Part 1 is HERE. In March 1969, while Buba was busy in the quicksand of its swaps and forward dollar interventions, Netherlands Bank (the Dutch central bank) had instructed commercial banks in Holland to pull back funds from the eurodollar market in order to bring up their liquidity positions which had dwindled dangerously during this increasing currency chaos. At the [...]
The finance ministers and representatives of central banks from the world’s ten largest “capitalist” economies gathered in Bonn, West Germany on November 20, 1968. The global financial system was then enthralled by a third major currency crisis of the past year or so and there was great angst and disagreement as to what to do about it. While sterling had [...]
It’s one of those myths that persist no matter how many times it fails to live up to itself. Perhaps that is due to the fact that it originates in simplifying assumptions that allow econometric models nothing more than avoiding disqualifying singularities (infinity) in the equations. I am thinking about the assumption that is widely used in orthodox theory that [...]
If top level sales are not to ever become what economists projected, as retail sales left little doubt in December, then what is left is to no longer hold the line as best as possible on resources and inputs. With inventory already massive, production must be brought down to equalize sales at each level plus already accumulated(ing) inventory. With the [...]
The scale of the inventory bloat in the latter half of 2015 was perplexing. By any reasonable standard, it doesn’t make any sense that businesses would be so bold as to almost ignore sales (and this applies at each level of the supply chain). The only way that it could have possibly occurred was businesses setting aside what was happening [...]
The US economy is supposed to be nothing like its Chinese counterpart, a sentiment that extends in the mainstream well past that into genuine surprise about how it would be possible US financial markets tripping over Chinese stumbles. Though the US might be fighting, too, a manufacturing slump that looks more like recession every day, convention still holds that the [...]
You almost have to marvel at the resilience shown in leveraged loan pricing over the past nearly month. Prior to the Fed’s rate decision on December 16, the leveraged loan market, as with the rest of the junk bubble, was sinking fast and furiously. Since then, however, despite great financial turmoil all over the world, and even in the places [...]
Chinese exports in December were better than feared, declining by just 1.4% against some expectations for an 8% decline. However, there were significant questions in the data, starting with year-end contract projections, unverified accounts that don’t match other countries’ trade figures and the return of Hong Kong as a potential falsification point. As ZeroHedge points out, without the huge jump [...]
Behind our new paywall, I have been documenting the behavior of “dollar” money markets as they relate to China and elsewhere (global, general liquidity) but recent data in repo demand a more open airing. There are numerous indications that US$ markets are a total mess, none more so than repo. That starts with GC repo rates that remain above the [...]
The fallout in liquidity and funding markets (subscription required) has been mostly suggested at the junk bond bubble. Prices have fallen, and many precipitously, while yields have risen. But those are not the only negative factors being exhibited. If the issuance figures are anywhere close to correct, then increasingly junk obligors are being totally shut out at any price. Worse [...]
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