Bernanke ‘Irresponsible’ to Compare US to Greece

That’s the headline from my latest talk on RT’s Alyona Show. Before I send you to the clip, let me explain my thinking because I don’t think I was really clear in the video

Why I am not optimistic about Europe

I am not at all optimistic about the euro zone in terms of policy makers fashioning a solution to the problem. The euro leaders have the diagnosis all wrong. They keep harping on government debt and deficits as if that’s the problem. And this has caused them to go all in for austerity without a backup plan. The reality is that the sovereign debt crisis in Europe is not about government debt; it’s about private debt and intra-euro zone imbalances

On the IMF bailouts, Greek defaults and Canadian household debts

Below is the link to my latest appearance on BNN with Howard Green and Ryan Avent. Quick thoughts here

The fireworks will start with Spain or Italy

Here’s what I had to say about Europe on Capital Account with Lauren Lyster on Thursday night. I’m not bullish on the real economy there (but I still expect relative share outperformance due to lower P/Es). The US is having a bit of a data surge to the upside: housing, employment, manufacturing, all of these numbers have been better of late

On the ECB’s Long-Term Refinancing Operation and 2012 macro ideas for investors

The end of year is usually a good time for markets. There was a lot of angst about the European situation a few weeks ago, but there is less of that now because we’re hitting year-end (tape painting). Does that mean the credit crisis situation is stable? No, but it has stabilised somewhat. 2012 will be a different story though. I talked about the European sovereign debt crisis and my themes for 2012 with Howard Green of BNN and Ryan Avent of the Economist yesterday. The link to the video is below but let me say a bit more, particularly about today’s LTRO by the ECB. I’ll try to be brief

Thoughts on Europe and the global synchronised slowdown

We are in a second synchronised global growth slowdown. Moreover, the policy response must be more muted this go round as the public sector is more indebted and has less policy space than in 2008 or 2009. Expect policy inaction followed by fits of volatility due to inaction. This points to a risk off a lot more than a risk on environment

Markets anticipate a euro zone solution within days

I anticipate a large enough move toward limited fiscal integration in the coming days that enables the ECB to move toward a full monetisation euro area national debt by the end of the year. Interestingly enough, the initial reaction by currency markets has been euro strength not weakness. Stock markets around the world have rallied as well. That tells me the markets are more concerned about the impact of a euro breakup scenario than any impact of an ECB rescue scenario

More on the political economy of the European sovereign debt crisis

European economies are really breaking down and panic has set in. You see pointless proposals to lord over supposed fiscal free riders from Finland and unelected governments lacking in political legitimacy and taking unfavourable economic policies in both Greece and Italy. Europe is clearly on the edge

Can Europe step back from the brink of serious financial Armageddon?

When you run through the scenarios, really the only medium term solution that makes sense is to allow the ECB to put a permanent bid on Italian and Spanish bonds. The problem with such a move is that it reduces pressure on those governments to make the kinds of reforms that countries like Germany feel are necessary to ensure longer-term euro area convergence

CDS are a mess

You saw my comments in the last post on the damage Europe has done in making a mockery of the sovereign CDS market. The Italy situation is worse because of this. Below is a video clip from Monday night of the Lang & O’Leary Exchange, a well-regarded business show in Canada. I am on near the tail end of the show talking about Credit Default Swaps.

Catch my commentary after the 47th minute

Edward Harrison and Demetri Kofinas on the Future of the Eurozone

Yesterday I was on RT with Demetri Kofinas (@CoveringDelta) talking about the future of the euro zone. Lauren Lyster asked us where this was headed and we both agreed that it really was all about Italy. I just posted on why questioning Italy’s solvency leads inevitably to monetisation. So my answer was that it’s heading toward the ECB buying bonds and acting as a lender of last resort.

Video below

Greece in debtor’s prison

On the Max Keiser show, I said that Greece has been sent to debtor’s prison. The goal is for creditors to Greece to get as much out of the Greek government as possible before they default