Thursday, June 14, 2012

19:56, 6/13/12

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http://af.reuters.com/article/worldNews/idAFBRE85C0CG20120613

Greek banks see outflows pickup as election nears - bankers

Wed Jun 13, 2012 9:04am GMT
 
ATHENS (Reuters) - Greek banks have seen a marked increase in the pace of bank withdrawals as a June 17 general election nears and fears grow that Greece could be forced out of the euro, senior bankers said on Wednesday.
Combined daily deposit outflows from the major Greek banks have reached 500-800 million euros over the past few days, with the pace picking up as the election draws closer and rising noticeably on Tuesday, two bankers said.
Deposit outflows at smaller and medium sized banks were running at 10-30 million euros.
"This includes cash withdrawals, wire transfers and investments into money market funds, German Bunds, U.S. Treasuries and EIB bonds," said one banker, who spoke on condition of anonymity.
Fears that Greece may have to quit the single currency and return to a weak drachma have fuelled a steady stream of withdrawals by companies and businesses alarmed at the prospect of seeing the value of their deposits cut sharply.
The result of the election, called after a previous vote in May failed to produce a government, remains too close to call, with the conservative New Democracy party running neck and neck with radical leftist SYRIZA.
Both groups say they want Greece to remain in the single currency but SYRIZA has pledged to scrap a 130 billion euro bailout agreement signed in March which has imposed some of the toughest austerity measures seen in Europe in decades.
The European Union and International Monetary Fund have warned that Greece, which has only enough cash to last for a few weeks, must stick to the conditions of the bailout deal or risk seeing funds cut off.
A third Greek banker said the withdrawals were manageable and were matched by the Emergency Liquidity Assistance programme provided by the European Central Bank.
"We have stable outflows on a daily basis, which are manageable and covered by the ELA facility," the banker said.
(Reporting by George Georgiopoulos and Lefteris Papadimas; Editing by Catherine Evans)"




Biderman & Santschi On "Why Germany Should Leave The Euro"

Submitted by Tyler Durden on 06/13/2012 - 17:08

While some have discussed the game-theoretic dilemma that Germany faces relative to the 'rest' of Europe, David Santschi of TrimTabs (Biderman's balder buddy) digs into the details of a potential solution (hard as it may be) as Europe's fatal flaw (the currency unionization - but not fiscal or banking union -  of a group of nations with strong sovereign identities) becomes all too real. The imbalances are so great right now that the only solution David sees is to breakup the Euro-zone, and simply put the best way to achieve a break up would be for Germany to leave voluntarily - establishing a strong currency and in turn saving itself financially. While not minimizing this as a 'good' or 'easy' solution - many people would lose their livelihoods and many would lose a lot of money - it is the only practical solution that he sees (as Eurobonds, banking unions, and fiscal unions are simply impractical in terms of both effect and timeliness). Quoting W.C.Fields with regard the European press' and politicians' efforts towards investors: "If you can't dazzle them with brilliance, baffle them with bullshit!", they correctly explain that Europe is a solvency problem and not a currency problem. In one of the sanest (and least hyperbolic) discussions of the reality in Europe, Bidermantschi note that it appears investors have finally wised up to the fact that "bailout loans are nothing but a shell game replacing old debt with new debt" and the heretical proposition that central banks perhaps cannot solve all the world's problems.




Tyler Durden's picture

These Three Spanish Banks Will Be Downgraded Tomorrow

Submitted by Tyler Durden on 06/13/2012 - 18:55 Counterparties ratings "As is well-known in the ratings world, sovereign downgrades never come alone: first the sovereign is cut, then sovereign-supported domestic banks (the sovereign is the threshold rating), then general financial companies like insurance firms and specialty fins. Such downgrades are particularly painful when they go through a major threshold such from A to B as they spring various collateral and margin calls into action. One thing we do know is that the last thing undercapitalized Spanish banks can afford now is even more margin calls, and even greater collateral haircuts. However, this is precisely what will happen for the following 3 banks tomorrow: Banco Popular Espanol, Banco Santander and BBVA, all of which are currently at the old sovereign rating of A3 and tomorrow will see their rating cut to Baa3, and we fully expect the other three Moody's rated banks: Caixa, Banco Financiero y de Ahorros and Sabadell to be cut anywhere between 1 and 3 more notches, sending them into junk territory. We can only hope that the ESM or whatever Spanish bank bailout scheme is operational tomorrow as suddenly all of the banks below will find themselves without any willing counterparties around the world."



