euro

Dead Money US$; The OIS Transformation

By |2015-04-28T16:55:27-04:00April 28th, 2015|Economy, Federal Reserve/Monetary Policy, Markets|

In looking last week at some stress mechanics of the interbank markets I intentionally left out one piece, the Overnight Index Swap. OIS is often viewed as another measure of liquidity risk, keyed off matched maturity LIBOR, to give us a sense of order and good function. There is an OIS rate for every major currency regime, predicated and cued to [...]

Old Fashioned In Europe

By |2015-04-24T11:05:31-04:00April 24th, 2015|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

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 [...]

‘Rationality’ Behind the Currency Genocide

By |2015-04-22T10:41:10-04:00April 22nd, 2015|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

I believe the phrase that is attaining Paul Krugman all these invitations to “consult” on economic failure is one that he has used pretty consistently for years. He says “deflationary vortex” and for a long while it was ignored as studious monetarists were busy inflating away; except that none of them, from the Fed to BoJ to the ECB, even [...]

Currency Genocide Inward

By |2015-04-21T15:30:40-04:00April 21st, 2015|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

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 [...]

Currency Genocide; Or Let’s Kill It More

By |2015-04-20T15:54:49-04:00April 20th, 2015|Economy, Federal Reserve/Monetary Policy, Markets|

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 [...]

Swiss ‘Dollars’ In February

By |2015-04-16T11:18:57-04:00April 16th, 2015|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

I think it is interesting that the TIC data also provides some further confirmation about the Swiss participation in the January 15 version of the “dollar” problem. Of course, that still fits with the supercycle decay of the overall eurodollar standard, and even as one of those asymmetries, but I think it deserves its own emphasis. Again, all caveats about [...]

If Sentiment Were A Currency

By |2015-04-08T16:50:18-04:00April 8th, 2015|Currencies, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

The ECB having announced and then implemented at least some kind of QE plan, the entire economist community has adjusted their economic projections upward in uniform, flocking fashion. They haven’t had to make much of an adjustment because they never downgraded economic expectations much to begin with. That is why almost every news story about the economy (and not just [...]

Kill Debt to Make Debt

By |2015-03-20T16:56:01-04:00March 20th, 2015|Economy, Federal Reserve/Monetary Policy, Markets|

In the days before 2007, the idea of monetary “stimulus” was relatively straight-forward in theory as well as (seemingly) practice. A central bank declared that it would reduce an interest rate target and the “market” would respond by doing the work for it. In other words, all that was needed was an indication and banks would make it so as [...]

Multi-dimensional Navigation of Systemic ‘Dollar’ Alteration

By |2015-03-17T16:35:33-04:00March 17th, 2015|Bonds, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

Under the traditional formula for viewing currency movements, a rising currency is believed to be a huge impediment for economic expansion as exports “become relatively more expensive” against trading partners and competitors. This is a two-dimensional view in three-dimensional space as it leaves out the very necessities of finance. It isn’t just straightforward that one causes the other, as the [...]

Europe’s Banks Lend Themselves Less of QE’s Intentions

By |2015-03-16T17:02:17-04:00March 16th, 2015|Economy, Federal Reserve/Monetary Policy, Markets|

So far Europe’s QE is having some trouble gaining pace. As of March 13, the ECB reports that €9.7 under the Public Sector Purchase Program has been carried out, or about half the rate that was anticipated. That may come as a shock to those not familiar with the ECB’s heightened action of the past eight months, but it is [...]

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