Morning Reading – December 14, 2010
FT.com BeyondBRICs: Google in China: not as loved as Baidu
Google’s share of the Chinese online search market is plummeting, but the company’s staff in China comfort themselves with the thought that they are the champion of hearts. “The people love Google,” says John Liu, the company’s vice president for Greater China operations.
But it turns out that the Chinese people love Baidu more. According to WPP, the global marketing group, Chinese consumers have much stronger emotional ties to the brand of the local hero than to Google.
FT.com Alphaville: Spanish debt watch, exploding yield edition
The yield on Spanish 10-year debt has exploded on Tuesday morning…
FT.com Alphaville: The ECB’s technical insolvency
€60bn worth of covered bonds + €70bn of government bonds = €130bn of potential problem assets on the European Central Bank’s balance sheet.
A 1 per cent interest rate increase at a 3 per cent coupon with an average of seven years maturity makes just under a 5.32 per cent loss rate — which is quite a rough (but conservative) estimate by German financial consultant Achim Dübel.
Add in some forex losses and presto…
… The ECB’s subscribed (2009) capital of €5.8bn is already used up.
FT.com Alphaville: Central bank SOS
To give a bit more context — there are two draft laws, one to allow the Hungarian parliament (and not the MNB governor) to appoint members of the Bank’s monetary policy committee, and another one to increase the salaries of officials whom the government appoints to supervise the MNB.
Both stink.
Self Evident: Default and bankruptcy in the municipal bond market (part one)
A caveat: Although I cite the academic work of some well-established bond counsels in this post, I am not an attorney. I am just writing this post to demystify a process that evidently needs demystifying. (If I use any unexplained jargon, or if you happen to be a bond counsel and notice any mechanical errors, please let me know and I will make the appropriate amendments.)