Recognizing the danger of overdoing it on Greece today, I think there is another important and complimentary factor that the uncertainty about default there is revealing. In addition to the economic re-awakening about how nothing much has really changed with Greece, including its fiscal impediments that endure despite its default three years ago, the financial theme that has provided such [...]
The Greek drama seems to have reached somewhat of a boundary, with deadlines and credit assistance drawing toward maximums. If this seems more than a little déjà vu that’s because it is an almost exact replay of 2012; all that is missing at this point is another default (debt swap or however it shall be classified). Greek banks have been [...]
At his last news conference on June 3, ECB chief Mario Draghi issued his list of successes so far with QE in Europe. The program was only announced four and a half months ago, being operational only for two, but he was positive that it was already having its intended effects. "Our monetary policy measures have contributed to a broad-based [...]
With every piece of “unexpected” weak data from China, the calls for more “stimulus” grow louder and more desperate. And still the PBOC sits on the sidelines with only minor adjustments. The latest of those has been what amounts to a muni swap, with banks eligible to pledge municipal government debt as collateral in repurchase operations, SLF’s, MLF’s and even [...]
The Agence France Trésor of the French government reported on May 7 that its bond auction of Obligations Assimilables du Trésor (OAT) across three maturities was lightly subscribed. That wasn’t their assessment, of course, as the government simply reports the figures and the credit market makes value judgments. The October 2023’s were bid-to-cover of only 1.58; the May 2025’s were [...]
The difficulty of being a central banker in Europe is that you face the challenge of dealing with the structure of a monetary union with no fiscal union. At any given time, the economies of different countries will require different monetary policy. So, while Greece may be begging for easy monetary conditions, Germany may not require or even desire such loose [...]
Even factoring different sources, there is a decided bi-polar nature to views on Europe’s “recovery.” The slightest deviation from the straight, upward extrapolations of economists is cause for serious self-reflection of Europe internally. That should not be so unexpected, particularly given how economists have completely missed everything since 2007 (anyone remember de-coupling?). But with the ECB’s new QE, there is [...]
The theme this week has been one of killing currencies, or monetary genocide, as that seems to be reaching once-believed improbable levels of descent. While not specifically a self-contained series, the prior pieces, which are relevant to this discussion, are here, here and here. My intent so far as this angle is far more speculative, looking ahead at projecting a [...]
Yesterday brought on an exposition on the death of currency, but it was only one dimension in that process. Owing to the orientation of monetary policy, especially under QE conditions, most attention is focused outward from short to long. The irreconcilably truth, as I put it, is that destroying time value amounts to depressing financial participation. Today we are very [...]
There is an irreconcilable tension that lies at the heart of every “extraordinary” monetary policy. It isn’t something that is talked about much, and in fact it is steadfastly avoided as if these were two distinct topics. Bringing them together amounts to “crossing the streams” (to use 1984-style metaphors) and tends to undermine the idea that in the most extreme [...]
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