http://blogs.reuters.com/felix-salmon/2012/06/14/dont-worry-about-target2/

"But more to the point, German depositors wouldn’t lose any money, German banks wouldn’t lose any money, and the German government wouldn’t lose any money. The only entity which might be considered to have lost money would be the Bundesbank — but really the Bundesbank would just have converted all of the euros in Germany to Deutschmarks. If the euro ceased to exist, obligations within the eurosystem would cease to exist as well — indeed, the whole eurosystem would cease to exist, since its entire raison d’etre is to support the euro. All those internal accounting conventions would disappear in a puff of smoke, and every national central bank would be on its own, running its own currency and looking after its own banks.
It’s maybe comforting to think that today’s euros are somehow real and that tomorrow’s hypothetical Deutschmarks are not real, and that therefore if tomorrow those euros ceased to exist and were replaced by Deutschmarks, that there would be a loss of hundreds of billions of euros. But that’s not how fiat currencies work. Tomorrow’s Deutschmark is no more or less real than today’s euro, and in fact the most likely problem with the Deutschmark is not that it would be weakened when the Bundesbank printed lots of it, but rather that it would be such a popular currency that it would soar in value, making German exports uncompetitive."

Sometimes I think I understand

http://www.telegraph.co.uk/finance/financialcrisis/

IMF approves €1.4bn Irish bail-out loan

The International Monetary Fund has approved a €1.4bn (£1.13bn) disbursement to Ireland under a three-year IMF-EU rescue loan and cautioned that the broader euro-zone debt crisis could dampen the country's export-led recovery.  
The International Monetary Fund has approved a €1.4bn (£1.13bn) disbursement to Ireland under a three-year IMF-EU rescue loan and cautioned that the broader euro-zone debt crisis could dampen the country's export-led recovery.
13 Jun 2012
| Comment

Spain could be cut to junk within three months

 
Spain could be downgraded to 'junk’ within three months, rating agency Moody’s warned on Wednesday night, as it slashed the country’s credit rating by three notches.
13 Jun 2012
| 61 Comments

Spain faces 'junk' status within three months: full statement

Moody's has warned it could cut Spain to  
Moody's has warned it could cut Spain to "junk" within three months, as it slashed the country's credit rating by three notches, citing the increased debt burden linked to its bank bail-out. Here is the rating agency's statement in full.
13 Jun 2012
| 2 Comments

Europe's sovereign funk denies solutions

It's hard to know whether to laugh or cry. Every week, seemingly, brings some new miracle cure, some further quack remedy, produced as if from the back of a lorry, which promises finally to fix the eurozone debt crisis once and for all.  
It's hard to know whether to laugh or cry. Every week, seemingly, brings some new miracle cure, some further quack remedy, produced as if from the back of a lorry, which promises finally to fix the eurozone debt crisis once and for all.
13 Jun 2012
| 30 Comments

Germany signals shift on €2.3 trillion redemption fund for Europe

The German government has begun opening the door to shared debts for the first time in a profound change of policy, agreeing to explore proposals for a €2.3 trillion (£1.9 trillion) stabilization fund in order to stop the eurozone’s crisis escalating out of control.  
The German government has begun opening the door to shared debts for the first time in a profound change of policy, agreeing to explore proposals for a €2.3 trillion (£1.9 trillion) stabilization fund in order to stop the eurozone’s crisis escalating out of control.
13 Jun 2012
| 342 Comments

Debt crisis: as it happened, June 13, 2012

Syriza leader Alexis Tsipras says EU will do all it can to keep Greece in the eurozone and supply funding to the country even if he is elected and rejects austerity measures.
13 Jun 2012
| 832 Comments

Debt crisis: Greeks pulling €800m a day from banks

Greeks are withdrawing up to €800m a day from their banks and stocking up on basic food supplies ahead of the election on Sunday that many fear will result in the country being forced out of the euro.
13 Jun 2012
| 5 Comments

Weak manufacturing points to eurozone slump

The eurozone is edging closer to a deep recession, economists warned after official figures showed that manufacturing in the region slumped in April to its lowest level in almost two years.
13 Jun 2012
| 1 Comment

EU in 'social emergency', warns Barroso

The head of the European Commission has warned governments to grasp the gravity of the eurozone crisis now threatening Italy and urged greater EU integration, after a rescue for Spanish banks fell flat.
13 Jun 2012
| 89 Comments

