France

Stop the presses. Barely did we have time to report that European regulators failed to impose a coordinated short selling ban, that Bloomberg reports that the countries most impact by the market plunge are about to impose standalone short-selling bans. These are Belgium, Italy, Spain and France. In other words, it really is on and the 2008 Lehman PTSD flashbacks may now resume. Until we get a headline that says it isn't. The rescue of the Borsa Italian is now more schizophrenic than that of Greece. As a reminder, in the previous post the FT quoted Abraham Lioui, a professor at the Edhec business school in France, who said “It is the worst thing to do right now. This would signal to the market there may be something fundamentally bad that is happening."  He is correct. Something is fundamentally very wrong and about to break.

Here is the next installment of the public evidence of a bank run in France. This is literally a carbon copy of Bear Stearns/Lehman Brothers, just on a larger scale. Listen to that sucking sound. It's the illustion of liquidity hitting the hard wall of reality! You heard it hear first.

The easy way out of turning to bigger, more solvent governments for bailouts has run its course.

So it begins, the unraveling of the great Pan-European Ponzi Scheme!

While the legal case against DSK in New York may be ending shortly, a new one, and possibly the first of many if the man's reputation as a womanizer is indeed valid, is about to be launched against him in France. From Reuters: French writer Tristane Banon will file a legal complaint on Tuesday over an alleged rape attempt by former IMF chief Dominique Strauss-Kahn in 2002, her lawyer told Reuters. David Koubbi, Banon's attorney, said the complaint would relate to an incident that took place when she went to interview Strauss-Kahn in an apartment in Paris. She was 22 at the time and has already publically discussed the incident. "Tristane Banon will file a complaint on Tuesday for attempted rape in Paris," Koubbi said." It is unclear if the case will be civil or criminal although considering statuse on limitations on these kinds of things for a criminal trial is hardly 9+ years, we are confident the weakest for of allegation against DSK will be filed. Of course, this is to be expected when one waits 9 years to actually lodge a complaint against something that should have been brough to the authorities' attention immediately.

As expected. Just sent out from Lagarde's twitter account: "The results are in: I am honored & delighted that the Board has entrusted me with the position of MD of the IMF!" Now can the symbolic IMF and its double symbolic head please step aside and leave the real bailouts to China, please?

There is a curious email floating around (allegedly sourced here), which is supposed to represent a communication from France's La Banque Postale to its clients, notifying that beginning August 1, 2011, the bank will lower the weekly ATM withdrawal limit by anywhere between 33% and 50%. In brief, according to the terms of the of the bank's statement, the top tier of credit card holders, the Visa Premier, will see their weekly withdrawal limit reduced from €3000 to €1,500, while the next two tiers, MasterCard and Bleue Visa, will see their weekly withdrawal allowance lowered from €1,500 to €1,000. Lastly, the lowest tier will see its cash withdrawal drop from €1,000 to €800. Naturally if confirmed, this would not be a good sign as pertains to the bank's current liquidity situation: traditionally cutting the withdrawal cap is an indication of a substantial cash on hand scarcity. We hope some of our French readers can confirm or deny this peculiar development out of a country that has so far rarely made the "financial woes" headlines.

Call it Eyjafjallajokull part two, or, more pronouncedly, Grimsvotn part one. Just like last year, when the unpronounceable Icelandic volcano erupted and covered Europe in ash, grounding flights for about a week, so the 2011 vintage of Icelandic pyroclastic goodyness, contrary to "expert" predictions, is about to cause widespread havoc within European air traffic control. According to Eurocontrol, The European Organisation for the Safety of Air Navigation, whose twitter account is about to become all the rage all over again, "By 08:00 CET #gromsvotn #ashcloud to cover Scotland." In other words, expect massive plane delays, outright cancellations and another round of completely unexpected losses for airline carriers.

To all Americans complaining about high taxes, better keep your beef on this side of the Atlantic. According to a recent OECD report, captured by the Economist, when it comes to total taxes paid out by both employees and employers, the US doesn't even come close to its just slightly more socialist European cousins. In fact, while total taxation as a % labor costs is about 30% in the US, comparable with Japan and Ireland, in France and Germany this number is nearly half of the total. Which explains why there is no greater threat to these two countries than the perpetuation of the status quo welfare state. Should Greece file Chapter, who knows what will happen to the Bismarckian ideal. Incidentally, on the other end: Chile, which pays out just 7% of labor costs to taxes. Per the article: "The report splits out the tax burden on employment which is paid by employers (in the form of social-security payments) and employees (as income tax and more social security). France and Germany have some of the most costly tax regimes—with people who earn the average wage taking home just over 50% of their total labour cost. The effect of fiscal austerity, particularly across Europe, has meant that the tax burden rose in 22 out of the 34 countries in the OECD from 2009 to 2010. Meanwhile real incomes for average-wages earners fell in 15 OECD countries. As the second chart shows, these reduced earnings caused by the world recession and subsequent inflation tend to have a much larger impact on incomes."

A plethora of shocked, shocked, responses, that Strauss-Kahn tried to get away (and off) with it again... Of course, the focus now is on the presidential race which just like that of the US, following the Mike Huckabee announcement, is once again wide open.

Remember when we said March would be the cruellest month for Europe? Looks like someone did, at least on a NPV basis, and is now preparing for the next phase of the European Crisis. According to Newedge, there is very large selling on dealer screens in "all kinds of bonds: Spain, Italy, and France." It seems at least one trader is not waiting around to see what the Irish stress test results indicate, and the expectation is that, as Bloomberg noted earlier, bondholder haircuts will be fast and furious.

Today should be fun.

Mr. Neutron, the most dangerous and terrifying man in the world...

It has begun - From the AP: "Top officials from the United States, Europe and the Arab world have announced immediate military action to protect civilians amid combat between Libyan leader Moammar Gadhafi's forces and rebel fighters. French President Nicolas Sarkozy said after an emergency summit in Paris on Saturday that France has already taken military action against Libya. Sarkozy said "our determination is total." Earlier Saturday, Libyan government troops forces stormed into the rebel capital of Benghazi, apparently ignoring a proclaimed cease-fire and potentially complicating any allied military action."

Contrary to prior expectations that all No Fly Zone decisions will have to go through the UN, Reuters reports an Al Jazeera update that US, Britain and France have promised East Libyan rebels the imposition of a No Fly Zone. While the latter two were expected, and hardly relevant considering both are quite impotent at actually imposing "any" zone anywhere in the world, the addition of the US, with its USS Enterprise floating in the region, is rather surprising, especially since the nobel peace prize winning teleprompter announced previously how no unilateral invasion (because that is what a No Fly Zone in essence) decisions would be made.

Update: Libyan Rebel group rejects Venezuela peace proposal according to a report, as the Pentagon announces it remains cautious but not against Libya no-fly zone

Just headlines from AFP for now. Hpefully this should end the most embarrassing 12 hour period ever in which the dumbest news possible actually impacted the commodities market.