Here's my Top 10 links from around the Internet at 2 pm in association with NZ Mint.
I welcome your additions in the comments below or via email tobernard.hickey@interest.co.nz.
I'll pop the extras into the comment stream. See all previous Top 10s here.
There is a distinctly European flavour and pungency to today's Top 10.
1. A new phase in the crisis - It's hard to under-estimate the importance of the failure of the German government bond auction overnight.
The European sovereign debt crisis has now spread to a place no one ever thought it would go: Germany.
This says investors both within and outside Europe are so nervous about European sovereign debt and the continent's banking system they won't or can't even buy its safest debt.
The fact the Bundesbank had to step in to buy the bonds is devastating for market confidence.
We are in a dangerous place now.
Yet no one is talking about it on the campaign trail.
New Zealand may well wake up on Monday morning to a government about to do things it gave no indication it would do before the election.
Ready for that?
2. Here's John Hardy from Saxo Bank at Trading Floor with his take on the German bond auction failure:
Today’s auction failure is like a sudden crack in that market assumption of a solid foundation - potentially introducing a whole new dynamic. Today’s auction dramatically moves forward the timetable of the either/or outcome – either we get a massive new official/ECB response or this situation will quickly “go systemic”.
So now back to EU politicians, the ECB and whether we can wait for some ponderous progress toward a treaty change or the like at the Dec. 9 EU summit. Will the spirit of Maximum Intervention be able to counter the potentially vicious discipline meted out by the markets?
Stay very careful out there.
3. And here's why it's important - SMH reports Australia's banks are preparing for a freeze in global funding markets.
AUSTRALIAN banks are preparing for a potential freeze in global funding markets as Europe's worsening stresses threaten to send the world's financial markets into a tailspin. Renewed funding pressures for the big banks, which need to raise $16.3 billion over the next two months, are likely to make it tougher for business and some consumers to access credit.
Finance executives from at least two of Australia's big banks have reviewed forward funding plans. This has involved shelving scheduled raisings, with the focus to remain on ''opportunistic'' fund raisings in US and Australian capital markets.
Australia's four major banks need to refinance a total of $48 billion in bonds by June next year, according to figures prepared for BusinessDay by Deutsche Bank. Of this, $16 billion needs to be refinanced by the end of January, the figures show.
4. 'A slow motion train wreck that has gone viral and global' - That's Nouriel Roubini's view here at Yahoo, despite the announcement by the IMF yesterday to provide new liquidity (ie cash) for the global financial system.
But "money alone is not going to resolve the problems" in Europe, where the "contagion is spreading" far beyond the so-called periphery, according to New York economics professor Nouriel Roubini. "The contagion has now gone viral, cross Atlantic and global."
In Europe, the problems of Greece, Italy and Portugal have now spread to Italy, Spain and beyond. "Most ominously," Roubini notes, credit spreads are widening on the sovereign debts of France and Belgian among other "core" nations. In addition, there are acute signs of stress in interbank lending such as LIBOR and the TED spread while many European banks are facing a shortage of dollars.
"It's a slow-motion train wreck," the famed economist says.
5. Eurostress is building - The Telegraph reports British insurers are protesting over bank plans to force them to take 'coercive' bond exchanges. This could lead to a bond buying strike, just when banks need to roll over masses of debt.
Barclays Capital analysts reckon Europe's banks must sell about €800bn (£689bn) of new bonds next year, or about €50bn to €70bn every month. However, the eurozone crisis has led bank issuance to come to a virtual halt since May, creating a huge backlog of debt that needs to be refinanced.
Large insurance groups and other debt investors have been angered by multi-billion euro bond exchange programmes launched this month by lenders including Banco Santander and BNP Paribas.
Bondholders are say the terms of the exchanges represent a transfer of value from debt investors to bank shareholders, making them more wary about buying new issues from banks.
Analysts at Societe Generale have estimated that Santander's €6.8bn offer to exchange Lower Tier 2 debt for new senior unsecured bonds could result in the bank making a Tier 1 capital gain of about €640m, which it could potentially book as a fourth-quarter profit.
6. ECB the only one lending - CNBC reports the only bank lending to Europe's banks right now is the European Central Bank.
The ECB's weekly, limit-free handout of funding underscored the widespread problems, with 178 banks requesting 247 billion euros, the highest amount since mid-2009.
Commerzbank may need considerably more capital than previously expected to meet a targeted 9 percent core capital buffer by mid-2012 as demanded by the European Union's banking watchdog, the European Banking Authority (EBA), several persons close to the bank told Reuters.
Just as fears about the financial health of Italy and Spain have stopped banks lending to some their peers, U.S. funds have also continued to retreat from the region, and Italian and Spanish banks have seen corporate deposits flow out to safer havens. U.S. money market funds, which are key providers of liquidity to banks and have been pulling back from the euro zone since May, cut their exposure to European banks by a further 9 percent in October, according to ratings agency Fitch.
Bankers said there appeared little chance of wholesale funding markets reopening for euro zone banks this year, and the best that can be hoped is for a return to more normal conditions early in 2012.
7. 'The Chinese banking system is built on quicksand' - Hedge fund manager Jim Chanos warns in this Bloomberg interview about the weakness in the Chinese banking system and the fallout on Australia. HT Hugh via email.
8. China starting to ease - Bloomberg reports that China's central bank has eased its reserve requirements for 20 rural cooperative banks.
The drums are beating in China for something more substantial as exports to Europe in particular take a dangerously Lehman-esque path.
The move reduces the percentage of deposits that the cooperatives are required to park with the central bank to 16 percent, a “normalization” after an increase a year ago, the People’s Bank of China’s Hangzhou branch said in an e-mailed statement yesterday. The central bank gave no indication whether it may cut reserve requirements for the largest commercial banks, a step that Bank of America Merrill Lynch predicts may come in January.
Yesterday’s decision follows a pledge by Premier Wen Jiabao’s government to implement more “forward looking” and flexible monetary policy as the global economy struggles to sustain its recovery. With prospects for Chinese export demand slipping, a preliminary manufacturing purchasing manager index for November fell to its lowest level since 2009.
“The unexpectedly sharp drop in China’s flash PMI for November, if corroborated by other indicators, is likely to push policy makers to go beyond policy ‘fine-tuning’ to outright easing,” said Mark Williams, a London-based Asia economist at Capital Economics Ltd. “Confirmation that the People’s Bank has lowered reserve requirements for some banks is likely to be only the start.”
9. Totally irrelevant but fun video from the New York Times about 'Umbrella Man', the man who stood with an umbrella near Deely Plaza on the fine day in 1963 when JFK was shot.
HT David via email.
10. Totally Stephen Colbert with 'The Word' on The Super Committee's failure.
"Their later is our now."
"The tough medicine will be delivered rectally"
This one is interesting because Colbert is actually angry. Funny and sobering.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.