More on how post credit bubble fiscal austerity leads to depression

Britain’s economy is a shambles as the negative impact of austerity has been made plain. Now, mind you, it was already clear from a leaked Greek bailout document that expansionary fiscal consolidation has failed in Greece. But now the OECD’s double dip warning for Britain should make this plain to all

News Links: Osborne to Fund Infrastructure Projects as UK Retail Sales Fall

News links for 28 November

News Links: BofA Clash With Fannie Mae Escalates Over Loan Buyback Stance

BofA Clash With Fannie Mae Escalates Over Loan Buyback Stance – Bloomberg Bank of America Corp. (BAC) told Fannie Mae it refuses to cooperate with the U.S. mortgage firm’s new stance on loan buybacks, setting the lender up for a potential surge in claims and penalties. EU’s Barnier: Tougher rules must precede euro bonds |

Chart of the day: Definitive guide to the European debt web

The BBC has a terrific chart tool that gives you a good feel for exactly how much the sovereign debtors in each of the European countries owes and to which other countries. The great thing about this chart is that it also shows you the debt flows outside of the European periphery i.e. for France and Germany, as well as for Japan, the US and Britain in both directions

Nigel Farage: ‘Germany is dominating Europe’

The well known eurosceptic Nigel Farage is having a field day over the sovereign debt crisis in the euro zone. Farage says that the EU lacks democratic legitimacy, a complaint heard ever more often during this crisis. He goes further, saying political puppets are being put into place right across the euro zone. He sees this as a demonstration of a “German-dominated Europe”, something he believes the euro was supposed to prevent

Key data to focus on in the week ahead

Economic data has been of tertiary concern to the market recently, overwhelmed by the drama in Europe. Given that the drama may die down, with new governments in Greece and Italy, the economic data may become somewhat more important

Class Warfare and Revolution (Circa 1850)

By Rick Bookstaber In a recent post I discuss six policies that spurred the Industrial Revolution in England – opening up immigration, weakening the guilds, investing in infrastructure, privatizing agricultural land, forcing a move to new energy sources, and policies for bringing capital to the new, capital-intensive technologies – and suggest that these policies have

Sketch of Week’s 6 Key Events and A Few Things to Monitor

Risk appetites returned in a big way in October, as equities, emerging markets, commodities and currencies all generally advanced and smartly so, recouping much of the ground lost in September. The events in the week ahead will likely set the tone for the month of November. They include three central bank meetings (RBA, Fed and ECB), two data points (UK Q3 GDP and US employment report) and the G20 summit

Fed Outgunned, EMU Outflanked

The auxiliary objective of QE by the Fed is to weaken the USD. Herein lies the rub. Quite simply, with the recent announcement by the BOE of another round of QE worth £75 billion, with the ECB now willingly or unwillingly being forced into increased support of peripheral debt markets and with the BOJ also pledging more stimulus, the Fed is starting to look like the conservative central bank in the G4. Even if Merkel and Sarkozy, and rightly so, appear most concerned with putting pressure on Italy, the most significant issue remains Greece which is now in default a fact that was un-sanctimoniously confirmed by the leaked bailout document which has the Troika admitting that the medicine they were mandated to administer would only make the patient worse and not better

UK real wages are falling

These numbers are well under the inflation rate and show British consumers becoming victims of stagnating and negative real wage growth

BOE and ECB: What It Means and What is Next

The Bank of England, which has a penchant for surprising the market, chose not to wait for the quarterly inflation report to provide cover, and announce GBP75 bln additional bond purchases over the next four months. We forecast sterling to finish the year near $1.50. However, in the near-term there is scope for additional position adjusting. A move above the $1.5500-50 area could target $1.57 before sellers re-emerge.

The ECB focused on liquidity measures, including a 12- and 13-month long-term refi operations and 40 bln euro covered bond purchases. The ECB did not cut rates as many had expected. Short-term European rates back up smartly, with the euribor futures strip yields rising 9-13 bp. We expect the euro to finish the year near $

A Tale of Policy Shifts as the UK goes QE2

Sterling plummets as BoE surprises the market with QE announcement; global stocks, oil advance. All eyes turn to Berlin for Trichet’s last meeting in the hopes of a policy announcement. BoE announcement see QE larger and earlier than many expected; Swiss inflation increases