Welcome back, View fans. Here are your morning links.
You didn't think Mohamed El-Erian would stop writing just because he's stepping down at Pimco, did you?
Of course not. Here he is writing about the crisis in Ukraine: "Is Ukraine simply the latest example of a more disturbing general phenomenon of less effective global political coordination, and the tensions that inherently come with that? I worry that the answer to this question is yes. If you agree with me, then overall geopolitical risk may not, as yet, be adequately reflected in some risk markets."
And here are a couple of extreme examples of that risk.
This comes from the BBC's website, with a hat tip to Mark Grant of Southwest Securities for pointing it out to me. The RIA news agency quoted a Kremlin aide, Sergei Glazyev, as saying the following about the Russian response to any U.S. sanctions over Ukraine: "In the instance of sanctions being applied to stated institutions, we will have to declare the impossibility of returning those loans which were given to Russian institutions by U.S. banks." He also said the U.S. financial system faced a "crash" if it agreed to sanctions and that Russia could stop using dollars for international transactions: "We would find a way not just to reduce our dependency on the United States to zero but to emerge from those sanctions with great benefits for ourselves." It all looks like crazy talk, but that's the type of regime we're dealing with here.
Here's a Bloomberg News story about how some of Russia's richest billionaires saw $13 billion of their wealth disappear yesterday, including two who own almost half of the Russian gas producer Gazprom OAO. And a Lex column from the Financial Times about the long-term outlook for Gazprom: "Gazprom has said it expects to control a third of the European market decades from now. That looks increasingly unlikely."
David Wessel on the Federal Reserve and financial stability.
He has moved on to the Brookings Institution after 30 years at the Wall Street Journal, and he's still as indispensable a read as ever. Here he poses three questions. Is it all about leverage? Is the Fed's current policy sowing the seeds of the next financial crisis? And what happens when the Fed steps on the brakes?
What happened with that crazy Chinese trust product Credit Equals Gold No. 1 that almost defaulted in January?
Bloomberg News has a solid tick-tock on how Credit Equals Gold got bailed out and how this same scenario keeps happening: "At least 20 trust products have run into difficulty making payments since 2012, according to Beijing-based China Securities Co. All have avoided default as issuers or third parties such as state-owned bad-loan managers and guarantee firms eventually repaid investors in full." Christine Kuo, an analyst at Moody's in Hong Kong, says the government is faced with a dilemma: “It knows that the implicit guarantee cannot last forever, but at the same time it is very worried about triggering a systemic crisis.”
Check out these photos of a snake eating a crocodile.
Wild stuff here about an epic fight at a lake in Australia. No, this has nothing to do with finance.
(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter @jonathanweil.)
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