France

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Meet Andorra: Europe's Next Failed State





Nestling idyllically between France and Spain in the foothills of the Pyrenees, Andorra - which has enjoyed the benefits of European borders without the restrictions of EU membership - has seen its risk "increase beyond our expectations," according to S&P. As a reminder, when Cyprus was "templated" and depositors awoke with a 47% haircut, its total financial assets to GDP was around 8x, Andorra is now at a stunning 17x. As The Telegrpah explains, in the last three weeks, the state has been gripped by a banking crisis that threatens to take it to the brink; and Andorra, which is not a member of the eurozone but uses the single currency on an informal basis, would have no way of bailing them out (with no central bank or lender of last resort). In short, the country faces a catastrophe if its banks fall apart.

 
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Futures Jump On Chinese Easinng Speculation, False Rumor Of PBOC Rate Cut





With the rest of the developed world's central banks waiting for the Fed to admit defeat for one more year and delay its proposed rate hike (or launch NIRP/QE4 outright) it was all about China (the same China which a month ago we said would launch QE sooner or later) and hope that its central bank would boost asset prices, when over the weekend the PBoC governor hinted that more easing is imminent to offset the accelerating drag after he admitted that the nation’s growth rate has tumbled "a bit" too much and that policy makers have scope to respond. How much scope it really has now that its bad debt is rising exponentially is a different question. It got so bad, Shanghai Securities News leaked a false rumor earlier forcing many to believe China would announce an unexpected rate cut as soon as today, in the process sending the Shanghai Composite soaring by 2.6%.

 
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"The Risks Are Very High" Swiss Billionaire Warns "Global Financial Markets Have Never Been This Distorted Before"





"Global financial markets are more distorted than ever before and accordingly, the risks are very high... All equity and currency markets are pretty extended, at present; and many of the bond markets are as well... We know that the longer a distortion prevails, the more investors get used to it and it becomes the “new normal” to them. That’s where the problem lies! I see three potential threats..." - Felix Zulauf

 
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De-Dollarization Continues As Russia Seeks AIIB Membership





As Moscow and Seoul throw their support behind China's Asian Infrastructure Investment Bank, the question is no longer about the end of dollar hegemony but rather about the extent to which the new venture will be used to institute a global shift towards the yuan. 

 
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Risk of ‘World War’ between NATO and Russia on Ukraine Escalation as Yemen Bombed for Third Day





World sleep walking from ‘Cold War’ to ‘Hot War’ and new World War ... It will lead to financial decimation in the coming years when the monstruous financial bubble of today eventually collapses ... and it will as sure as night follows day

 
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Obama Administration Bullies Allies Over Iran Nuke Deal Dissent





President Obama is "blowing up our alliances to secure a deal that paves Iran’s way to a bomb," according to European sources close to the negotiations, and as Washington Free Beacon reports, efforts by the Obama administration to stem criticism of its diplomacy with Iran have included threats to nations involved in the talks, including U.S. allies. France has borne the brunt of Obama's wrath as one source in Europe close to the ongoing diplomacy said the US has begun to adopt a “harsh” stance toward its allies in Paris because "the clarifications expose just how weak the Americans’ deal is shaping up to be."

 
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Syria "Welcomes" Larger Russia Presence





Following Vladimir Putin's demands for an "immediate cessation of military activities" in Yemen, AFP reports Syrian President Bashar al-Assad's comment during a recent interview that "with complete confidence that we welcome any widening of the Russian presence in the eastern Mediterranean and on Syrian coasts and ports," including the port of Tartus. Amid the Western-backed opposition National Coalition's planned boycott of talks, Assad pointedly remarked, "the negotiating parties must be independent and must reflect what the Syrian people want... people would not accept that their future, their fate, or their rules are decided from outside."

 
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Hans-Werner Sinn Fears Europe's "Very Messy" Easy-Money Endgame





There is a risk that Japan, China, and the US will not sit on their hands while the euro loses value, with the world possibly even sliding into a currency war. Moreover, the southern EU countries, instead of leaving prices unchanged, could abandon austerity and issue an ever greater volume of new bonds to stimulate the economy. Competitiveness gains and rebalancing would fail to materialize, and, after an initial flash in the pan, the eurozone would return to permanent crisis. The euro, finally and fully discredited, would then meet a very messy end. One can only hope that this scenario does not come to pass, and that the southern countries stay the course of austerity. This is their last chance.

 
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Futures Wipe Out Early Gains In Volatile Session As Dollar Resumes Climb; Oil Slides





After a few days of dollar weakness due to concerns that the Fed's rate hike intentions have been derailed following some undisputedly ugly economic data (perhaps the Fed should just make it clear there will never be rate hikes during the winter ever again) the USD has resumed its rise, and as a result risk assets, after surging early in the overnight session driven by the Nikkei225 and the Emini, the "strong dollar is bad for risk" trade has re-emerged, with the Nikkei dropping almost 500 points off its intraday highs, with US equity futures poised to open lower once more, sliding nearly 20 points in the overnight session, and surprising the BTFDers who have not seen five consecutive days of "risk-off" in a long time.

 
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Frontrunning: March 26





  • Saudi Arabia, allies launch air strikes in Yemen against Houthi fighters (Reuters)
  • Pilot on Crashed Jet Was Locked Out of Cockpit, NY Times Says (BBG)
  • Why Bombing This Tiny Oil Producer Is Roiling the Energy Market (BBG)
  • U.S.-led coalition, Iraqis pound Islamic State in Tikrit (Reuters)
  • Munger Says Prepare for Harder World as Buying Power Slides (BBG),Mocks Greek ‘Idiotic Idea’ You Can Vote Yourself Rich (BBG)
  • The Central Banker Who Saved the Russian Economy From the Abyss (BBG)
  • Bank of Canada says foreign buyers complicate housing market (Reuters)
  • Investors Scoop Up Companies’ Bonds (WSJ)
  • Espirito Santo Probe Turns Mariana Mortagua Into Portuguese Star (BBG)
 
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Lessons From The German Hyperinflation Of The 1920s





The German hyperinflation episode in the early 1920s is often quoted as an example of the dire consequences of excessive money printing – a leading industrial economy succumbing to the dangers of currency debasement promoted by incompetent central bankers. Alas, the reality is more complex than that, particularly when certain geopolitical and economic constraints of that time are taken into consideration. And as we shall see, we can draw some important lessons from that episode that can help us gauge the effectiveness of our very own currency debasement in the 21st century.

 
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US Hegemony, Dollar Dominance Are Officially Dead As China Scores Overwhelming Victory In Bank Battle





The China-led development bank essentially marks an epochal shift away from traditionally US-dominated multinational institutions like the IMF and the ADB. Meanwhile, it also represents an implicit attempt by the Chinese to usher in a kind of sino-Monroe Doctrine. The more isolated the US becomes as it relates to the new venture, the more transparent its motives seem. This was never about “standards” (the original excuse for Washington’s opposition to the bank), but rather about stifling Chinese ambition. "America seems to be confirming China’s darkest fears: it has adopted a policy of containment that is wrong in principle and has failed in practice," notes The Economist.

 
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