Osborne can only pray as the storm in Europe rages

The Chancellor and No 10 seem powerless to act, while many Tories call for bolder measures, reports Benedict Brogan.
13 Jun 2012
| Comment

Italy will not need bailout if it continues austerity, says Schaeuble

There will be no danger of Italy succumbing to the debt crisis if it continues to implement structural reforms and growth measures, German Finance Minister Wolfgang Schaeuble said.
13 Jun 2012
| 27 Comments

Sants: my plan would have saved Rock

Hector Sants, the chief executive of the Financial Services Authority, believes the run on Northern Rock would not have happened had the Government listened to his advice.
13 Jun 2012
| 223 Comments

Withdrawals at eurozone cash machines could be capped

British holidaymakers could face restrictions on cash machine withdrawals in the eurozone if the debt crisis worsens.
13 Jun 2012
| 15 Comments

Osborne: It could take Grexit to convince Germany to take action

A Greek exit from the eurozone may be needed in order to persuade Germany to sign up to the measures needed to secure the survival of the single currency, George Osborne said on Tuesday.
12 Jun 2012
| 24 Comments

Mario Monti insists Italy 'will not need a bailout'

Italy will not need a bail-out to survive the economic debt crisis, prime minister Mario Monti declared on Tuesday, amid fears Rome may be forced to call for aid.

Then I dig a bit more.

http://krugman.blogs.nytimes.com/2012/06/13/wolfmania/
"June 13, 2012, 8:36 am

Wolfmania

Martin Wolf writes about saving the euro, citing an analysis from ING (pdf); basically Wolf argues that the only realistic hope is the strategy on the upper right of this figure from the report:
Obviously I agree."


http://www.nakedcapitalism.com/2012/06/links-61312.html

Wednesday, June 13, 2012

Links 6/13/12

U.S. government to use ‘drones the size of GOLF BALLS to spy on AMERICAN citizens’ Daily Mail (furzy mouse)
Data.gov Releases Open Source Software Data.gov. The US government has outsourced an open source project to India.
Estimating the Potential Impact of Failure of the Fukushima Daiichi Unit 4 Spent Fuel Pool George Washington
Drug Family Accused of Laundering Cash With Horses New York Times
Checking In Barry Ritholtz (furzy mouse). Wow, I don’t use any of these sites ex the inescapable Google.
Skout, a Flirting App, Bans Minors After Rapes New York Times
The Mining Boom Is Making Australians Dumber Clusterstock
Down-Under Greeks Send Money As Crisis Awakens Ties To Homeland Bloomberg
Euro-Australia: An instructive counter-factual Yanis Varourfakis
Fears rise over EU handling of debt crisis Financial Times. This blog and plenty of other commentators were skeptical, and this time, Mr. Market’s euphoria has worn off pretty quickly.
CNBC graphic of the day, Greek bond yield edition Felix Salmon, Columbia Journalism Review. This makes me feel so much better about the fact that I seldom get asked and even then pretty much always turn down financial TV requests (save longer format ones). If Martin Wolf comes off not making much sense, what good are they?
U.S. Probes Cable for Limits on Net Video Wall Street Journal. While welcome, the timing is pretty sus.
JPM and ING: Some Trading with the Enemy Is More Equal than Other Trading with the Enemy Marcy Wheeler
The Obama Administration Is Criminalizing Investigative Reporting Huffington Post
Ann Romney Sending Her Horse-Slave to Pillage Europe for Gold TBogg, Firedoglake
Ratings agency warns of rough road for New York State Thruway Syracuse (bob) :-(
Foodie Files: Disney seeks out haggis from W.A. Bean in Bangor Bangor Daily News. I suppose I should remember to have real haggis the next time I am in the UK…
Obama campaign’s rough patch concerns some Democrats Washington Post. I must note Obama gets nice looking photo today, in contrast with yesterday. Notice the original headline was apparently “erratic behavior” (see the webpage, as well as the URL).
Gingrich: Elections rigged in favor of the wealthy Raw Story
“Hypothetical, illustrative example of the orderly liquidation of JPMorgan Chase” FT Alphaville. Note the objections in the comment section, such as by dhdhohm. And the paper assumes the FDICcan void cross default clauses. Not if they are in agreements governed by UK law. Finally, notice how this hit the media in a big way on the eve of Dimon’s Senate testimony.
JPMorgan’s Jamie Dimon releases testimony before Senate hearing McClatchy
BREAKING: Victory for Minneapolis mom over Citibank’s foreclosure effort AmericaBlog
Ex-loan officer claims Wells Fargo targeted black communities for shoddy loans Washington Post. Sanctimonious Wells strikes again.
Prebuttals, part 2 John Quiggin
Wall Street’s high-stakes love affair with Europe continues Christian Science Monitor
Charles Ferguson: Predator Nation, Global Predator Class Jesse
Tweet of the day (Richard Smith)

