I will post again in a few hours
http://ftalphaville.ft.com/blog/
FTfm on AV
Some highlights from Monday’s FTfm.Chairmen fail in governance duty
Chairmen of FTSE 350 companies are failing to take responsibility for corporate governance, with half making no mention of the issue in their annual report statements, according to a review of company reports for the year to the end of March 2011
LatAm poised for big growth
The Latin American asset management industry could nearly triple in size over the next 10 years presenting great opportunities for global managers, report says
Pension funds sign up for UK project
Two of the UK’s largest pension funds, The £11bn Greater Manchester Pension Fund and the £4.1bn London Pension Funds Authority, have agreed to work with the UK Treasury to develop proposals to facilitate institutional investment in infrastructure
Fine time to utilise those LDI strategies
Pension funds that have been ignoring their liabilities are in trouble, but those already employing LDI strategies are probably feeling great relief
Don’t trust the new normal in bonds
We’re in very strange territory indeed – Germany’s dismal bond sale, its worst received since the euro’s launch, and now the US and the UK, two debt-laden deficit countries, are the world’s main bolt-holes for nervous money, says John Plender
A welcome departure from the norm
StockR8 might actually work and might finally offer a departure from short-termism. Anything that helps us move in that direction would be good news, writes Pauline Skypala
So what happens if the euro breaks up?
John Dizard ponders the What Ifs arising from a break-up of the eurozone and wonders why the obligations of competitive, solvent corporations in peripheral Europe should not be valued at a premium to their home governments’ bonds
http://krugman.blogs.nytimes.com/2011/11/27/the-euro-curse/
The Euro Curse
Joe Weisenthal has a smart post comparing Sweden and Finland. Both look solid, and fiscally are in good shape. But where Swedish bond yields have been plummeting, Finnish yields have risen. As he says, this looks like the penalty Finland is paying for being part of the euro and lacking a lender of last resort.
I thought I’d look into this a bit more. Here are Swedish and Finnish 10-year bond yields (ECB monthly data; “November 11″ is actually last Friday):
You can see the big divergence as the euro crisis has exploded. But I think it’s interesting that Finland and Sweden started to diverge back in April. What happened then?
Ah, yes — the ECB started raising rates. And as Rebecca Wilder points out, that’s precisely when euro bond spreads began their upward march, culminating in the current crisis.
By itself, that rate hike — although it was obviously, obviously a big mistake — should not have mattered that much. But maybe it acted as a signal of the ECB’s bloody-mindedness, and that’s what set off the panic.
If that’s what happened, then the ECB’s hard-money madness may have destroyed the euro."
I thought I’d look into this a bit more. Here are Swedish and Finnish 10-year bond yields (ECB monthly data; “November 11″ is actually last Friday):
Ah, yes — the ECB started raising rates. And as Rebecca Wilder points out, that’s precisely when euro bond spreads began their upward march, culminating in the current crisis.
By itself, that rate hike — although it was obviously, obviously a big mistake — should not have mattered that much. But maybe it acted as a signal of the ECB’s bloody-mindedness, and that’s what set off the panic.
If that’s what happened, then the ECB’s hard-money madness may have destroyed the euro."
http://www.nakedcapitalism.com/
Saturday, November 26, 2011
IMF and ECB to offer Italy a 600 billion euro bailout (sources)
Cross-posted from Credit Writedowns There is a flurry of activity going on in Euroland this weekend. I have a number of stories up on different proposals in the offing. Clearly, European policy makers have got religion about saving the euro. Expect some kind of announcement soon. According to Austrian daily Der Standard, Italy is to [...]
Read the Rest...
Is a Eurofix Around the Corner?
After telling readers that the Eurozone leadership looks to be suffering from “dulled reaction times…so out of line with market events that even if they were to snap our of their stupor now, it would be too late,” news reports suggest that they have finally roused themselves.
Or have they?
Read the Rest...
http://www.telegraph.co.uk/finance/financialcrisis/
IMF drawing up £517bn package to save euro
The International Monetary Fund is being lined up to help Italy and Spain amid fears that a European rescue scheme will not work.27 Nov 2011
| Comment Markets pricing in endgame for the euro, warns UBS
27 Nov 2011
| 52 Comments Should the Fed save Europe from disaster?
