EC green light to Rajoy’s fiscal plans makes Spanish sovereign bailout more likely
I am going to try a different format for the daily today because I have a number of foreign language articles. This time, I am going to give a brief synopsis of each article rather than just having a main talking point at the outset. This is a more time-consuming way of putting up the links but I think it’s important to highlight more of the salient points in each article. So I hope you like the change.
Rajoy has recived a green light from the European Comission for his fiscal plans for the next two years. To me this is significant because it says that Spain can easily get a sovereign bailout using the existing fiscal template and that the MOU would not mean a whole new set of terms for Spain. In my view that makes a sovereign bailout likely.
The silver probe is likely dead.
Indonesia does not depend on export volume for growth and that is beneficial to continued strong numbers. Nonetheless, the country does have commodity linkages to China.
House prices are about where they were in 2009 in Britain.
Reuters covers the Bundesbank President who is on the other side of Draghi’s monetisation call. Weidmann is the last real opposition that Draghi has to his master plan.
Record numbers of insolvencies in Spain as the number has increased by 28.6%.
British car sales were better in July but they are still near multi decade lows.
We know that auto loans are more lax. here is further evidence that the credit cycle is well advanced in the US.
Another warning sign that the recession in the periphery is going to negatively affect the core.
Negative short yields for the Netherlands again.
Portuguese bonds have returned 28% this year. That’s the most in the euro zone.
The short end is rallying the most here because Draghi has said the ECB would be buying there. And so 2-year yields have dropped dramatically. This is proof positive that an ECB backstop matters most.
The title says it all. Cyprus will need a bailout.
Sounds like great mobile technology
Yves Smith highlights a full on piece of propaganda that suggests that a revoloving door between the regulator and the regulated is actually a good thing.
Olaf Storbeck highlights the fact that an IMF study has just come out saying that central banks’ raising their inflation target is dangerous. This will give support to inflation hawks at the ECB.
Ambrose Evans-Pritchard is a eurosceptic who thinks the euro should break apart but he commends Mario Draghi and mario Monti for playing good politics on the plan to save the euro. Good but dramatic piece as usual from AEP.
I highlighted this article already. It basically says that a bigger ECB backstop is bullish for shares in Europe.
Greece could end up hitting its 2012 deficit targets and that would be stupendous news. The 2012 first half primary deficit was only 490 million euros.
Apparently the mood in Italy is moving toward an anti-Euro, anti-German mood and that’s significant giving upcoming elections. Unless Germany can do more to show flexibility, anti-euro sentiment will be felt at the polls in a big way.
Warren Buffett has a percentage of his portfolio in cash and is selling stocks. This may suggest that Buffett is becoming wary of developments in equities.
The heatwave in the US midwest has killed tens of thousands of fish in addition to causing grain prices to skyrocket. This reminds me a bit of the Dust Bowl phenomenon in the Depression. The last thing we need is a natural disaster to add to pressure on the global economy. In my view, this disaster could be the exogenous shock that tips the US economy. Let’s hope it recedes.
This one scientist says global warming has caused the heatwave and he expects more of the same in the future.
Here is an indication that social unrest is a problem to contend with in emerging markets as labor conditions there make for combustible stuff. I have no more insight to note but I believe this incident is significant enough to put in the links.
The week when Mr Draghi greatly diminished the office of ECB President and sacrificed the fiscal-monetary policy distinction (in a manner that does not even help the euro in the short run!) « Yanis Varoufakis
Noteworthy here is Yanis’ line that the ECB has now become enmeshed in fiscal matters by making its purchases conditional on bailouts with fiscal preconditions. The ECB is now fully politicised.