Post Tagged with: "Europe"
Timing and Magnitude of Euro Bounce
The argument presented here is to underscore the over-stretched condition of the euro and to warn medium term investors of the risk of the euro bounce. The euro has dropped more than 11% since late October against the dollar and we suspect it has fallen to within almost 1% of what we anticipate to be a near-term bottom (~$1.25). The correction we anticipate should give investors a better selling opportunity and we target the euro to fall toward $1.20 by midyear
Why bank deposits are piling up at the ECB
Central Banks, whenever they buy any asset create new reserves. Commercial banks and people do NOT have the capacity to destroy those reserves. Once the Fed or ECB wires the money or creates that asset line item on its spreadsheet, there is an equal and offsetting liability on its spreadsheet called reserves. This spreadsheet cannot be broken
Successful Auctions Boost Tone in Europe
Better than expected reception to Spain and Italy’s debt auctions have spurred risk on; dollar softer. BoE, as expected, left policy unchanged, ECB expected to do the same; Japan’s current account shrinks. US advanced retail sales expected to rise to 0.3% from 0.2%; thoughts on the EM central bank outlook
Protecting wealth in a world of recurring crisis
Happy Wednesday. I know the news is ‘less good’ today than it was when I last wrote you but writing these weeklies always puts me in a more positive frame of mind. Nevertheless, today’s topic is about downside risk. My hope is to frame the economic scenario globally and then to offer some strategies of mitigating what I believe is significant downside investment risk
Thoughts Ahead of Spanish and Italian Bond Auctions
Spain and Italy begin this year’s funding operations with bond auctions tomorrow and Friday. Although the euro is bouncing along its recent trough against not only the dollar, but against many of the other major currencies as well, there has been a modest improvement in some of the measures the market has focused on as metric of stress. Of course there are other signs that still show a high level of paralysis, including the fact that overnight deposits at the ECB continue to set record levels and are approaching 500 bln euros
Chart of the Day: Greek workers work 48% more hours than Germans
While many will be initially surprised by the data, on reflection it makes intuitive sense. In crude terms, wealthier countries typically work smarter–more capital intensively–than poor countries, not longer
Geithner’s Ploy: Saving U.S. Banks at Taxpayer Expense, Once Again
Mr. Obama’s Secretary Geithner went to Europe met with EU leaders to demand that Greece make the write-downs voluntary on the part of banks and creditors. He explained that U.S. banks had bet that Greece would not default – and their net worth position was so shaky that if they had to pay on their bad gambles, they would go broke
Euro Slides Ahead of BOE and ECB Meetings
The euro was recovering in early Europe, moving back toward the upper end of its recent narrow range and it reversed course sharply, triggering stops along the way as it dropped nearly a cent to $1.2695. The technical failure yesterday at $1.2820 may also have been more telling. News from the German stats office that its economy may have contracted 0.25% quarter-over-quarter in Q4 is a bit disappointing as some hoped for stagnation
Mosler: I advocate tax relief and jobs, but forecast muddle through at best
Warren Mosler proposes a full FICA suspension, a $150 billion one time distribution to the states and an $8/hr federally funded transition job for anyone willing and able to work. However he believes these proposals will likely not be followed and predicts muddle through at best as a result
Foreign Press: Hungary deficit miss, German recession, ECB’s Ireland blackmail
Here are some of the foreign language links from the last two days plus some in English that are related which I want to highlight
Poll: Readers believe the latest deal in Europe will not solve the debt crisis
The results are in from the poll I began a month ago. By an overwhelming majority, Credit Writedowns readers believe the crisis will continue
If no trade reversal now, then when?
The best resolution, and the one Keynes urged without success on the US in the 1920s and 1930s, is that Germany take steps to reverse its trade surplus. It could boost disposable household income and household consumption by cutting income and consumption taxes. If Germany imposes austerity, unemployment will force the peripheral countries into the unenviable choice either of absorbing that surge in unemployment themselves, or of forcing the unemployment back onto the core countries by abandoning the currency that is at the heart of their lack of competitiveness