Greek Referendum Could Mean CDS Greek Default Trigger

Author: Edward Harrison · November 1st, 2011 · RGE EconoMonitor

I think Tim Duy’s recent post title “Did The European Deal Just Collapse?” is the right one. He sees the shock Greek referendum announcement as a big problem not just for Europe, but for the US and elsewhere:

The cracks began appearing before the ink was dry. More worrisome is that the Greek leadership didn’t even believe they were on board in the first place. Simply put, the world economy is no less fragile than it was a week ago. And in that fragility still lies the recession risk for a still struggling US economy.

Did the European Deal Just Collapse?

Author: Tim Duy · November 1st, 2011 · RGE EconoMonitor

To be sure, I have been bearish on Europe. From last week:

I remain something of a Euroskeptic at this point. At best, I think the Europeans will be kicking the can down the road for a few months.

It turns out a “few months” might have been wildly optimistic. It was quickly evident that bond markets didn’t show the same enthusiam equity markets expressed for the supposed deal. That was huge red flag. The second red flag was the Bank of Spain announcing a stagnant 3Q GDP. From the Associated Press:

The Bank of Spain suggested that the flat growth calls into question the government’s goal of reducing its deficit to 6 percent of GDP in 2011, from 9.2 percent last year…

Perspectives on the Crisis in Europe

By John Mauldin | October 31, 2011

This week’s Outside the Box will be unusual. Rather than one essay, I give you a number of short ones, and links that are representative of the confusion that is Europe, along with a little history. As I noted this weekend, last week’s Eurozone announcement was short of details, and very little of the real work had been done. Merkel has to get her own country on board, keep the other nations that are in trouble from demanding haircuts, and keep the markets from trashing Italian and Spanish debt. Berlusconi has to figure out how to get the Italian budget balanced while staying out of jail and “balancing” his social calendar. Maybe he can dollar-cost average with a 70-year-old date? (Sorry, that was snarky, but it is so easy.)

Europe’s problems will visit shores all over the world. China will not come to the rescue, at least not cheaply. It is becoming increasingly unclear where they will get the money without ECB participation, but that is VERY euro bearish.

I don’t want to seem like I am piling on Euroland, but they are the crisis du jour. And it’s just a matter of time until it’s the US. Sigh.

Papandreou: Ein Ministerpräsident zwischen allen Stühlen

Handelsblatt.com, 1/11

Seit zwei Jahren versucht Giorgos Papandreou Griechenland aus dem Sumpf zu ziehen. Doch die Zustimmung für seine Politik ist gering. Nun will er das Volk auf seine Seite ziehen. Und verwirrt damit Freunde und Partner.

Giorgos Papandreou: Skepsis begleitet ihn seit seinem Amtsantritt. Quelle: REUTERS

Athen. Kein Name hat die politische Landschaft Griechenlands in den vergangenen fünfzig Jahren so geprägt wie der der Familie Papandreou. Ein Giorgos Papandreou regierte das Land, bevor es in den 60er Jahren unter eine Militärdiktatur fiel, und ein Giorgos Papandreou versucht heute, den finanziellen Ruin des Landes abzuwenden.

Immer wieder hat er auch mit spektakulären Aktionen auf sich aufmerksam gemacht. Jetzt will er das Volk über das Rettungspaket der Europäischen Union für Griechenland abstimmen lassen – und spricht dabei von einem „demokratischen und höchst patriotischen Schritt“. Seine Freunde und Partner hat er damit eher verstört, viele sehen die mühsam ausgehandelte Euro-Rettung in Gefahr.

So viel zum Vertrauen in die Entscheidung der Regierungschefs…

… und in den Berlusconi Brief an die EU Staatschefs.

Der Risikoaufschlag für italienische Staatsanleihen erreichte gestern seinen historischen Höhepunkt seit der €-Einführung. Die Italiener zahlen 4% mehr für die Zinsen als die Deutschen. Und das trotz einer heftigen Aktion der EZB gestern und heute, wieder italienische Staatsanleihen zu kaufen (hfk).

“Als Käufer sprang wieder einmal die Europäische Zentralbank ein. Nach Aussagen von Händlern soll die EZB am Dienstag in großem Stil italienische Staatsanleihen aufgekauft haben, vor allem Anleihen mit acht- und zehnjähriger Laufzeit”. (Handelsblatt.com, 1/11)

EU Summit Paves the Way for a Split Continent

Date: 31-10-2011
Source: Spiegel
Subject: The Division of Europe

EU Summit Paves the Way for a Split Continent

Last Wednesday’s summit in Brussels took important steps toward saving the European common currency. But it also made it clear that the European Union is being divided in two. Germany is the new Europe’s leader — for better or worse.

At 7:45 p.m., European Council President Herman Van Rompuy could no longer avoid the embarrassing and unpleasant task of throwing out 10 people. Friendliness was called for, of course, and nice words. But so too was firmness: Their presence was no longer required, and they were asked to leave the assembly hall of the Justus Lipsius building in Brussels.

They were all proud people, the sort who usually do the throwing out themselves: national leaders like British Prime Minister David Cameron and Polish Prime Minister Donald Tusk — all from the 10 countries that are part of the European Union but don’t use the euro.