Visar inlägg från juni, 2017

The second half of 2017 just got a lot more interesting for bond investors

For investors scrambling to keep pace with a hawkish shift in the world’s biggest central banks, the second half of 2017 just got a lot more interesting. Bloomberg 29 June 2017  Friday global sell off in the bond market spread to equities amid fears that the post-crisis era of easy money was coming to an end. FT 30 June 2017 May you live in interesting times

Ambrose BIS. The global economy is caught in a permanent trap of boom-bust financial cycles.

  This deformed structure is becoming ever more corrosive and dangerous as debt ratios rise to vertiginous levels, BIS has warned. Ambrose Evans-Pritchard, 25 June 2017

Greek economic tragedy, much of the European view continues to defy economic logic – and for a simple reason

European politicians worry about the domestic political consequences of granting Greece debt relief, especially ahead of Germany’s federal election in September. Mohamed A. El-Erian, Project Syndicate 21 June 2017

Greece “extend and pretend” - The latest deal on debt won’t work, and everybody knows it.

This protracted game of “extend and pretend” serves nobody’s long-term interests: not those of the Greek government, the International Monetary Fund or, most of all, the people of Greece. The Editors, Bloomberg 21 June 2017

ECB rule book for giving emergency loans. Greek banks are still using 44 bn euro of ELA help.

ECB-sanctioned “emergency liquidity assistance” was a lifeline for a clutch of banks that were cut off from normal financing channels during the crisis. FT 19 June 2017

“Minsky moment,” the point at which excess debt sparks a financial crisis.

The late Hyman Minsky said that such moments arise naturally when a long period of stability and complacency eventually leads to the buildup of excess debt and overleveraging.  At some point the branch breaks, and gravity takes over. It can happen quickly, too. Minsky came to mind because in the past week I saw yet more signs that financial markets are overvalued and investors excessively optimistic. Yet I still haven’t seen many references to Minsky.  That’s a little surprising. John Mauldin, 17 June 2017

Can We See A Bubble If We're Inside The Bubble?

Charles Hugh Smith via zerohedge, 16 June 2017

Greece Compromise deal, IMF join the rescue, but delay providing any money

Under the compromise deal, the IMF is set to formally join the rescue programme,  but delay providing any money to Athens until the eurozone provides more clarity on what debt relief it is prepared to offer. FT 15 June 2017

Räddningslånen till Grekland kan inte summeras. Greece bailouts does not add up.

In 2010, when the Greek debt crisis started, Greece received €110bn in bailout money. And in 2012, the country received a second bailout of €130bn. In August 2015, the eurozone countries agreed to give Greece a third bailout, of up to €86bn  The next tranche of that bailout, which Greece needs in order to honour repayments due in July, is being discussed at the eurozone finance ministers' meeting on Thursday. BBC 15 June 2017 Kommentar av Rolf Englund: Observera att man inte kan addera dessa summor, eftersom nästan hela de nya lånen används för att lösa in tidigare lån från EU och IMF. Ja, de första pengarna gick förstås till de tyska och franska banker som gärna lånat ut pengar till Grekland och nu hotades av konkurs. EU räddade inte Grekland. EU räddade bankerna. EU did not save Greece. EU saved the banks.

Albert Edwards, US profits are actually declining.

John Authers, FT 9 June 2017

Albert Edwards' Scariest Charts

"Investors Should Be Petrified" Of The Coming Ice Age The big Ice Age  call was that the tight positive correlation between equity yields and bond yields that market participants had enjoyed since 1982, driven by ever-lower inflation, would break down. zerohedge 7 June 2017

Krugman Germany trade surplus and ULC


The new “safe asset” proposed by Brussels doesn’t solve the euro zone’s problem.

Crucially, however, the proposed new securities wouldn’t be jointly guaranteed by the euro-zone governments. Without the joint guarantee, the new instrument is largely pointless. The innovation would have symbolic value, always much prized in EU affairs.  And it could serve as a prelude to deeper forms of integration. Bloomberg editorial 5 June 2017 "I am sure the euro will oblige us to introduce a new set of economic policy instruments. It is politically impossible to propose that now. But some day there will be a crisis and new instruments will be created." Romano Prodi, EU Commission President. Financial Times, 4 December 2001

Plender: Would-be homeowners confront a horrendous problem of affordability.

When politicians promise to make homes more affordable they are being utterly disingenuous because the requisite drop in house prices might lead to their being thrown out by the large pool of owners whose houses would be worth less. They prefer instead to bolster demand by offering financial support to first-time buyers via schemes such as the perverse Help to Buy initiative that until recently provided guarantees for mortgages that required only a 5 per cent deposit. John Plender, FT 14 May 2017

Nigel Lawson: The EU exists only to become a superstate. Britain has no place in it.

On the European mainland it has always been well understood that the whole purpose of European integration was political,  and that economic integration was simply a means to a political end. Nigel Lawson, Telegraph 2 May 2016

The European Financial Stability Facility and the European Stability Mechanism will raise 600 miljarder kr this year

The European Financial Stability Facility and the European Stability Mechanism will raise a combined €61.5bn (600 miljarder kr)  in financing this year. FT 1 June 2017

Monte dei Paschi di Siena, Banca Popolare di Vicenza and Veneto Banca

For all the finance ministry’s ebullience over the MPS agreement,  it will find it much harder to win approval from Brussels for a state bailout of Banca Popolare di Vicenza and Veneto Banca.   FT 1 June 2017

ECB’s Coeure calls for clarity on Greece debt relief before QE inclusion

Christine Lagarde said that eurozone creditors must provide considerably more detail on debt relief for Greece  before the fund will take a decision to join the country’s bailout programme. “There cannot be a specific case for any particular country.” Read more here