News Links: Italy’s yields lower but contagion is spreading

The eurozone storm is spreading fast and Slovenia has become the latest country to be battered by its winds. Its 10 year bond yields have jumped dramatically since the start of November and are now sitting dangerously close to 7 per cent. Slovenia’s spread over German debt also reached a record high of 535 basis points. Such yields haven’t been seen in Slovenia since it joined the eurozone in 2007 and their slide can be traced straight to Italy’s ongoing crisis.

The European Central Bank has established a great deal of credibility with regard to keeping inflation at or close to 2 percent. It could probably offer a great deal of additional support – through creating money – without immediately causing inflation. And if the ECB is providing a complete backstop to Italian government debt, the panic phase would be over. None of this is a lasting solution, of course. Europe needs a proper fiscal center – much as the United States needed in 1787 and got under Alexander Hamilton’s policies from 1789. Hamilton remains a controversial figure in US history but when he took over the US was in default and the credit system was almost completely broken.

So says Nomura in a research note sent to clients on Thursday. Asymmetry between a country like Italy and a country like France, with only the ECB in between. Hence the question, which Nomura poses: – what flavour of ECB bond-buying we will get?

The only answer, if that is the right word, is a central bank. Right now central banks need to be doing everything they can to avoid a second Great Depression. I talk to many smart people, and I am continually surprised how many of them do not realize the urgency of the current situation

Italiens Finanzhäuser brauchen dringend mehr Kapital. Die Bundesbank fürchtet schon Auswirkungen auf die Stabilität in Deutschland.

Imagine the ECB were to announce publicly that if the Spanish government continued its reform efforts according to an independent IMF supervision, it would back Spanish debt in full from a certain point in time on (for instance a year from now depending on the IMF-approved reform plan) and will not tolerate yields above, say, 4% at that point. This target could be lowered to 3.5% after another year if the Spanish progress continues further, or increased if it doesn’t.

The Federal Reserve needs to buy up every single European bond owned by every single American financial institution for cash before the increase in eurorisk leads American finance to tighten credit again and send us down into the double dip.

The ink on the most recent European Union summit agreement was hardly dry before it became clear that it was insufficient. With investors now increasingly wary of Italy, the consensus is growing that the European Central Bank — and the IMF — will have to play an even greater role. But will it be enough?

A fear that inflation leads to nationalist extremism lingers in Berlin – but European unity will not die if the Germans allow the euro to fail, argues Daniel Johnson.

I have grave reservations about the Reuters story claiming that top German and French officials have had "intense consultations" on plans to reshape or "prune" the currency bloc, reducing it to a manageable core. The Brussels press corps do not believe it. Nobody seems to know which German official is briefing behind the scenes that "you’ll still call it the euro, but there will be fewer countries."

But in the end, it’s going to come down to credibility. Stories contradict each other. Grand jury testimony clashes. Who was telling the truth? Who was trying to keep the truth silent? And what part did that silence play in the fact that Sandusky is alleged to have sexually assaulted young boys for 10 years after the first boy stepped forward?

Deutschland verdankt seinen Aufschwung zu einem großen Teil China: Die Exporte in die Volksrepublik steigen ständig, nun ist das Land zum viertwichtigsten Handelspartner der Bundesrepublik aufgestiegen. In manchen Branchen legten die Ausfuhren nach Fernost um mehr als 30 Prozent zu.

Two blows for India’s banks in one day. An outlook downgrade from Moody’s for the whole sector and a chunk increase in bad debt provisions at the State Bank of India (SBID:NSI), the biggest lender, which saw its shares plunge on Wednesday by 6.8 per cent.

"That is a huge decrease," said Deepesh Rathore, managing director for IHS Automotive in India. "Demand is depressed – the reasons are the high interest rates," high inflation, and high petrol prices, he said.

Goldman Sachs Group Inc faces lawsuits over $15.8 billion worth of mortgage securities, the bank said in a regulatory filing on Wednesday, a more than 30-fold increase from the amount disclosed three months earlier.

Unless our policy makers can make job creation the top priority, the mass riots and burning streets of Europe may be coming soon to a neighborhood near you.

Google has bought Apture, the start-up that makes a browser plug-in that adds additional contextual information to Web pages for the Internet’s most prominent publishers. The financial details of the acquisition were not disclosed

Who better to ask for cold prevention advice than a doctor? Besides specializing in healthcare, these are the people at the frontline of germ attacks. So how do they manage being exposed to all of us sick people day after day without taking hundreds of sick days every year?

MUCH of Europe has pneumonia. How is that affecting Germany, the continent’s biggest economy? Exports are surprisingly buoyant considering the European pandemonium; they rose by 0.9% in September. But industrial production dropped by 2.7% in September and new orders, a harbinger of future output, fell by 4.3%, the third monthly decline in a row.

And now Greece has provided a convenient model. You’ve now manufactured a crisis (that EASILY could have been solved by the ECB years ago – Greece is around 2.5% of Europe’s GDP), which is now spreading, but providing ample opportunity to get rid of troublesome politicians who don’t do what they are told (effectively embrace this "stability culture" that the Germans bleat on about, but which in reality is nothing more than consolidation of the rentiers’ control of the various governments).

Rhode Island’s debts have been woefully underestimated, with alarming consequences for cities across the US, says report

Standard & Poor’s accidentally released a message to some of its subscribers on Thursday saying that it had downgraded French debt from its top AAA rating.

Cutting interest rates and printing more money could help Rome, but boss of bank has refused to offer more than limited support

Supporters fear Newcastle United’s owner, Mike Ashley, is using the club as a billboard to advertise his Sports Direct chain

Basically, it’s impossible to short Groupon now because everyone has the same idea.