Moral Hazard

ECB Proposes End To Deposit Protection

"covered deposits and claims under investor compensation schemes should be replaced by limited discretionary exemptions to be granted by the competent authority in order to retain a degree of flexibility."

The 4 Possible Channels For A Chinese Financial Crisis

An analysis by Victor Shih of Merics lays out 4 plausible scenarios of financial crisis in China: household defaults, shadow banking panic, capital flight, and a sudden stop of international lending. It finds that China’s greatest vulnerability resides in its dwindling foreign exchange reserve and escalating external debt, which can trigger a confluence of maxi-devaluation, external defaults, and sharp asset price depreciation.

Bank Of Japan Is Buying Bonds From Scandal-Hit Kobe Steel

The BOJ previously avoided bonds from companies rocked by scandal, according to the Nikkei. Such avoidance has occurred even if the security otherwise meets credit ratings and other requirements set by the bank. That no longer appears to be the case.

How BofA Learned To "Stop Fighting Central Banks" And Love Shorting The Euro

In a new report that may come as music to the ears of Mario Draghi, who has been valiantly hoping to show the European economy recovering while keeping the EURUSD below the "red line" of 1.20, BofA FX strategist Athanasios Vamvakidis is out with a new note today urging currency traders to "stop fighting the central banks", in other words stop selling the USD and buying the EUR, and recommends shorting the EURUSD to 1.15 with a 1.21 stop loss. 

China's Minsky Moment Is Imminent

Everything you wanted to know about the looming bursting of the world's biggest credit bubble, but were afraid to ask...

To Fix Healthcare, We Need To Repeal A Lot More Than Obamacare

If repealing Obamacare is really the goal, the GOP should instead focus on repealing and undermining the edifice on which Obamacare was built: the highly regulated, subsidized, and manipulated healthcare markets that dominate today.

Deutsche: The Fed Has Created "Universal Basic Income For The Rich" And Now It Can't Get Out

"The accommodation and QE have acted as a free insurance policy for the owners of risk, which, given the demographics of stock market participation, in effect has functioned as universal basic income for the rich. It is not difficult to see how disruptive unwind of stimulus could become. Clearly, in this context risk has become a binding constraint"