27 Nov 2011
| 67 Comments George Osborne to unveil £20bn credit easing scheme
27 Nov 2011
| 20 Comments Jobless rate could hit 3m as private sector retrenches
27 Nov 2011
| 8 Comments Autumn Statement: the two coalitions go to war
On Tuesday, George Osborne will be making the case for the coalition of the competent against its ragtag rival, says Matthew d'Ancona.26 Nov 2011
| 105 Comments A daring idea to fix the economy: try doing less
The Government's solutions to the economic crisis are worryingly reminiscent of Gordon Brown's, says Janet Daley.26 Nov 2011
| 430 Comments America still the best place to find safe-haven stocks
Thanksgiving really was the appropriate word this year. Whatever else our American cousins have to be thankful for, they are particularly grateful that they are safely on their side of the pond right now.26 Nov 2011
| 31 Comments Lloyds makes £6m ‘golden hello’ bid
Lloyds Banking Group has entered into negotiations over a possible £6m “golden hello” to release chief financial officer, George Culmer, from his 12-month notice period at insurer RSA Group.26 Nov 2011
| 71 Comments It is now becoming clear Germany has had enough of this euro mess
The Anglo-Saxon world is feeling smug this weekend. UK and US policymakers are counting their blessings they’re not directly embroiled in the historic debacle that is the single currency.26 Nov 2011
| 726 Comments Spain 'will not apply for international aid'
Spain's conservative Popular Party which won an election last Sunday has denied reports it is considering applying for aid.26 Nov 2011
| 66 Comments http://www.zerohedge.com/
Black Friday Shopping Like There Is No Tomorrow?
Submitted by Tyler Durden on 11/27/2011 - 15:34 Black Friday Consumer Confidence Consumer Credit headlines Savings Rate
By now the broader population has been inundated with reports of what a stunning retail experience Black Friday was. And for those who haven't just head over to CNBC: "Sales rose an estimated 6.6 percent to a record $11.4 billion on Black Friday, typically the busiest shopping day of the year for Americans, while the traffic at stores rose 5.1 percent, according to ShopperTrak. The day's sales growth was the strongest percentage gain since 2007, when sales rose 8.3 percent on the day after Thanksgiving, said Ed Marcheselli, chief marketing officer at ShopperTrak, which monitors retail traffic." This is happening despite the savings rate recently dropping to pre-Depressionary level, and despite revolving consumer credit (as in not cars and colleges), continuing to contract. That there is more than enough fine print will be largely irrelevant for the mainstream media which will naturally trumpet this as the next best thing to the S&P actually rising for once: "More than 120 stores at the Mall of America opened at midnight. The crowd at that point was about 15,000 people. Mall operators estimated that it was the largest crowd ever at the mall, which is big enough to hold seven Yankee Stadiums. While eager shoppers emerged from stores around the country lugging big-screen TVs and bags full of video games and toys, it was far from certain that people will pull out their wallets for much more than the best deals this year. Shoppers with limited budgets started using layaway at chains such as Walmart as early as October. Retail shares fell more than the overall market on Friday. "Americans are still worried about jobs, still worried about the economy," said Mike Thielmann, group executive vice president at J.C. Penney, who noted that shoppers were buying gifts and for themselves, and said jewelry was selling well." Yet what really caught our attention was the Retail Group comparison of this "record" black Friday Weekend. From Bloomberg: 'RETAIL GROUP SAYS SECOND-BEST BLACK FRIDAY WEEKEND WAS IN 2008." As a reminder, Thanksgiving 2008 happened just after a nearly 400 point plunge in the S&P in two months as can be seen in the chart below. Which begs the question: with the world on the verge every single day once again, is it a coincidence that people spent more than they did only compared to 2008 when the world was once again ending. In other words, did Americans really spend "like there is no tomorrow" (more so than ever that is)... and what happens when the bill (because there is no doubt the purchasing was entirely on credit) is in the mailbox?http://www.guardian.co.uk/business/debt-crisis
Most recent
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27 Nov 2011: Jackie Ashley: The eurozone crisis has brought Ed Balls and George Osborne closer than they care to admit, and Lib Dems to the fore 43 comments - 27 Nov 2011: EU officials hope the Belgian government deal, ending 18 months of standoff between prosperous Dutch-speaking Flanders and poorer French-speaking Wallonia will impress markets
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27 Nov 2011: Italian footballers' association is encouraging members to join campaign to buy up bonds as country's banks waive fees - 27 Nov 2011: Move clears the way for a new government to be formed, amid fears of a fresh market panic after the country's credit rating was cut 29 comments
- 25 Nov 2011: But is there really any cause for optimism as the 'nice' decade turns 'vile'? 1 comment
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25 Nov 2011: • Italian and Spanish bond yields reach new highs
• Belgium downgraded by S&P credit-rating agency 378 comments - 25 Nov 2011: Eurozone crisis has left the Belgian government casting round for bond purchasers, writes Phillip Inman 36 comments
- 24 Nov 2011: Simon Jenkins: Europe may well muddle through with technocrats and tighter straitjackets, but the rule of the people must be guarded
285 comments - 24 Nov 2011: Global investors headed for the eurozone exit after leaders of the area's three biggest economies squashed residual market hopes for a huge intervention by the ECB
At the End of the Day
The strange case of the anti-social CoconutBrand new creatures don’t worry about dignity very much. She gave a shake, sniffed at a twig, and then returned to her previous occupation of chasing the crisp Autumn leaves, being startled by everything, and running around a great deal.
