Good morning

The headlines:

  1. Merkel is not going to share debt. Link: “Soz, Obams”.

    Back in monetary-free-for-all territory, the Obama was blaming Europe for the badder-than-expected US job numbers that came out on Friday. Then, and I quote, he “singled out” the European leaders (which I hoped meant “naming and shaming”, but it didn’t) for not doing enough. That accusation, coming from Mr Equivocating-America, is a bit, for the lack of a better word, rich. Particularly when he talks about a “lack of decisive steps”.

    Angela M continues to tell the Germans that “under no circumstances” will she agree to German-backed bonds. That sounds pretty decisive to me. And while it seems like the Germans taking care of the Germans, the point is that “equal interest rates” will only make Germany worse-off, not Europe better-off.

    Perhaps they should cut their now-significant losses and start to get more punitive with the problem-children. Some problems can be helped with therapy. But maybe the more persistent problems need to be dealt with by sending the kid to Juvenile Detention.

    Let him/her learn how mean the world can be without a Guardian Angela?

  2. The EU rescue fund is said to open for business on July 9. Link: Stability mechanism is not an oxymoron, it’s just for oxymorons.

    So July 9 is the start date for the €500 billion European Stability Mechanism (ESM). The 17 parliaments across the member states must ratify the fund before it comes into effect – until that time, the problem children will be relying on the European Financial Stability Facility (EFCF), which only has €240 billion of its original €440 billion left. As Germany will contribute 27% of the funding, this really all hinges on them.

  3. The declining nominal yield of Germany. Link: When bond rates go negative.

    2 year yields on German notes fell below zero for the first time last week. It really does show a desperation amongst investors to put the money somewhere – because you would literally be better off taking your euros in cash and burying them.

    The yield drop happened after the announcement of poor EU employment figures, and Italy failing to meet its debt target at auction. Suddenly, there’s a fight to preserve capital, and you’re literally paying for the privilege of lending Germany your money.

    Of course – in real terms, those yields have been negative for some time (because the yield is meant to compensate for inflation as well as for the use of your money). Last reports were that inflation was floating around 2.4%.

    I’m not sure if I would use the phrase “preservation of capital” to describe the flight to Bundesbonds. It sounds like that capital is disappearing at about 2.5% per year.

  4. Iraq sides with Iran. Link: Putting the pec in OPEC.

    Iran and Iraq have agreed to adopt a “unified stance” on production at the next OPEC* meeting, where Iran will insist that the cartel maintain its current ceiling on crude production.

    US sanctions against Iranian oil could blow up in its face – which would be a bit ironic.

  5. Ipads are saving the world. Link: One plane trip at a time.

    When they replace the television set on each seat, they make the planes lighter. Increased fuel efficiency, higher profits, lower carbon emissions.

    By the same principle, forcing the obese to take two seats when flying would also save the world by making the planes lighter.

    I’m just saying.

That’s all for now.

Have a good day.

*Organisation of Petroleum Exporting Countries