Visar inlägg från maj, 2018

ECB has bought €341bn in Italian bonds

Mario Draghi, head of the Bank of Italy before his ECB appointment F T 31 May 2018

OMT, Italy and ELA

Outright Monetary Transactions Under OMT, the ECB would make large-scale purchases of Italian debt, bringing yields down and ensuring the government can fund itself. There is a catch: The country must apply for it, and must also go to the European Stability Mechanism, the euro area’s bailout fund.  And an ESM rescue comes with conditions requiring economic reforms Bloomberg 29 May 2018

It looks like the debt crisis days of 2012 all over again

Italian, Portuguese and Greek bond yields surged and billionaire George Soros warned of an “ existential threat ” to the European Union. Att ta ett jättekliv på väg mot politisk enhet och mer centralstyrning därför att marknaderna kräver det och bankerna behöver det, mot flertalet medborgares vilja, är att bädda för nya och ännu större problem Alltför mycket makt och befogenheter kan inte samlas i Bryssel utan att medborgarna får möjlighet att påverka politikens inriktning.  Och eftersom demokratin fortfarande fungerar bäst på nationell nivå måste krisgeneralerna gå försiktigt fram Annika Ström Melin, Signerat DN 29 juni 2012

Italy’s pro-euro elites have overreached disastrously

President Sergio Mattarella has asserted the extraordinary precedent that no political movement or constellation of parties  can ever take power if they challenge the orthodoxy of monetary union. In one sense, this veto should have been expected. The Berlusconi government was toppled in 2011 by Brussels and the European Central Bank. Whistleblowers have since revealed that they manipulated bond spreads to exert maximum pressure. The EU even tried to recruit Washington. The US refused to help. “We can’t have blood on our hands,” said the US Treasury Secretary, Tim Geithner. What is new is that euro sanctity should be formalized as an Italian constitutional imperative. Ambrose Evans-Pritchard 28 May 2018

Italy - snap parliamentary elections, perhaps in October

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 establishment   that stands accused of presiding over a quarter-century of political incompetence and economic decline. Tony Barber FT 28 May 2018 Tony Barber is Europe Editor of the Financial Times.  He is a former foreign correspondent in Austria, Belgium, Germany, Italy, Poland, the former Soviet Union, the US and the former Yugoslavia.

”Sverige är på väg mot en bostadskrasch”

Myndigheter och politiker har ungefär ett år på sig att agera innan de tvingas ta hand om en finanskris.  Göran Collert, Sverker Lerheden och Roland Petersson SvD 28 maj 2018

It would be fitting if the European Union were to come to a sticky end because of Italy

After all, the agreement that established the entity that we now call the European Union was signed in Rome. Roger Bootle Telegraph 27 May 2018

Otmar Issing vänder sig mot hur ECB-chefen Mario Draghi har drivit igenom obligationsköp

som ska stötta euroländer med stora interna problem som Italien och Grekland. Johan Schück DN 26 maj 2018

The high-yield bond market. That’s the polite name for “junk” bonds Mauldin

Bonds  issued by companies that can’t earn an investment-grade rating even from our famously lenient bond rating agencies. B ondholders 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

China accounted for 46% of America’s colossal $800 billion merchandise trade gap in 2017

Stephen S. Roach Project Syndicate 23 May 2018

European Commission warns Italy it must act to cut national debt

EU’s stability and growth pact requires governments to work to bring their debt levels below 60 per cent of GDP. Pierre Moscovici, the EU’s economy commissioner, said that Italy’s debt is “set to decline slightly to 130.7 per cent in 2018 and 129.7 per cent in 2019” based on a “no policy change” scenario. FT 23 May 2018

Goldman "liquidity is the new leverage"

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 Zerohedge 22 May 2018 Fotnot: High-frequency traders (HFTs)

Italy’s new rulers could shake the euro Wolf

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).” Martin Wolf chief economics commentator Financial Times 22 May 2018

Italy The bond markets have woken up to the enormity of what is happening

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
Probably somewhere 1979-1981

the trigger for a crisis could be anything if the system as a whole is unstable. William White

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

Italy's insurgents enrage Germany and risk ECB payment freeze Ambrose

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

Italy illustrates the way to liberal democracy’s demise Münchau

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. Deutsche Welle 20 May 2018

The only sustainable debt burden is one that can be managed even during cyclical downturns

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.

Sverige står utanför euron. Det har svenska folket självt bestämt, och ingen annan råder över den frågan.

Stefan Löfven vid Uppsala universitet, 26 oktober 2017

Ett svenskt medlemskap i euron är inte aktuellt just nu.

Ulf Kristersson  16 maj 2018 Moderaterna inför EU-valet 2014:  "Vi är i grunden positiva till en gemensam valuta" VI TROR PÅ EUROPA Läs mer här

Argentina peso boosted as central bank auction deemed a success

The central bank agreed to pay 40 per cent interest rates on the notes “This could be a turning point,” says Marcos Wentzel, a partner at Puente, a local investment bank FT 15 May 2018

Det ligger tyvärr en del i kritiken att bostadsutvecklarna byggt för mycket i attraktiva lägen

skriver Anders Lago, förbundsordförande HSB, och Pernilla Bonde, vd HSB Riksförbund. SvD 15 maj 2018

IMF calls for an agreement on Greece’s debt by next week

CNBC 15 May 2018

In an old-style economic cycle, recessions triggered bear markets.

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 David Stockman 11 May 2018 Read more here

The ECB has soaked up €300bn of Italian debt

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

When Argentina issued its so-called “century bond” in June last year, many held it up as the peak of bull market insanity.

After all, what sane individual lends money for 100 years to a serial-defaulter? Robert Smith FT Alphaville 11 May 2018 After all, as Jay Powell, the Fed chair, observed this week:  “Some investors and institutions may not be well positioned for a rise in interest rates.” Gillian Tett FT 10 May 2018

Germany’s finance minister’s obsession with surpluses will damage EU neighbours

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

The idea of secular stagnation

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

Låt er inte luras – vi ser en kollapsad bomarknad - Patricia Hedelius

Frågan är vad som händer med alla dem som i år ska flytta in i sin nyproducerade bostadsrättslägenhet. En stor andel av dem har idag boenden som måste säljas för att finansiera inflyttningen och slutbetalningen till bostadsutvecklaren. Det betyder i sin tur att det är på gång ett stort utbud från den här gruppen.  Det kan röra sig om stora tal.   I fjol var det runt 15 000 lägenheter som färdigställdes i Stockholms län Patricia Hedelius SvD 23 april 2018

Bankerna kan få problem eftersom två tredjedelar av de pengar de lånar upp är utländsk valuta.

Håller vi på att återuppleva 2007? Om utlänningar börjar bli nervösa över hur det står till i landet så kan bankerna få problem eftersom två tredjedelar av de pengar de lånar upp är utländsk valuta.  Birgitta Forsberg, SvD Näringsliv 30 april 2018 2007 and all that