I have never known a puppy run everywhere in quite the way Coco does. Her full name is Coconut, and she’s certainly living up to the suffix. It exhausts me just watching her; and indeed, it does her too. At this age puppies are like clockwork toys – when the spring is fully unwound, they fall over. Then they sleep. Then they wee, poo, and eat some more eukanuba. Getting them to excrete the bodily wastes in the right places is, of course, the main challenge. Our house is now one long series of newspaper lavatories, most of which the puppy ignores in favour of Persian carpets and polished wood. I am become the human pooper-scooper.
There are half-chewed toys on the floor everywhere. They used to squeak, but dogs have a zero tolerance policy when it comes to squeaky toys. All our shoes, spectacles and headphones are on high surfaces. For like all terriers, Coco is a great believer in dental hygiene, and the method of choice for maintaining that is chewing everything that doesn’t object to being chewed. Then shaking it about until the predator is entirely sure it’s extinct. This process often takes several months, as slippers can take forever to die.
Manic chewing includes one’s fingers, and also other dogs’ legs. The technique when they bite your digits is to scream in a high-pitched voice. This terrifies the canine, deafens the neighbours, but teaches them that chewing people is wrong. Usually. Coco takes the response to be a sign of enjoyment. This isn’t going down well with me. But it’s going down like a cup of cold sick with our other two dogs.
Middle dog Tiggs is only three anyway, so having initially backed off when she saw the new baby – as if Coconut might be an alien hedgehog – she’s delighted to have something that likes being chased, and demonstrates this by going “Yup” with enjoyment whenever it happens. As Tiggs has a habit of going “Erp”, when they’re doing that maypole thing just as the fun is about to start, it’s hilarious to listen to the erp-yup-erp as things get going.
The problem with Coco is that she has no sense of when enough is enough. Working on the encouraging principle that Tiggs hasn’t as yet eaten her, the latest gambit is biting the end of the older dog’s tail, and then being dragged along on a short sledging trip. Tiggy now has her back to the wall at all times of puppy wakefulness. But the new girl is on thinner ice with Foxie.
Foxie greeted the new arrival with a menacing snarl, and a disdainful retreat upstairs. She is the undisputed Alpha, and a firm believer in the do-it-to-them-before-they-do-it-to-you principle. She’s reduced the snarl down to a glare now, but is way past all the chasing pa-lava. As for having her legs eaten, that was never something she would tolerate anyway.
Now when the Alpha finally snaps, growls and goes in briefly for the face, 99% of puppies squeak in panic and sprint for the nearest sanctuary. We have lucked into the 1% that doesn’t. Instead, she does an amazing all-fours off the ground backwards jump, and goes “Yup” again. Then she goes back for some more. This is how Arab border wars start.
In short, Coco is fearless. There are up and down sides to this: on the one hand, her only danger with Foxie is being gummed to death, as most of her teeth fell out years ago. On the other, who knows what troubles might lie ahead once the new pack member reaches truculent adolescence?
The good news is that they’re all three sleeping together quite happily now. I find this an enormous relief, as giving new puppies their space at night means our bed becomes a terrier treat for three weeks. I retreat to the middle bedroom in search of tranquility. Lack of bloke and presence of dogs on the bed is as close to nirvana as Jan could get. A horse in there too would add the perfect touch for my wife, but even she recognises that this would be a tad extreme.
