Death Star Economics



Yes, we’re still talking about eurobonds and failbook…

It seems like the set of news-worthy stories is pretty small this week, it all comes down to eurobonds and failbook…

The day started with Europe more or less falling apart, only held together by the piece of string that is tonight’s informal EU dinner meeting. On the menu: Angela Merkel against the world, the fight of the titans, round 1.

Mariano Rajoy may or may not ask the ECB for help with Spain’s liquidity issue, which is rather worrisome, though not completely unexpected.

MarketBeat asks why anybody still even cares about the news coming out of Greece, why not wait until there’s some actual spill-over effects that can rock the boat that is Europe. Fair question, but the simple answer is probably fear. Or opportunity. Or both.

Markets, in fact, could be even more susceptible to headline risk today due to the European Union summit. […] Much will be discussed, yet analysts don’t expect many firm plans to come from this [summit].

There we have it again: much ado about nothing. To be fair, things got a bit more concrete when LucasPapademos, former Greek prime minister, mentioned an exit from the eurozone as a realistic possibility, if austerity measures are abandoned. He has since clarified his statements.

So far, Germany has held on to its ‘no, never, go away’ position on eurobonds, disregarding the IMF, OECD and several country leaders in Europe and beyond. Those want the fiscal pain to be shared, while Germany wants to do what’s best for all, even if the others can’t see that yet. Angie’s main argument is that eurobonds would remove the incentive for struggling economies to implement the EU-imposed structural reformsread article

Meanwhile, Alexis Tsipras is asking Germans to go on holiday in Greece to strengthen the country’s tourism industry… read article

The latest drama around the Facebook IPO goes as follows: after three days of trading, a 20% fall of the share price, which slashing a lot of dollars from the company’s market cap. Now, lead underwriter Morgan Stanley, who adjusted, i.e. cutFacebook’s growth forecast before the company actually went public, is now being subpoenaed in Massachusetts. The issue at hand, obviously, asymmetric information. Bloomberg says it’s all good and MS played by the rules, while BusinessInsider is pretty upset about the whole thing.

So long.

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