Post Tagged with: "ECB"

An anecdote on the German housing bubble

An anecdote on the German housing bubble

I don’t know if there is a German housing bubble or even whether there will be one. I do know that we hear a lot about it in the press – the result of zero, even negative, interest rates. So let me give you a little anecdote from my trip to Germany last week.

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The threat of an overheated German economy

The threat of an overheated German economy

The Eurozone economy is doing really well. Some data points to 3% growth. The German economy is doing even better – with some data pointing to 5% annualized growth. But there’s a downside – overheating. And with the ECB at negative rates and engaged in 60 billion Euros of QE to boot, overheating in Germany is a reasonable fear. Some thoughts below

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The faltering US economy, currency wars and the Fed

The faltering US economy, currency wars and the Fed

According to Jon Hilsenrath at the Wall Street Journal, ECB and PBOC easing aren’t obstacles to a Fed rate hike before year-end. Yet, the Wall Street Journal is running a headline as its top story showing that “U.S. Companies Warn of Slowing Economy”. Given monetary policy acts with a lag, we are now in a dangerous period for the US economy.

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Did lending by foreign banks really cause the Greek debt crisis?

Did lending by foreign banks really cause the Greek debt crisis?

There are a lot of competing narratives going around as to why Greece is in such trouble relative to the rest of the eurozone. A lot of this centers on whether Greek fiscal profligacy or poor credit controls by foreign banks was the main cause of the Greek debt crisis. Let me throw my hat into this ring with a few comments. What I say below will generally shade toward the problem being one of fiscal profligacy worsened by an ECB monetary policy that was inappropriate for the eurozone periphery as a whole and Greece in particular.

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The coming Greek bank nationalization, bail-in and privatization

The coming Greek bank nationalization, bail-in and privatization

The existence of capital controls eliminates contagion and makes it possible to bail-in deposits that would normally be considered to have systemic consequences. The more I look at it, the less benign this bailout deal appears. Indeed it looks to me as if it was set up to do considerable damage to the Greek economy. Once this becomes apparent, Greeks are surely likely to change their minds about staying in the Euro.

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The Greek capitulation puts nationalism centre stage

The Greek capitulation puts nationalism centre stage

Over the past week, European institutions have shown no qualms about bullying, arm-twisting, and humiliating a sovereign nation and its people. This is no union – this is a fiasco.

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Grexit is much closer than we think

Grexit is much closer than we think

The Greek government has now been boxed in by the “no” referendum vote and is unable to make the kinds of concessions a “yes” vote would have allowed. Meanwhile, the Eurogroup’s thinking about the manageability of Grexit is coalescing around letting Greece go unless it makes major concessions. With only a few days left to come to an agreement before bank nationalization and IOUs are necessary, a deal looks less likely to me. Grexit has become the default scenario.

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Institutions’ negotiating stance now untenable

Institutions’ negotiating stance now untenable

In the wake of the decisive “No” referendum vote by the Greek electorate and related events, the negotiating landscape has shifted substantially. The negotiating position of the institutions now looks untenable. But this by no way changes the potential outcomes for the Greek economy, which will still either face further harsh austerity or the turbulence of eurozone exit.

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The Euro is a failure

The Euro is a failure

When I was discussing the Greek economic crisis last night with my colleague Ameera David, she asked me who I blame for the mess we are in. I told her I blame the euro because the euro is a monetary union created for political reasons without political union. It is a failure and the Greek crisis shows us one reason […]

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Grexit: The staggering cost of central bank dependence

Grexit: The staggering cost of central bank dependence

This weekend’s dramatic events saw the ECB capping emergency assistance to Greece. This column argues that the ECB’s decision is the last of a long string of ECB mistakes in this crisis. Beyond triggering Greece’s Eurozone exit – thus revoking the euro’s irrevocability – it has shattered Eurozone governance and brought the politicisation of the ECB to new heights. Bound to follow are chaos in Greece and agitation of financial markets – both with unknown consequences.

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Are bond investors crying wolf?

Are bond investors crying wolf?

The abrupt spike in interest rates from mid-April to mid-May is very unlikely to be the beginning of something much bigger and much more likely to be the sort of occasional panic attack that Japan has seen so many of in recent years.

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Greece: Default within the eurozone is nearing as Troika tables take-it-or-leave-it deal

Greece: Default within the eurozone is nearing as Troika tables take-it-or-leave-it deal

Greece has reached the end of the line. Its debt repayment schedule is so large in early June that it will definitely run out of money without a deal. And judging from the latest negotiations, a deal that is mutually agreeable is not on the table as yet. Default is likely. The question now is whether Tsipras tries to sell this deal to his MPs and what the ECB does if he fails to do so and Greece defaults.

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