Last November, the Spanish government withdrew €4 billion from the state’s Social Security reserve fund to pay pension obligations. That followed a €3 billion withdrawal just two months before, in September 2012, to cover “unspecified” needs at the Spanish treasury. It was also disclosed that the Social Security fund had allocated over 90%, about €65 billion, into Spanish sovereign debt. [...]
Financial markets in Europe have been a sea of tranquility since last summer. The ECB and Mario Draghi’s promise for unlimited interventions began another quieting period that suppressed bond spreads that has led to the premature “euro crisis is over” sentiment. During that time, the Greek settlement (or third default) on December 10 seemed to have abated the heavy pressure [...]
By Brian Cronin: I am old enough to remember the horrendous conflict in the Congo in the 1960s. The players: Patrice Lumumba, Joseph Kasavubu, Dag Hammarskjold and Moise Tschombe of the breakaway province of Katanga are all still clear memories. What is also clear, unfortunately, is the question asked by a particularly insensitive British TV reporter of Belgian nuns in [...]
By Brian Cronin This week sees the 20th anniversary of a traumatic event for the British government. Wednesday, September 16th 1992 was the day that Britain exited the Exchange Rate Mechanism in rather ignominious fashion. It would forever after be known as Black Wednesday. It is also a good lesson for today’s investors in that trying to defend something that [...]
Germany is the key to the euro. The homogenized currency provided them with a labor cost advantage that has been the engine behind the robust export economy (a la China, Japan before 1986, etc). In fact, the original sin of the euro (apart from the very notion of unelected supranational authority) was mispricing the D-mark into the euro schematic. That [...]
From friend of Alhambra, Brian Cronin: Cards on the table: I consider myself a euroskeptic. You may already have gathered that if you’ve read enough of these essays. Having lived in the UK when Britain decided to join itself to the European Union in 1973 and seeing after that the creeping effects of what that meant for ten years before [...]
Guest post from friend of Alhambra, Brian Cronin: I emigrated to the US in 1983 and became an American citizen in 1987. It was the second best thing I ever did though it confounded some of my British friends. There cannot be too many American citizens who can say they voted for Margaret Thatcher but I can certainly lay claim [...]
Guest post from friend of Alhambra, Brian Cronin: REFLECTIONS ON THE EURO AND THE “PROUD” POUND If you asked most Brits what they thought about the euro, their answers would likely be short and pithy, and none too flattering. This rather insular attitude has the faint whiff of disdain. It is new, it is foreign and, well, just not British. [...]
More of the same this week. Markets inching higher on low volume. Crude oil spiking. Tensions in the Middle East. The Bank of Japan trying to do too much. The markets do seem overbought right now, but have been for weeks now. Will this correction ever come? The Nasdaq Composite is holding its trend line. The index is overbought, and [...]
The S&P 500 continues to creep up on no news from Europe and further monetary easing here in the US. While the move up has been nothing to write home about, the markets do find themselves overbought, and sentiment is quite positive, which may signal at least a short term top. The VIX index hit levels not seen since July [...]
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