Like all goody-two-shoes owners, we are still waiting for the pup’s injections to mature before taking her out to meet other dogs. At that time, we shall have the joy of watching her fail to understand that the lead isn’t something to climb up, enormous bull mastiffs are not vegetarians, and squirrels cannot be caught. Then it’ll be down the vet for socialisation classes. My two key conclusions from undergoing this ordeal are that first, it’s the owners who mainly need socialising; and second, there’s a great deal of urine involved – which is why the vets put an enormous plastic sheet down, and then retreat immediately. Once things get lively, it isn’t really what you’d call a class. It looks to me more like a canine reconstruction of the Battle of Little Bighorn. I’m always relieved when it ends.
As I write, Coco is going twelve rounds with one of Jan’s Crocs. More news in due course.
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Filed under A puppy too big for its paws
EU CRISIS BOMBSHELL: HOW THE EUROZONE PLANS TO SELL US OUT TO THE BANKS
Yes Wolfie, we can smell it too.Ever so quietly, with the acquiescence of Berlin, Brussels is planning to let the bankers off.
Scared by market attacks on northern Europe, and still lacking any bazooka money, the EU’s key players are secretly putting together a plan to ensure the electors pick up the debt-crisis tab. The plan – which first emanated from Paris – is being scoped out and sold to the major member States by Wolfgang Schauble. It will be discussed at the ESM summit this week.When I was first given this lead last Friday, my initial reaction was that it was unlikely to be true – because none of the majors had picked it up. But I’ve been fooled that way before. If you hunt hard enough, both Reuters and Bloomberg have reported it: but I don’t see any sign that they’ve grasped its full significance.
The spin technique has been to smother it with what appears to be this morning’s ‘big’ story – that Merkel and Sarkozy have agreed to set up an ‘instant austerity pact’ between all eurozone members….including themselves. Bild Am Sonntag pre-released it onto the wires last night, billing the idea as, basically, bringing the ESM bailout mechanism forward from 2013 and applying it de facto right away. In fact it’s nothing of the sort: it’s just another “look we’re applying discipline” stunt. More disturbing than the ham-fisted cynicism of this is that yet again here, we have a clear sign here of how Merkel is completely misreading what the markets are trying to get through her dull Osti head: they want action now on guarantees, not more signs of the dominatrix wielding her leather whip. But others are addressing this with a cunning approach to getting the markets off their backs.
Basically, the nugget that has gone largely undiscovered is this: although a number of sources know and have reported about tighter lending discipline being forced upon all the banks operating in the euro area, Brussels is secretly dangling a quid pro quo in front of investment bankers – who should be scoring loans properly as part of their commercial duty anyway.
Staggeringly, the deal is this: agree to these new banking rules in full, and we’ll let you off taking any haircut when it comes to ClubMed debt.
I understand the ClubMeds are all for it. Imagine that. The northern Europeans are less keen, because they see this for what it is: looney lender forgiveness as well as sovereign debt forgiveness. The exception (and why are we not surprised?) is German Finance Minister Woflgang Schauble.
The way this would span out, the fat guys in the tall buildings – who have not suffered at all in the past – will not suffer anything at all in the future either. Those who have wound up sleeping on the streets because of their foolhardy agreement to the cheap loans pushed their way will be let off….courtesy of the EU taxpayer. In a phrase, the banks would be off the hook. As always in Wonderland, however, there is the small matter of who picks up the tab.
I suppose one always imagined it would end up like this…but somehow I’d hoped that this time, the banks might get theirs. That now looks more doubtful than it did a week ago. Also unsurprising is that I am reliably informed the idea came from….France. Having knocked at the doors of the EFSF, the ECB and the IMF, Sarko is now knocking on our doors. If this thing flies, we the People will be bailing out the banks all over again.
I suspect that quite a few folks have missed the significance of the leaks and briefings because they are couched in the usual obfuscation about ‘private sector involvement in the region’s permanent bailout fund’, ‘preconditions for deeper integration among euro zone states’, ‘changing the statutes of the European Stability Mechanism’, ‘restructuring debts that undermine market confidence in the currency zone’ and other related bollocks. But the bottom line, I am assured, is exactly as I’ve described it.
