News Links: Central Banks Take Joint Action

I have written a piece on today’s liquidity action for the New York Times that will run shortly, I will have more to say on this once that article is up.

• Central Banks Take Joint Action to Ease Debt Crisis – NYTimes.com

  The Federal Reserve moved Wednesday with other major central banks to buttress the financial system by increasing the availability of dollars outside the United States, reflecting growing concern about the fallout of the European debt crisis.

• Indian groups risk default on dollar debt – FT.com

  Dozens of Indian companies are coming under financial stress after the sharp fall of the rupee against the dollar during the past few months made once-cheap loans in the US currency much more expensive, analysts have warned.

• Occupy Los Angeles: Riot police close in on protesters | Mail Online

  More than 200 people were arrested at the Occupy L.A. camp today as 1,000 riot police stormed the site and cleared the tents. Officers swept through the camp under darkness to drive out some of the longest-lasting protesters since crackdowns ended similar occupations across the country. In a move identical to the one carried in New York two weeks ago, the mayor ordered an eviction of the protesters who have camped outside City Hall for the past eight weeks.

• Eurozone agrees to explore ways to boost IMF bailout fund firepower – Telegraph

  Eurozone finance ministers agreed on Tuesday to explore ways of boosting the IMF’s resources through bilateral loans so that the international lender can match the leveraged capabilities of the eurozone’s bailout fund.

• ‘Ten days to rescue euro’ as leaders call for IMF funds – Telegraph

  Europe faces a crucial ten days to save the eurozone, a leading EU monetary chief warned after finance ministers from the currency bloc admitted they may need IMF help to increase the firepower of their bailout fund.

• Life after the end of economic growth | Richard Heinberg | Comment is free | guardian.co.uk

  A continually rising GDP is not necessarily possible – or even desirable. So why do policymakers obsess over it?

• China cuts bank reserve ratio | Reuters

  China’s central bank cut reserve requirements for commercial lenders on Wednesday for the first time in three years, a policy shift to ease credit strains and shore up an economy running at its weakest pace since 2009.

• Slump in shipping costs suggests Chinese exports to Europe slumping too | beyondbrics | FT.com

  Shipping costs between China and Europe are plummeting as demand from the beleaguered eurozone contracts sharply. And while falling demand might not be much of a surprise the speed of the drop in transport costs is an eyebrow raiser – it has slumped by 39 per cent in just under 3 months, according to Bloomberg. A worrying indicator of what’s to come.

• Gingrich Leads; Romney at New Low in Positive Intensity

  Newt Gingrich’s most recent Positive Intensity Score of 20 in Gallup tracking conducted Nov. 14-27 is the highest of any Republican candidate, while Mitt Romney’s current score of 9 is his lowest of the year by one percentage point.

• Romania: junked by S&P | beyondbrics | FT.com

  Here we go again: another CEE rating gets junked. Standard & Poor’s downgraded Romania’s local currency sovereign rating on Tuesday after markets had closed. S&P lowered both the long and short term local currency ratings to BB+/B from BBB-/ A-3. Anything below BBB- is considered ‘junk’ or speculative grade investment material. The main reason? Romania’s banking sector is massively exposed to its Greek and Austrian parents. We have seen this story before.

• Senate Votes To Let Military Detain Americans Indefinitely, White House Threatens Veto

  The Senate voted Tuesday to keep a controversial provision to let the military detain terrorism suspects on U.S. soil and hold them indefinitely without trial — prompting White House officials to reissue a veto threat.

• AppleInsider | Apple pulls iTether from iPhone App Store [u]

  A new iOS application that allows users to tether their Mac or PC to an iPhone 3G data connection without paying a carrier for the ability was pulled from the iPhone App Store on Tuesday [updated].

• Italy’s Basically In Better Shape Than Japan: So Why Are Italian Bond Yields Almost 7% Higher?

  Consider the following differences between Italy and Japan. Italy has a history of lower budget deficits, as well as forecast budget deficits for the next few years that are dramatically lower than those forecast for Japan.

• Bank of America Hits Fresh Two-Year Low, Testing $5 Level – MarketBeat – WSJ

  A close below $5 would be more than a psychological blow – it could result in some investors being forced to sell the stock.

• More Europessimism – Tim Duy’s Fed Watch

  We are setting the stage for a massive counter-example to the US reaction to its financial crisis.  The US allowed the fiscal deficit to swell while force-feeding capital to the banking sector (not enough, but that is another story).  Europe is pushing for massive fiscal austerity and, to prevent additional fiscal borrowing, pretending that the banks can survive via "liability management exercises."  If you think the US would have been better off shrinking the deficit while letting the banking system collapse, it is time for you to go long on Europe. 

