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 [...]
It’s certainly not quite the “butterfly effect” but the reality of the overall arrangements of the global economy is shockingly simple. The details, methods and interactions of the “dollar” can be incomprehensible at times, especially since there is no directly observable and thus plainly unambiguous data, but once the “big” moves entrench all that complexity recedes in importance (at least [...]
In contrast to the franc, the Danish krone continues to ignore ongoing speculation. The latest has seen rumors of not just direct buying by Danmarks Nationalbank but now even full-blown capital controls. Before yesterday, the krone had traded at or near 7.444 to the euro for 20 consecutive trading days; now surging today. In other words, the Danes don’t have [...]
With Greece relenting on its game of chicken with the Eurozone noose, you have to wonder how much the ELA and the threat of total financial meltdown pushed that direction. From the view of credit markets in Europe, there was an unusual almost confidence in such an outcome from the moment of the election last month. Small wonder when Europe [...]
Leverage: the use of credit to enhance one's speculative capacity Merriam-Webster Give me a lever long enough and a fulcrum on which to place it, and I shall move the world. Archimedes The Swiss National Bank - the Swiss equivalent of our Federal Reserve - didn't exactly move the world last week but the fallout from their surprise change in [...]
The FOMC continues to posture as if the economy is good enough to allow the first “tightening” in policy since Alan Greenspan. If we have learned anything from the era of shadow finance and the global eurodollar standard, it is that in these unsettled times the true “money supply” of bank balance sheet mechanics behaves of its own accord. In [...]
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