been trying to stabilise the Euro overnight deposit rate in recent weeks — as most central banks are wont to do during a crisis — then they’ve failed.
The levelling-off in OTC derivatives
Fresh from the Bank for International Settlements — lots and lots of derivatives statistics.
And according to the central bank’s bank, growth in the OTC derivatives market has rather slowed. Positions went up in the three years since their last Triennial survey (+15 per cent,