• LPS Foreclosure Fraud Whistleblower Found Dead (Updated) « naked capitalism

  it was Lawrence who turned Nevada Attorney General Catherine Cortez Masto on to two mid level LPS employees who face up to 30 years in jail each if found guilty.

• Cyber Monday sales hit record $1.25 billion | Reuters

  Cyber Monday online sales set a record, led by department stores and home goods retailers, according to U.S. data released on Tuesday.

• Time to act – Italy must restructure its debt – FT.com

  It is increasingly clear that Italy’s public debt is unsustainable and needs an orderly restructuring to avert a disorderly default. The eurozone’s wish to exclude private sector involvement from the design of the new European Stability Mechanism is pigheaded – and lacks all credibility.

• BBC News – S&P downgrades bank credit ratings

  Ratings agency Standard & Poor’s has downgraded the long-term credit grades of a string of major financial firms.

• House prices surprisingly resilient, says Nationwide | Money | guardian.co.uk

  Nationwide’s November survey shows a 0.4% monthly rise, but one housing expert says the data ‘is as misleading as it gets’

• Eurozone crisis: why the Fed should buy Italian bonds | Mark Weisbrot | Comment is free | guardian.co.uk

  If the ECB and European authorities stick with their suicidal doctrine of austerity, then the Federal Reserve must intervene

• Autumn statement: George Osborne’s cutting fantasy is over | Robert Skidelsky | Comment is free | The Guardian

  Without growth and income, eliminating the deficit will happen not in 2017 but in never-never land

• Eurozone finance ministers turn to IMF to help bailout fund | Business | The Guardian

  Fears of the debt crisis spreading, forcing the collapse of the euro and plunging the global economy into recession

• Another European "Solution" Coming? – Tim Duy’s Fed Watch

  Despite these optimistic signals, there remains room for plenty of disappointment in the days ahead.  Notably, Reuters reports that German Chancellor Angela Merkel will not back Eurobonds or additional ECB intervention.  This may be just internal posturing, but does speak to the high degree of internal resistance toward greater EU fiscal integration.  Moreover, we have seen in the past the internal bickering yields responses that seem bold at first but quickly fail to stabilize the crisis.

• Facebook’s Settlement With FTC Confirmed: Privacy Changes Must Be Opt In – UPDATED | TechCrunch

  Facebook CEO Mark Zuckerberg just issued a statement on the Facebook Blog confirming that his company has settled with the FTC over charges that it has violated user privacy over the years. Facebook is now "required to obtain consumers’ affirmative express consent before enacting changes that override their privacy preferences", effectively making opt in all future privacy control changes to the audience of previously shared data or content.

• FT Alphaville » A Minsky moment in the eurozone?

  that banks need to deleverage is plain to all. They have been frozen out of primary markets. It’s currently too expensive for most to issue on an unsecured basis, and secured lending ties up assets, hence is also "expensive" in terms of balance sheet usage. Hence banks are increasingly reliant on the ECB for funding. Unable to tackle the numerator of the capital ratio, banks are by necessity taking aim at the denominator and shrinking assets.

• CyanogenMod 7 Makes its Way to the Amazon Kindle Fire

  CM7 will provide a more full-fledged Android experience on the Kindle Fire but it will come at the cost of the total Amazon integration that the tablet flaunts as its biggest selling point.

• steal this record – Yellow Press – Elvis Costello

  If on the other hand you should still want to hear and view the component parts of the above mentioned elaborate hoax, then those items will be available separately at a more affordable price in the New Year, assuming that you have not already obtained them by more unconventional means.

• Political Sign of Apocalypse: The Non-Denial Denial | Swampland | TIME.com

  This appears to be an accusation of private, alleged consensual conduct between adults – a subject matter which is not a proper subject of inquiry by the media or the public." Missing from the word cloud of Wood’s denial was a crucial element: the denial itself.

• interfluidity » Yes, Virginia. The banks really were bailed out.

  Regardless of whether the government could or could not have abstained from making the transfers that it made, it did make huge transfers. Bank stakeholders retain hundreds of billions of dollars against taxpayer losses of the same, relative to any scenario in which the government received remotely adequate compensation first for the risk it assumed, and then for quietly moving Heaven and Earth to obscure and (partially) neutralize that risk. The banks were bailed out. Big time.

