The Economist, 4/14/2012, "Return of the euro crisis: after the sugar rush"
新的一期 The Economist 明天就要出來了，上個星期的文章還是值得一看。今天 Spain 有一批債券要標售，目前看來情況不太樂觀，需求可能不強。
這幾年我學到的教訓是不要拿 2008 年看投資銀行的方式來看國家。Lehman 要倒的時候雖然 Paulson 和 Geithner 會出來幫忙找人想辦法，但是最後救不了他們就拍拍屁股走人，所以市場反應也相當迅速而且激烈。主權債券這種東西不一樣，有時候為了『顧全大局』，外國政府領袖會出來幫你恐嚇民間投資者，再不然中央銀行倒入大筆資金進入市場幫你壓低借款成本。歐洲還限於歐盟的條約，不能由 ECB 直接購買各會員國的政府公債，要不然歐洲版本的 QE 就會跟美國一模一樣了。現在是透過民間銀行做中間這一手，所以放款效率比起美國來還差一些。
去年年底跟今年二月 ECB 注入大筆資金到市場兩次，效果差不多都消損掉了。這是標題用 "after the sugar rush" 的原因。西班牙今天這個債券標售案要全靠他們自己了，西班牙銀行先前跟 ECB 借來的錢大概已經沒剩多少下來。
對於德、法等國以及 ECB, IMF 甚至英、美等國來說，問題將是評估需要多少錢才能穩定住西班牙。當初這些國家出手救希臘的原因之一就是怕市場在希臘倒掉之後一方面需要資金來補 collateral，另一方面也希望降低自己在歐洲這些危險國家的曝險部位，使得太多銀行同時出手降低西班牙和義大利的公債部位，導致這兩個國家連一博的機會都沒有就得被迫倒下。現在希臘暫時穩住，西班牙變成最明顯的目標。
The pain in Spain falls mainly on the lame....
Good post, CCLu. I think that a lot of investors are confusing liquidity with solvency. LTRO only addressed a bank's short-term liquidity issues, but not their solvency problems. And with elections in France and Greece coming up, there are plenty of "surprises" in store for the unprepared investors. The next few months should be interesting....
Well said. When the time is tough, lack of liquidity looks almost like insolvency. Sometimes it is so difficult to tell these two apart. Hank Paulson and Timothy Geithner made that mistake with AIG. They thought it was illiquid, but it was more like insolvent.
Here we have an application to the opposite end in Europe.
I don't have the stomach for this market. It's going to be great fun for option traders (or big pain if they bet on the wrong side), but I'd like to sit this one out.
The water is calm, CCLu, I promise:)
And release the Iron Condor!
A very interesting interview with Buba's Weidmann. How I wish that I had a time machine so that I could travel ahead and see the endgame of this EMU tragedy.
I have to admit that I'm not good at options. I never got how to determine the proper width of the Iron Condor's body. Do you think the volatility will be limited? It looks so but I don't know about that in the summer. If another bad news of the U.S. coming out later like the one we saw in March about employment, it could set off another wave of panic. I have to say the probability of that is slim, but economists seem to change forecasts every other month this year.
The endgame in Europe is another interesting thing. I'll bet on the following:
Politicians got caught in elections or the elections in nearby countries and they will think it is a good idea not to bail out foreign countries. For countries that need to be rescued, the politicians will also refuse to address how weak their countries are. After all, it's easier to attract votes with optimism than painting a picture of doomsday.
After a stretch of denial, they will find themselves in a bigger hole than they imagine. Another round of panic meetings will take place later this year. The cost of taming the beast will be higher than otherwise, but they will no longer have a choice by then. What we saw last year with Greece will happen again for Spain, hopefully we don't need to see Italy in that situation.
Buy VIX related ETFs or inverse ETFs if you are not confident of playing options.
>>I never got how to determine the proper width of the Iron Condor's body. Do you think the volatility will be limited?<<
Bingo! You got to the heart of the Iron Condor strategy. I, too, struggle with the very same issue whenever I deploy iron condor. To me, options are probably more art than science. I can't remember the last time that I used Black-Sholes to determine the fair value of any option.
Regarding volatility, I think that VIX may be one of the more misunderstood indexes out there today, which create opportunities for better-informed and better-prepared traders/investors. I am sorry but I can't share too much of my volatility thesis at this time because I am still building my positions and don't want to disclose too much info. Some of the products that I am looking at are thinly traded, even for a small guy like me. However, I do think that volatility will pick up in the next few months, but when and how much? That's what I am trying to figure out right now.
My European endgame view is largely in agreement with yours. Not a whole lot of surprises in the French election today, other than Le Pen's strong showing. Perhaps it will be Germany who will leave the EMU first....
Last but certainly not the least, my wife, who is a college professor, was awarded and had just accepted a Fulbright scholarship grant to spend 11 months in Taiwan in 2012-2013. I am still undecided on how much time I will spend in Taiwan with her but I will most certainly be visiting Taiwan again. If you are up for it, CCLu, I would like to buy you a drink and to thank you in person for this wonderful blog that you have created. Please let me know the best way for me to get in contact with you when I am in Taiwan.
Send me an e-mail to
and give me an e-mail address I can use to contact you. I'll give you my normal e-mail address.
I didn't know Fulbright has a grant like that. It's a two-way street! I thought it's only for foreign scholars to do research in the U.S.. My girlfriend got it last year and spent half a year in her alma mater (PSU).
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