Chart of the Day: Developed economies’ debt levels by sector

This is a great chart below via the Wall Street Journal. It shows the total debt to GDP ratios for the largest developed economies in the world broken down into four sectors: households, non-financial corporations, financial institutions and government

Mild Corrective Forces Unfold

The light news stream, adequate bill auction receptions and comments from Fitch suggesting France’s AAA rating is secure this year encouraged short-term players to take profits. However, sentiment is still wholly euro negative and a large investment bank was out today with new calls to sell the euro. Resolution of credit watch decisions are still awaited from Moody’s and S&P. Separately France defied expectations and contradicted poor PMI readings by posting a 1.1% jump in November industrial output. The consensus was for a 0.1-0.2% gain

Merkozy’s Dinner for One

Soon, Credit Writedowns Pro is coming out with my predictions/forecast for 2012. I am aiming for a Jan 5th release and will also start a few forum topics then as well. See the piece “Introducing Credit Writedowns Pro”, which is stuck to the front page, for pricing. For now, I want to wish you a Happy New Year. And I thank you for making 2011 an enjoyable and unique experience. Here’s my first non-links post of 2012: Merkozy’s Dinner for One video in German. Thanks, Scott. Enjoy

Chart of the day: Euro nations with largest deterioration in fiscal situation

Here are two interesting charts courtesy of the Macro Business Superblog. In outlining how the latest European crisis response policy fails to deal with the underlying issues in Euroland, Macro Business also illuminated the individual debt and deficit trajectory of each euro nation. The charts highlight where the euro area countries have broken the Maastricht stability and growth pact criteria

A Deep Seated Hostility Towards European Construction?

The British decision to veto the proposed new EU treaty is not surprisingly provoking an avalanche of commentary this weekend. Among journalists, at least, there seems to be a consensus that David Cameron committed some kind of major diplomatic blunder.

Possibly this is so, but given the difficulties presented by having to take this agreement forward outside the formal structure of the EU, it is hard to not reach the conclusion that both Angela Merkel and Nicolas Sarkozy have been guilty if not of a similar blunder, then at least a major error of judgment

Full Text: Moody’s downgrades three large French banks’ long-term ratings

The following are the press releases Moody’s issued this morning, downgrading the credit ratings of three large French banks

News Links: Economists see France losing AAA in 3 months

News links for 7 December 2011 featuring thoughts on a French downgrade, the austerity budget in Ireland, patents and China and other stories

The European Troika to Watch

The “troika” – Italian, Spanish, and French bond yields – is acting pretty well even after the S&P downgrade. Italy is under 6 percent and that is what matters. We sense there will be tremendous pressure on the shorts and equity risk off crowd going into the EU Summit and believe the market moves higher even if it’s just a fig leaf to give the ECB cover. After that? All bets off going into 2012. Stay tuned

Egan-Jones on French ratings downgrade from AA- to A

Sean Egan explains that this downgrade came because of increasing concerns that France’s banks will have to be bailed out by the government. Video below

Foreign News: France and Germany are still miles apart on agreement

Foreign news for 1 December 2011 focuses on Europe, and in particular Spain

Wating for Another Shoe to Drop

The major currencies are consolidating in yesterday’s broad trading ranges, but the “real” action is in the European bond markets, with acceptable auctions in Spain and France, helping support of a bond market rally that was already underway, encouraged by yesterday’s step to increase access to dollar funding

France and Germany want the stability and growth pact hurdle to move to zero percent by 2016

According to Spanish website Cinco Dias, France and Germany want to move from a 3% deficit target to balanced budget by the year 2016. This aim points to a clear intention by the two countries to present a deal on fiscal integration and priorities in the coming days