• Federal Judge Pimp-Slaps the SEC Over Citigroup Settlement | Matt Taibbi | Rolling Stone

  Imagine if normal criminal defendants were treated this way. Say a prosecutor and street criminal come into a judge’s chamber and explain they’ve cooked up a deal, that the criminal doesn’t have to admit to anything or plead to any crime, but has to spend 18 months in house arrest nonetheless. What sane judge would sign off on a deal like that without knowing exactly what the facts are? Did the criminal shoot up a nightclub and paralyze someone, or did he just sell a dimebag on the street? Is 18 months a tough sentence or a slap on the wrist? And how is it legally possible for someone to deserve an 18-month sentence without being guilty of anything?

• CITI’S BUITER: 4 Conditions Must Be Met First, But The ECB Will Intervene

  In our central projection, two or more insolvent sovereigns (Greece, Portugal and possibly Ireland) undergo orderly debt restructuring in 2012-13. We also expect a ring-fencing of the illiquid but most likely solvent sovereigns (Italy, Spain, Belgium, France and Austria) through greater ECB involvement, directly or indirectly, as lender of last resort for sovereigns, through enhanced EA-wide fiscal facilities and through extra-EU assistance, most likely organised through the IMF.

• How Paulson Gave Hedge Funds Advance Word of Fannie Mae Rescue – BusinessWeek

  At the Eton Park meeting, he sent a different message, according to a fund manager who attended. Over sandwiches and pasta salad, he delivered that information to a group of men capable of profiting from any disclosure. Around the conference room table were a dozen or so hedge- fund managers and other Wall Street executives — at least five of them alumni of Goldman Sachs Group Inc., of which Paulson was chief executive officer and chairman from 1999 to 2006. In addition to Eton Park founder Eric Mindich, they included such boldface names as Lone Pine Capital LLC founder Stephen Mandel, Dinakar Singh of TPG-Axon Capital Management LP and Daniel Och of Och-Ziff Capital Management Group LLC.

• Struggle Over the Euro: German Constitutional Court at Risk of Losing Power – SPIEGEL ONLINE – News – International

  Some see Germany’s Federal Constitutional Court as as a guardian of democracy in the euro crisis, others see it as an obstacle to rescuing the currency. Now members of Chancellor Merkel’s ruling conservatives want to lessen its power by amending the constitution — to remove its jurisdiction over European issues.

• George Osborne – the man who would be prime minister | Politics | The Guardian

  The chancellor will have to eliminate Britain’s structural deficit and stimulate growth if he is to succeed David Cameron

• Belgium forms government as four eurozone states plan bond auctions | Business | The Guardian

  Elio Di Rupo, a Francophone socialist due to become the next prime minister of Belgium after a 600-day wait for a new government, said the €11.3bn (£9.3bn) of budget cuts agreed by six parties met EU demands in advance of Monday’s auction.

• Poland’s appeal to Germany: Sikorski: "I fear German inactivity" | The Economist

  I demand of Germany that, for your sake and for ours, you help [the euro zone] survive and prosper. You know full well that nobody else can do it. I will probably be the first Polish foreign minister in history to say so, but here it is: I fear German power less than I am beginning to fear German inactivity.

• Grantham Calls Corporate Profits Freakish – Bloomberg

  U.S. companies are the most profitable in more than 40 years, and some of the best-known stock pickers are divided over how long that will last. Bob Doll, chief equity strategist at BlackRock Inc. (BLK), said low labor costs and cost-saving technology will allow companies to keep up their profitability. Jeremy Grantham, chief investment strategist of Boston-based Grantham, Mayo, Van Otterloo & Co., said margins will send stock markets tumbling when they eventually revert to their mean.

• UK on the brink of double-dip recession, warns OECD | Business | guardian.co.uk

  The OECD said in May that it expected the UK to grow by 1.8% next year, but said on Monday that it was sharply downgrading its forecast because public spending cuts, the squeeze on household incomes and a more difficult climate for exporters had weakened the economy.

• Ireland becomes poster child for implementing austerity programmes | Business | The Guardian

  Ireland has a young, skilled workforce and the republic does not have UK’s hang-up about using industrial policy to boost growth

• Fitch Affirms US as AAA, But Cuts Outlook to Negative – MarketBeat – WSJ

  Fitch has come out and affirmed the US credit rating as AAA, but moved the outlook down to "negative" from stable."