Economic Crisis, The Audit — June 11, 2012 02:20 PM

CNBC graphic of the day, Greek bond yield edition

Martin Wolf, the anti-CNBC, makes an appearance
By Felix Salmon



Martin Wolf appeared on CNBC today, which is never a good idea. Between all the swishing noises and flashing graphics, it was pretty hard to understand what he was saying — and in any case, the questions from Andrew Ross Sorkin were generally of the form “tell me what’s going to happen in the future”, rather than “analyze what we know about the present”. At one point Sorkin literally asked Wolf to “handicap the outcome” of the Greek election. Wolf is a fascinating and erudite man, and I’ve never had a conversation with him where I didn’t learn a lot. But maybe if I asked him that kind of question, it could be possible for me to walk away none the wiser about anything.
Ryan McCarthy picked up on one point that Wolf made: he said — or seemed to say — that a eurozone deposit guarantee scheme would not protect deposits against the risk of devaluation. Sorkin really should have pushed him on this, since it seems to me at least that the whole point of a eurozone deposit guarantee scheme would be to keep depositors whole in euro terms, even if their country leaves the euro and devalues. Even without such a scheme, there’s a strong case to be made that if and when Greece leaves the euro, the EU should essentially write a large check to Greek depositors, making up for any losses due to the drachmaization of their deposits. Because if the EU doesn’t do that, capital flight from the European periphery will go from bad to catastrophic.
But CNBC is a place for heat rather than light, so instead of an interesting conversation between two smart journalists, we got shown the graphic above, twice. It purports to show a real-time quote for the Greek 2-year bond, which currently seems to be yielding 349.152%. (I love the idea that they know this number to three decimal places.) According to the chart, the yield on this instrument has been rising steadily until now: there’s no indication that there was even a dip after the bond restructuring in -
Hang on a sec. Check out that x-axis! You can’t be expected to grok this in the amount of time that the chart appears on CNBC — just a couple of seconds. But the chart stops in March, when the restructuring took place and the Greek 2-year bond ceased to exist. No wonder the yield is “unch”!
CNBC has more than its fair share of meaningless graphics, but this one is especially stupid: it’s a chart of an instrument which ceased to exist three months ago, showing what the yield on that instrument did in the run-up to its default.
Of course, CNBC’s viewers can’t be expected to understand that. The one thing they will understand is the yield, which is shown at 350%. CNBC is sending a clear message, here, that Greek debt is about to default, and it’s using a made-up measure to do so. There’s no such thing as the Greek 2-year bond yield, but Bloomberg has done its best to come up with an approximation of what such a thing might be trading at — and their best estimation puts the Greek two-year benchmark at 8.98%. Which means that CNBC is only off by a factor of, oh, 340 percentage points. Well done that channel! In any case, here’s the clip."
You will have to go to the original for the video. Martin Wolf did very well.

Greece will exit at some point or Germany will pay the Greek debt. Whether the exit is Greece leaving or the euro destructing is an open question.  German funds will survive until the German economy restarts.


http://www.spiegel.de/international/topic/debt_crisis/


Euro Crisis Deepens: Italy Struggles to Break Out of Downward Spiral

Euro Crisis Deepens Italy Struggles to Break Out of Downward Spiral

SPIEGEL ONLINE - June 13, 2012 After Spain, the focus of the euro crisis has now shifted to Italy, which is struggling with a shrinking economy and rising bond yields. Prime Minister Mario Monti has denied that his country will ask for an EU bailout, but optimism about Italy's future is in short supply. By Hans-Jürgen Schlamp in Rome more... [ Forum ]
Signal Ahead of Key Election: EU May Soften Greek Austerity Package

Signal Ahead of Key Election EU May Soften Greek Austerity Package

SPIEGEL ONLINE - June 13, 2012 The EU is signalling that it may be willing to renegotiate the austerity measures it imposed in return for aid to Greece, a German daily reported on Wednesday. The move is aimed at keeping Greece in the euro by boosting support for pro-austerity parties in the June 17 election. more...
The Perils of Ignoring History: This Time, Europe Really Is on the Brink

