Here are my Top 10 links from around the Internet at 10pm (Not kidding. Wanted to be done before OCR at 9am Thursday) I welcome your additions and comments below or please send suggestion for Friday’s Top 10 at 10 to email@example.com
1. 'Point of no return' - Ambrose Evans Pritchard at The Telegraph captures the mood in Europe with this piece saying the ECB may soon have to invoke emergency powers to prevent the disintegration of southern European bond markets amid signs of investor flight from Spain and Italy.
“We have gone past the point of no return,” said Jacques Cailloux, chief Europe economist at the Royal Bank of Scotland.“There is a complete loss of confidence. The bond markets are in disintegration and it is getting worse every day. “The ECB has been side-lined in the Greek crisis so far but do you allow a bond crash in your region if you are the lender-of-last resort? They may have to act as contagion spreads to larger countries such as Italy. We started to see the first glimpse of that today.”
Mr Cailloux said the ECB should resort to its “nuclear option” of intervening directly in the markets to purchase government bonds. This is prohibited in normal times under the EU Treaties but the bank can buy a wide range of assets under its “structural operations” mandate in times of systemic crisis, theoretically in unlimited quantities.
Mr Cailloux added: “This feels like the banking crisis in late 2008 post-Lehman, though it has not yet spread to other asset classes. The ECB will have to act it if does.”
2. 'The end is nigh' - Nouriel Roubini is wondering if the Euro will exist 'within a few days', Felix Salmon at Reuters reports in an excellent musing-post about what the Greek crisis might mean for the global financial system.
Felix makes a good point about the European inter-bank system that should scare anyone witless. He and Roubini were on a Milken Institute panel together.
One member of the audience, though, had a really good question: what happens to the European system of sovereign guarantees of interbank lending? When those sovereign guarantees aren’t worth much any more, Euribor is likely to spike, since suddenly there’s a lot more credit risk involved in interbank lending. And there are hundreds of trillions of euros of debt contracts linked to Euribor, which could suddenly get very expensive and take control of short-term interest rates out of the hands of the ECB.
And in any case it’s worth remembering that even though Greece’s debts are small in relation to Spain’s, they’re still large in relation to, say, those of Lehman Brothers. And given that there is no formal mechanism for leaving the euro (or for defaulting on sovereign euro-denominated debt, for that matter), there will almost certainly be a range of unexpected and chaotic events somewhere down the line.
Identifying a bubble is unfortunately more easily done after it has burst. A bubble usually has three conditions:
1. Prices are rising sharply and are “too high” based on historical relationships; 2. Credit is easy to obtain.; 3. Lax regulation or innovations make regulation less effective.
We think the first two conditions characterize the current Canadian housing market. To avoid the third condition, the government is taking steps to tighten mortgage availability, and regulation remains relatively tight. While we believe any housing downturn in Canada won’t be as severe as the recent U.S. experience, the increasing likelihood of a cooling housing market still poses some risks for investors who are not well-diversified.
4. Hot, hot, hot - Chinese authorities cancelled a land auction overnight after bids exceeded a price ceiling set by the government, SFGate reported. That is some serious crack-down. But it's needed. If only our local and central governments did something similar.
"Imagine a seller refuses your business because he thinks you are paying too much for his products?" Bank of America- Merrill Lynch analysts led by David Cui wrote in a report distributed today. "It demonstrates the type of pressure the central government is putting on local officials to get the property market right this time; this increases the risk of potential overshooting in the property market crackdown."
China began requiring developers pay higher deposits for land purchases last month and banned banks from lending to developers found to be hoarding land as Premier Wen Jiabao pledged to crack down on real-estate speculation and keep housing affordable. Property prices in 70 Chinese cities gained a record 11.7 percent in March from a year earlier.
Francesca McDonagh, head of personal banking services at HSBC Hong Kong, would not disclose the bank's precise foreign-exchange trading figures, but said the recent surge was "not a tiny amount".
The 90 per cent increase in March was the highest monthly growth rate for the bank since it started yuan transactions in 2004, she added. "This is a very material upside increase from our retail clients," she told AFP.
Time and again at today's hearing, Goldman executives refused to admit, even in retrospect, that they had crossed a line. Time and again at today's hearing, they defended their actions by saying that they were rightly responding to market demand—as if responding to market demand somehow absolves one of the responsibility to use human judgment. I kept waiting for one of them to stand up and scream, "Look, we did things we shouldn't have, we did things that defied common sense, but that's the nature of an asset bubble! We're sorry, we are, we've learned from our mistakes and we have better risk controls. But you have to know, we're not bad people. Everyone got out of hand. We'll own up to own fair share, but please understand that more people than us had a hand in this."
Unfortunately, that moment never came. Instead, what we got was Goldman executives spending a lot of times leafing through the documents in front of them.
8. Death by (to) Powerpoint - The American Defence forces are finally debating whether its heavy use of Powerpoint to report back to superiors is a good idea. This New York Times piece makes some excellent (bullet) points about the dangers of Powerpoint. HT Sam Morgan via Twitter.
“PowerPoint makes us stupid,” Gen. James N. Mattis of the Marine Corps, the Joint Forces commander, said this month at a military conference in North Carolina. (He spoke without PowerPoint.) Brig. Gen. H. R. McMaster, who banned PowerPoint presentations when he led the successful effort to secure the northern Iraqi city of Tal Afar in 2005, followed up at the same conference by likening PowerPoint to an internal threat.
“It’s dangerous because it can create the illusion of understanding and the illusion of control,” General McMaster said in a telephone interview afterward. “Some problems in the world are not bullet-izable.”
My favourite bit is this one at the end about how the Army likes to use Powerpoint when briefing the media...
Senior officers say the program does come in handy when the goal is not imparting information, as in briefings for reporters.
The news media sessions often last 25 minutes, with 5 minutes left at the end for questions from anyone still awake. Those types of PowerPoint presentations, Dr. Hammes said, are known as “hypnotizing chickens.”
9. Totally relevant Muppets video - Beaker 'meeps' the Ode to Joy. It brightened up my day no end.
10. Totally irrelevant Muppets video - Beaker sings Coldplay's Yellow. It doesn't get better than this.
11. Totally irrelevant video - Stephen Colbert has discovered women in skimpy clothing actually do cause earthquakes...