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’Kicking the Can(nes)
Under-promise then under-deliver. Then watch markets tank. That’s the prognosis for the G20 summit, courtesy of Capital Economics’ crystal ball.
After poo-pooing suggestions Bric nations will ride to the eurozone’s rescue or take constructive measures to resolve global imbalances,
Step away from the Greek political risk
If you’re trying to price political risk perfectly… you’re doing it wrong, we’d submit. The Greek referendum’s a case in point.
The referendum came out of the blue. It might not even go ahead, pending a government collapse or early elections. So,
It-never-ends-um [updated]
…The President of the Republic shall by decree proclaim a referendum on crucial national matters following a resolution voted by an absolute majority of the total number of Members of Parliament, taken upon proposal of the Cabinet.
Who wants to be a Greek bond holdout?
Depends on what the “holdout” position is, maybe.
First though, we just can’t resist peeking at the latest in the Greek restructuring (re)negotiations.
Rumours about the new Greek private bondholder haircut are changing seemingly minute by minute at pixel time,
Eurozone running out of knights
Knights in shining armour that is.
The recently-floated plan for the big emerging markets to send money to Europe via an IMF-led SPV, which could be used alongside the EFSF to buy sovereign debt, is getting the lead balloon treatment.
The price of pathological procrastination
Pathological procrastination by the sovereign debtor in acknowledging the severity of its problem and commencing the necessary workout process can make the ultimate resolution of the crisis far more costly for all concerned—the sovereign debtor,
Greek haircuts and Greek myths — the details
European leaders on Friday received some interesting weekend reading.
FT Alphaville has also taken a look at “Greece: Debt Sustainability Analysis”, an assessment prepared by European Commission economists for discussion on Friday among European finance ministers.
US to Brics: thanks, but Europe needs to save itself
Not quite, but near enough, according to reports on Friday afternoon from the FT and Reuters.
The pink paper revealed on Thursday that Bric countries were looking at ways to support the eurozone, such as via a unicorn SPV,
The translated Troika
11 October 2011 – Statement by the European Commission, the ECB and IMF on the Fifth Review Mission to Greece
Staff teams from the European Commission (EC), European Central Bank (ECB), and International Monetary Fund (IMF) have concluded their fifth review mission to Greece to discuss recent economic developments.
IMF SPV — splatted
IMF European director Antonio Borges sallies forth to fix Europe’s sovereign debt crisis once mo — oh, hang on, oops:
Let me be clear about some earlier comments I made
The rest of it… is quite painful:
Quantum leap: EuroTARP
The FT’s report yesterday that policy makers may finally be getting around to throwing a TARP over European banks has sure got people talking. Will Dexia go down as the unwitting catalyst to addressing the lingering questions around bank solvency? And has the feedback loop between banks and their sovereigns been recognised as the death spiral that it is?
For an overview,
Meet the institutional investors
The end-users, the clients, the buyside. Or in more standard parlance – institutional investors. Not “buyside” like hedge fund — more like your pension fund, insurance companies, reserve managers, sovereign wealth funds,
The IMF can make your €200bn capital hole disappear in days!
What capital hole? The hole was never there! We do not know this €200bn capital hole of which you speak. This is spillover risk!
Charts via Chapter 1 of the IMF’s latest Global Financial Stability Report,
Increasing Macroeconomic Fright
Title of the IMF’s World Economic Outlook, September 2010:
Recovery, Risk & Rebalancing
The title of the September 2011 edition (just out at pixel time)…
Slowing Growth, Rising Risks
It’s generally
Rogue island
Madeira, a scenic archipelago of 267,000 people, crashed into the Portuguese mainland on Friday, scattering shards of new sovereign liabilities…
…Experts estimated the damage reached at least 0.3 per cent of the country’s GDP.
A Greek T-bill oddity
From the English edition of Kathmerini (hat-tip to a reader):
The prospect of a freeze in payments appeared even more serious on Thursday, after Greek commercial banks failed to cover the sum of 300 million euros of supplementary,
Greek execution risk, and the bond swap
With Greece “pausing” IMF talks and admitting that this year the budget deficit will be bigger and growth smaller…
…this is probably a bad time to note that the economics behind the Greek bond swap assumed something very different only recently.
Italy is the single point of failure. Including its auctions
Here’s the thing about “cancelling” an Italian bond auction. You have lots and lots of opportunities to do it (click to enlarge):
(Dates for August and September from the Italian treasury’s very own,
About those Greek privatisations..
Confusion in Greek bailout Mk 11 — not just for bondholders. This time it’s about the privatisation receipts.
Deutsche Bank has set its economists Abhishek Singhania and Alexander Duering to the task of addressing client questions over the differences between the EU and IMF financing documents.
China, nothing to see here
The HSBC/Markit flash China PMI for July fell below the 50-mark to 48.9. It was 50.1 in June, making the biggest fall since March 2009 and the first negative result since July 2010.
Whew.
(Cue some more slowdown/stagflation worries.)
The news apparently was a bit of a dampener on markets,
The International Monoline Fund, ECB and Greek banks edition
Among things you can find out from reading the IMF staff’s 172-page fourth review of the Greek bailout:
1) The Greek central bank is making contingency plans for providing lenders with emergency liquidity assistance outside the European Central Bank (p.
That Greek bank risk in New Europe, continued
If there’s something Greek and strange in your neighbourhood (bank contagion risk to sovereign credit in emerging Europe, to be precise)…
…Who are you going to call?
In Nomura chart form:
Click to enlarge.
The French proposal
You should all now be familiar with the EU ‘Brady bonds’ plan for Greece.
But what are the pros and cons of this French-led initiative?
Here’s RBS’s Harvinder Sian with his thoughts. We start with the short term positives:
IMF to Europe: could you try TAF please?
In this context, it will be essential to bring the unproductive debate about debt re-profiling or restructuring to closure quickly.
We were so distracted by the IMF’s pragmatic controversial application of the word ‘unproductive’ in its Article IV consultation on the eurozone…
Eurogroup to Greece – your move
Monday’s (very early) statement from the Eurogroup.
Quick summary. We’ve done our bit (or will have by early July), now it’s your turn.
(emphasis ours)
Statement by the Eurogroup
The Greek authorities are embarking on a significant and necessary adjustment effort.
Top of the Greek bond exposure pops [updated]
Emphasis on the popping. Worth listening to this as you scroll down the below table, compiled by a clearly nostalgic Laurent Fransolet of Barclays Capital…
None of the exposure is surprising,
The International Monoline Fund
Odd story in the Guardian on Friday:
Under its acting chief, the American John Lipsky, the IMF has taken a more hardline stance. The fund warned the Germans in recent weeks that it would withhold urgently needed funds and trigger a Greek sovereign default unless Berlin stopped delaying and pledged firmly that it would come to Greece’s rescue…
The real risk to Greece is Greece
An obvious point maybe, but one worth making, reckons JPMorgan’s David Mackie.
He thinks we should move on from worrying about the dispute between Germany and the ECB on Greek Bailout II and instead focus on what’s happening in Athens.
Plan B
The IMF version for the UK, anyway:
Conversely, if the economy experiences a prolonged period of weak growth and high unemployment—and if inflationary pressures consequently ease—fiscal automatic stabilizers should operate freely (as the fiscal mandate is designed to allow) and the current monetary policy rate should be maintained for an extended period.