The Perils of Ignoring History This Time, Europe Really Is on the Brink

SPIEGEL ONLINE - June 12, 2012 The European Union was created to avoid repeating the disasters of the 1930s, but Germany, of all countries, has failed to learn from history. As the euro crisis escalates, Berlin should remember how the banking crisis of 1931 contributed to the breakdown of democracy across Europe. Action is urgently needed to stop history from repeating itself. A Commentary by Niall Ferguson and Nouriel Roubini more... [ Forum ]
The Next Domino: Europe Unprepared as Euro Crisis Deepens

The Next Domino Europe Unprepared as Euro Crisis Deepens

SPIEGEL ONLINE - June 12, 2012 The weekend announcement that Spanish banks would be bailed out briefly drove up markets around the world. But optimism was short lived. The euro crisis is rapidly intensifying and Europe is not prepared. A Commentary by Stefan Kaiser more...
'Less Than Three Months': IMF Head Warns Time Running Out for Euro Zone

'Less Than Three Months' IMF Head Warns Time Running Out for Euro Zone

SPIEGEL ONLINE - June 12, 2012 As the focus of the euro crisis shifts to Italy, IMF head Christine Lagarde has warned that European leaders have less than three months to save the euro. Meanwhile top economist Nouriel Roubini has called on Berlin to drop its obsession with austerity, proposing that the German government give every household a 1,000 euro voucher to spend on a vacation in Southern Europe. more... [ Forum ]
Planning for the Future: A Sneak Peek at Tomorrow's Europe

Planning for the Future A Sneak Peek at Tomorrow's Europe

SPIEGEL ONLINE - June 11, 2012 European leaders have long insisted they will do everything to save the euro. Now, a plan is forming that would dramatically change the architecture of the European Union. Brussels would be granted a significant say in national budgets and debt would be communalized. But the hurdles such a plan might face are high. By Konstantin von Hammerstein, Christoph Pauly and Christoph Schult

http://www.guardian.co.uk/business/debt-crisis



The 6am Cut London

Posted by Kate Mackenzie on Jun 14 05:38. Comment | Share
France is pressing for new measures from the EU, pointing to the failure of the Spanish bank bail-out to calm market fears. France wants the ESM to be able to inject funds directly into banks; and also wants the ECB to begin supervising European banks, taking responsibility for stress-testing and winding up failed bank, as a step towards a banking union. Paris believes it is “making progress” on winning support from Germany for the proposals, the FT reports.

Credit Agricole might just walk away from Emporiki in the event of a Grexit, says the WSJ.
Asian shares retreated amid persisting concerns about Europe’s debt crisis, after another ratings downgrade for Spain and ahead of an impending Italian bond sale and Greek elections, reports the FT.

Opec will keep its production quota unchanged when it meets on Thursday, says the FT.

BHP reduced the medium-term outlook for commodities prices in its latest review of internal forecasts, the FT reports, citing people familiar with the matter. The cuts were said to be small and did not affect the longer-term view of the market.

George Osborne will commit to implementing Vickers reforms in his Mansion House speech on Thursday, says the FT.

The world’s second-biggest IPO this year, by palm oil producer Felda listing in Malaysia, has raised $3.1bn, reports NYT DealBook.

Bank bonuses are set to be regulated in the EU, says the FT, as bankers accept the rules will be introduced although the ratio of bonus to salary is not finalised.

Some big US fund managers are discussing the creation of a corporate bond market, says the WSJ. Fidelity, State Street and Ameriprise’ Columbia Management are named.

Fears over Belize debt grow: Country’s bondholders have formed a creditors’ committee out of concern it will default, reports the FT.

The Federal Reserve Bank of New York auctioned $1.9bn in face value of CDOs in the latest of several sales of assets this year associated with the bailout of AIG, reports the FT. The Maiden Lane III loan is the only outstanding government loan associated with the rescue of the insurer, although the Treasury continues to own around 62% of the company’s shares.

COMMENT AND CURIOS
- The strong geopolitical undercurrent in Greek elections. (Financial Times)
- Lloyd Blankfein wants to die at his Goldman desk. (Financial Times)
- Bundesbank is considering adding AUD to its forex holdings. (Wall Street Journal)
- Germany’s booming manufacturing training sector. (Wall Street Journal)







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