Now of course, this is far from being a done deal – and if we get this news around the blogosphere (especially on the European mainland) as quickly as possible, it might turn into a self-denying prophecy. The disturbing element is how attractive it is going to look to all those about to be pardoned for their arrogant idiocies – even Berlin. It is, let’s face it, a piece of lateral thinking: we can stop the lenders looking for a last-stop Sugar Daddy by letting them off the haircuts, and using the bailout mechanisms to pay the money back. And then we can quietly sneak through a 100 million small tax changes and personal allowance mechanisms, while upping everything from parking charges to healthcare contributions.
It is much easier to convince the distracted citizenry that they’re not really going to pay for this mess than it is to fool a bunch of hard-bitten lenders – whose allies in the markets can hound you unto death’s door if they don’t get what they want.
And bear in mind anyway, to remove the ESM Statutes about lender involvement in debt reduction would require only a majority vote of the eurozone countries.
“There are a few pointers here and there suggesting some movement in Berlin on the question of banks taking their full share of responsibility,” a trusted Parisian source told me yesterday afternoon. (As it happens, this source is on the outer fringes of DSK’s circle. Given that he thinks Sarkozy is an arse and Merkel is mad, I think we can rely to some extent on the provenance of the information: this is very bad news for all those French Socialists expecting the banks to get at least some comeuppance. More to the point, Sarko will without doubt use this scam – if it comes off – to present himself as the man who saved the French banking system.)
So then, surprise surprise – in the end, the europols take the easy way out. But it doesn’t end there.
Germany is also under pressure to soften its opposition to the European Central Bank (ECB) playing a more direct role in combating the debt crisis. It would be a simplification to say that the ECB capital and liquidity which isn’t junk bonds and parked bank cash belongs to us. Technically it doesn’t, because we paid for that through another million hidden taxes. But morally, central banks are there to ensure that the viability of citizen savings and currency valuation remains intact, and free from the machiavellian short-termism of the private financial sector.
So it will be our money that’s at risk. Still not convinced that we’re being sold out? Well, there is yet more: Reuters reported on Friday evening that ‘The European Commission will publish rules on state aid for lenders that may dilute the effect of turmoil in the euro area on the fees that banks have to pay for guarantees on their loans and bonds’. It’s another sweetener: call off your dogs guys and, one way or another, we’ll make it easy for you.
Officials in Berlin were yesterday calmly denying any involvement in a ‘Big Deal’ to solve the debt crisis. But as Bloomberg reported late last night GMT, ‘officials in other euro zone capitals, including Brussels, say such a deal is taking shape and suggest Berlin will move when it has the commitments it is seeking’. As I’ve now had the initial lead from Brussels, and a convincing confirmation from Paris, I have to believe that the talks are for real. In fact, I know the issue will be discussed at the Tuesday/Wednesday ESM meeting in Brussels this week. And I know that Schauble has been persuading reluctant Finns and the Dutch to buy into it.
The Dr Strangelove look-alike might yet have to persuade Chancellor Merkel to go along with this. But as always with unser geliebter Wolfie, yesterday he was using the cover of the Merkel-Sarkozy ‘pact’ to get some hints out there into the environment. This remark was, for me, something of a clincher:
“Basically, we agreed on the principle for the ESM already in July,” he said, “If we now manage to move toward a stability union, we’ll see how one might possibly adjust responsibilities within the agreement.”
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You don’t really need me to sum up what all of the above means. And to be frank, even when the truth comes out, a lot of EU citizens will accept the solution. So brainwashed have we all been over the last decade into believing that damage to the banking system means the planet will explode, it won’t be hard to bamboozle, cajole and spin this ‘answer’ to the electorates concerned. It is, in all senses except those involving morality and ethics, a very clever idea indeed.The ClubMed debtors have welcomed the scheme with open arms, and I don’t doubt their peoples will too. The obvious ethical flaw in the idea – that the banks win again – will appear esoteric to the Spanish estate agent whose credit line stays in place. But the ethical bombshell is nothing compared to what is once more being kicked down the road: how to get the real economies of Europe going again. The higher taxes and falling living standards that must follow the enactment of this grubby plan will turn a depression into a slump. I no longer have any real idea whether this bothers the banks, but I very much doubt it: their activities seem to take place more and more in a nether world far away from the rest of us – be that socially or economically.
Update/Corroboration: Some Sloggers seem to think I’m either making this up or making it too complex. Either way, there is an eminently clear version to be read here at Mish’s blog.
