The rumors of the ECB rate cut had become rather ubiquitous in the past few weeks. Confidence in the European economy has been indirectly proportionate to those rumors, particularly as Germany seems to be heading south again after a short-lived reprieve. France is just a downright mess. But the rate cuts that were just announced will have no impact on [...]
Ever since the first warning of crisis in August 2007, indications of global banking health and liquidity have been turned upside down. Nowhere is that more evident than European banking, especially in the periphery. Observers have been looking for lower interest rates and reduced reliance on the ECB as evidence of “normalcy”. Starting with the chief interbank rate in Europe, [...]
The Pew Research Center last week released a report showing that from 2009 to 2011 the top 7% of American households (based on net worth) realized a 28% gain in wealth while the bottom 93% saw a 4% decline. In a statement of the blatantly obvious, Pew said the difference was a result of the wealthy being more likely to [...]
The tendency of mainstream economists toward hostility and outright dismissal of gold is directly related to their view of monetary mechanisms that largely took over in the 1970’s. For the most part, gold acts as a very visible measure investment of disapproval of central bank actions intended to foster or create stability. Inflation is only one symptom of instability, so [...]
The Conference Board’s Leading Economic Index fell slightly (-0.1%) in March. It was the first decline since last summer. Don’t worry, however, Conference Board economist Ataman Ozyildirim helpfully notes that, “the U.S. LEI dipped slightly in March, with equally balanced strengths and weaknesses among its components. The leading indicator still points to a continuing but slow growth environment.” Looking further [...]
Earlier in the week I outlined the relationship between gold and collateralized liquidity in the banking system. In a second post, I put together the pieces of what may currently be driving growing illiquidity, with particularly emphasis on Europe. This post intends on adding detail and evidence to this cumulative analysis. First, we need to step back a moment and [...]
Late Friday the Treasury Department released its semi-annual report on global exchange rates or as I like to call it, the semi-annual report on why all other countries on planet earth should let their currencies rise against the UD Dollar. Or maybe the semi-annual report on how easy monetary policy by other countries' central banks is bad but it isn't [...]
Following up on yesterday's post about ECB interventions, I had noted the ELA accounting under the line item “Other Claims on Euro Area Credit Institutions Denominated in Euros”. For the most part, ELA usage has dropped since December 19, 2012, when the ECB reinstated Greek debt as eligible collateral for financing programs. The ELA was supposed to be a last resort [...]
Getting into the arcane accounting of central banks is a chore, but, in an uncertain world with every central bank “doing something” at exactly the same time, it is a vital task that requires patience. A lot of patience. Central banks all have familiar financial disclosures and statements. The Fed, ECB, SNB, Bank of England, Bank of Japan, et al, [...]
Japan last week announced a radical plan to finally slay the deflation dragon that has stalked their economy for the last 25 years. The sheer magnitude of the BOJ's program should put to rest once and for all whether monetary policy can truly work as the growth tonic that policy wonks such as Ben Bernanke fervently hope. The BOJ will [...]
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