December, 2011
Further further reading
For the commute home,
- Tweeting survives the end of history as Francis Fukuyama signs up (his take on Europe here).
- Against financial stability, by London Banker.
- China forgets inflation and goes for growth.
Introducing the ESM bank, rejecting the ESM bank
Well, it wouldn’t be Summit Eve without rumours and counter-rumours. But the clown show might have outdone itself this time.
Forty minutes before US markets closed, Reuters reported that the ESM would receive a banking licence and run side-by-side for one year with the EFSF,
Jon “to my recollection” Corzine returns
After a break for voting, it’s back to the MF Global hearing, where Jon Corzine is facing questioning. Click through for the live feed:
So far, the former MF Global chief hasn’t gone much further than his prepared testimony,
Inigo Montoya has a delayed message for S&P
Something we stumbled across while working on a separate post:
“Under our first scenario, which assumes no policy actions to counter demographic fiscal pressures, a general downward slide in sovereign ratings is expected to start in 2020,
Is there a world outside EBA capital targets? [updated]
Update — FT Alphaville has heard that the answer to this question is in fact… yes. See below for more details.
The official EBA numbers on European bank capital shortfalls are out. In aggregate it’s €114.7bn.
Sweet deals in European bank deleveraging
What links Hershey to the eurozone debt crisis? Well, aside from making a product that cracks under pressure, the confectioner has recently renewed a syndicated lending deal that Nomura’s analysts say augurs further European bank deleveraging.
Effectively controlling assets, MF Global edition
MF Global lost ‘effective control’ of its sovereign bond assets. This gifted the broker some rather favourable accounting treatment. The broker’s clients, meanwhile, wanted to keep effective control of their own assets,
More on the ECB’s most significant non-standard measures
Have you been flummoxed by Mario Draghi’s talk of three-year LTROs, reserve cuts and collateral adjustments on Thursday? We have.
Thankfully, the details have been outlined in the ECB press release,
Post-euro economies, charted
Crystal-ball charts via Mark Cliffe of ING (click to enlarge):
We lay emphasis on “crystal ball” given the long time-frame ING has employed, and the intense difficulty in quantifying the damage which complete break-up would cause to cross-border trade and so on.
Dr Robert Peston will see you now
Ring my friend, I said you call Doctor Robert
Day or night he’ll be there any time at all, Doctor Robert
Doctor Robert, you’re a new and better man,
He helps you to understand
He does everything he can,
The LSE’s call to action
Sadly, the London Stock Exchange’s plan to fix the broken UK IPO market is unlikely to work for the simple reason that it doesn’t really believe there’s a problem.
For companies seeking to raise capital,
The ECB’s new non-standard measures…
Here they are (via Reuters):
Today 13:31 – ECB’S DRAGHI – UNDERLYING PACE OF MONETARY EXPANSION CONTINUES TO BE MODERATE
Today 13:32 – DRAGHI-COST PRESSURES SHOULD REMAIN MODEST OVER POLICY RELEVANT
Hors d’oeuvres from the ECB
We now await the main course.
What will Chef Draghi offer us? A three-year LTRO? Or what about a wider pool of collateral for your delectation? ECB bills?
Tune it at 1.30pm (GMT):
While you wait for the gastronomique feast,
Show me the Wally, Mr. Corzine [updated]
RTRS-JON CORZINE: “I SIMPLY DO NOT KNOW WHERE THE MONEY IS”
RTRS-CORZINE: “I BELIEVE IT IS APPROPRIATE THAT I ATTEMPT TO RESPOND TO YOUR INQUIRIES”
RTRS-CORZINE SAYS WHILE AT MF GLOBAL HIS “INVOLVEMENT IN THE FIRM’S CLEARING,
What the repo markets *want* the ECB to do
We’ve discussed why the ECB’s policy of applying different haircuts to eurozone government debt collateral may be adding to dysfunctions in the repo market.
It’s one reason why broadening the ECB’s list of accepted collateral to include lower-quality assets won’t make much of a difference on a policy scale.
Markets Live transcript 8 Dec 2011
Markets Live chat transcript for the chat ending at 12:59 on 8 Dec 2011. Participants in this chat were: Neil Hume, FT Bryce Elder/FT NHHola rabble NHwelcome to ML NHI am back
Not even in Japan…
Whatever is decided at the Save the Euro summit, it seems certain the eurozone is heading into recession.
But not just any recession, this will be a protracted one reckons Citigroup.
Our economists believe the sovereign debt and banking crises are causing a renewed recession in the Euro Area.
On the ECB’s ‘most significant non-standard measure’
Back in October 2008, when the ECB first announced its list of extraordinary liquidity measures to help combat the financial crisis, most eyes were drawn to such things as widening eligibility of collateral and the announcement of long-term refinancing operations (LTROs) .
Further reading
Elsewhere on Thursday,
- Levitating above the crisis as the printing presses come out.
- But there are still ways that the euro can be saved.
- Though the stock market disagrees.
- But hell,
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
John Gapper: Let rating agencies have their say
Despite the criticism that rating agencies have endured in the past three years – much of it justified – someone at Standard &
Snap news
Breaking pre-market news on Thursday:
- Tesco says UK sales down for a fourth month in a row — statement.
- Imperial Leather soap maker PZ Cussons warns on profits — statement.
- Mulberry says half year profits up 231 per cent — statement.
Further further reading
For the commute home,
- Prognostication problems and the archives of The Economist.
- Next week might have the largest number of US IPOs since 2007.
- Ten questions for Jon Corzine.
- Despite the slump,
For sale: one timber company, hardly used
It’s about time we heard again from Sino-Forest.
The timber flipper has been quiet since it published the interim report into allegations of fraud made in June by short seller Muddy Waters. Third quarter results aren’t out until December 15,
Who does the ECB call when it wants to speak to Europe?
Answer: the United States.
The Washington Post on Wednesday has a sympathetic piece highlighting US officials’ behind-the-scenes roles in the eurozone crisis.
Most of which shouldn’t be surprising considering Tim Geithner’s background and the Stackelbergian morass in Europe, but there were a couple of interesting nuggets:
When the deleveraging meets the real economy
Looking forward to the new year yet?
After a likely outright contraction in GDP in 2012, in the creditless recovery that we envisage the pick-up in GDP growth is likely to be slow and shallow.
That’s from a note by Daniele Antonucci at Morgan Stanley in which the analyst assesses the impact of bank deleveraging on the real European economy.
Bloomberg vs Bernanke
How did it come to this?
1. Bloomberg News spent a couple of years trying to extract more information about the bank bail-out loans than the Fed wanted to share.
2. Bloomberg ran this story based on the data it obtained,
Markets Live transcript 7 Dec 2011
Markets Live chat transcript for the chat ending at 12:26 on 7 Dec 2011. Participants in this chat were: Bryce Elder/FT Joseph Cotterill, FT BEFinally! BEGood morning, everyone.
Me like cheap dollars
A much bigger turn-out than usual from banks for the ECB’s latest operations to swap their euros for dollars:
RTRS-ECB ALLOWS 50.685 BLN DOLLARS IN 84-DAY OPERATION VS RTRS POLL $10 BILLION
RTRS-ECB
UBS doubts your eurozone contingency plan is good enough
The latest eurozone missive from UBS’ global economics team is out, and they sound worried that their earlier reports were not adequately scary taken seriously enough.
Yes, the euro is deeply flawed,
Further reading
Elsewhere on Wednesday,
- What went down at Olympus.
- Equities are the new regulatory liquidity buffer.
- But should they be?
- Gasoline as a recession indicator.
- Social unrest in a chart.