On one side would be popular sovereignty and national self-determination
On the other side would be Brussels, Berlin, Frankfurt and their supposed lackeys in an Italian establishmentthat stands accused of presiding over a quarter-century of political incompetence and economic decline.
Bonds issued by companies that can’t earn an investment-grade rating even from our famously lenient bond rating agencies. Bondholders will want to sell those bonds, but the liquidity they presume probably won’t be there. Almost half of investment-grade companies are rated BBB, just one step above junk, up from just one-third in 2009. John Mauldin 25 May 2018
Goldman conclude that, when it comes to market risk factors, "liquidity is the new leverage" in a world in which HFTs are the marginal price setters
Fast forward to today when Goldman strategist Charles Himmelberg is back with a new report, which picks up where his last piece left off, defining "Liquidity as the New Leverage", and asking - rhetorically - "Will Machines Amplify the Next Downturn?"
The answer, of course, is "yes" as we have warned non-stop for almost 10 years now, but it is always gratifying to hear some non-tinfoil hat-wearing Goldmanite, i.e. FDIC-insured recipient of taxpayer bailouts, confirm it
Between 1997, when the eurozone was launched, and 2017, Italy’s real gross domestic product per head rose 3 per cent — a worse performance than that of Greece.
Today, debtor and creditor positions inside the European System of Central Banks surpass their scale during the crisis of 2012.
In 1991, I argued of monetary union: “The effort to bind states together may lead, instead, to a huge increase in frictions among them. If so, the event would meet the classical definition of tragedy: hubris (arrogance), ate (folly); nemesis (destruction).”
a country that cannot be easily crushed into submission “à la Grecque”, and that is big enough to destroy monetary union. The Bundesbank’s Target2 credits to the ECB system - mostly to Italy and Spain - are €927bn and rising. Ambrose Evans-Pritchard 21 May 2018
Moreover, the size of the trigger event need not bear any relation to the systemic outcome. The lesson is that policymakers should be focused less on identifying potential triggers than on identifying signs of potential instability. Today’s high-yield bond market - I think the crisis will begin there. The problem will be massive illiquidity. John Mauldin 11 May 2018
Professor Clemens Fuest, head of Germany’s influential IFO Institute warned that the ECB would have to cut off Target2 credits to the Bank of Italy within the internal payments system, potentially bringing the crisis to a climactic head. “If they start to violate eurozone fiscal rules, the ECB will reluctantly have to act. It will be like the Greek crisis. Italy will have to introduce capital controls and will be forced out of the euro,” he said. Ambrose Evans-Pritchard 17 May 2018
If liberal democracy fails to deliver economic prosperity for a sufficiently large portion of the population over long periods, it ends — along with the financial and economic institutions it has created. Wolfgang Münchau FT 20 May 2018
"Everyone in Italy must understand that Italy's future is in Europe and nowhere else, and if this future is to be in Europe, there are rules that must be respected," France's economy minister said.
Regulatory authorities should take particular care to prevent real-estate bubbles Michael Heise Project Syndicate 15 May 2018 Michael Heise is Chief Economist of Allianz SE and the author of Emerging From the Euro Debt Crisis: Making the Single Currency Work.
Economic contraction slowed consumer spending, corporate earnings fell, and stock prices dropped. That’s not how it works when the credit cycle is in control. John Mauldin 11 May 2018 If financial crashes trigger recessions, of course, you can't see them coming by reading the mainstreet entrails or looking for telltale recession warnings in the infamous "incoming data" from the Washington statistical mills. The story is essentially the same in the run-up to the financial crisis and Great Recession. Even after the subprime fissures broke out in the spring and summer of 2007 and the stock market stalled at its new peak of 1550 in October and November, the incoming data appeared solid, as shown below.
Indeed, the stock peddlers declared that it was an age of goldilocks
Italy has pulled off an “internal devaluation” within the eurozone, albeit at the cost of a deeper depression than the 1930s. Matteo Salvini, the Lega strongman and soon to be Italy’s co-leader His goal is to set off a chain of events that leads to German withdrawal as the “cleanest” way to end what he calls the “infernal instrument of the euro”. Ambrose Evans-Pritchard Telegraph 13 May 2018
Germany has been running current account surpluses of around 8 per cent for the past couple of years. Mr Scholz’s ambition is to push the budget into a surplus of 1 per cent of GDP or higher. Such a surplus would, over time, eradicate all public debt. At that point Germany will have reached ordo-liberal utopia: it will have become like Nicolae Ceausescu’s Romania, which boasted a surplus of $9bn in 1989, just before the dictator was overthrown. Wolfgang Münchau FT 6 May 2018
is that the private economy — unless stimulated by extraordinary public actions especially monetary and fiscal policies and, or, unsustainable private sector borrowing — will be prone to sluggish growth caused by insufficient demand. Lawrence H. Summers, FT 6 May 2018