Post Tagged with: "Europe"

The limits of monetary policy in today’s fiat currency world

The limits of monetary policy in today’s fiat currency world

As the Federal Reserve meets at Jackson Hole this week, I thought now would be a good time to talk about the limits of monetary policy – and why monetary policy alone cannot restore robust growth. And as I write this I want to make clear the goal of policy and the assumptions I am making.

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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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How Brexit makes Britain poorer, forcing Carney to stay his hand

How Brexit makes Britain poorer, forcing Carney to stay his hand

The risk in the UK is an inflationary recession. For now, Mark Carney is resisting a rate hike. But how long will the Bank of England hold out? And how long can British consumers keep spending if real wages are falling? Two things would ease this pressure. One is some sort of fiscal support for real wages. The second is the fall in oil prices. As in the US, I see oil prices as key.

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Anarchy in UK politics means lower yields and ends austerity as we know it

Anarchy in UK politics means lower yields and ends austerity as we know it

There are several threads I want to comment on in the wake of the UK general election. And from an economic standpoint, the conclusion that follows is that austerity in the UK has now lost its appeal politically. It also means lower yields for longer. Let me explain how I came to this conclusion.

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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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Why Macron’s work was made harder by German regional elections

Why Macron’s work was made harder by German regional elections

Germany held elections in Nordrhein-Westfalen (NRW) this past weekend. And the results, while encouraging for Angela Merkel’s CDU, point to difficulties that lie ahead for French President Emmanuel Macron’s reform agenda in Europe. This is negative for periphery bonds.

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What Schäuble is really saying about Macron and Europe

What Schäuble is really saying about Macron and Europe

German Finance Minister Wolfgang Schäuble talked to German weekly Der Spiegel about the election of Emmanuel Macron as French President, and this interview is being widely quoted in the English-language press without benefit of a translation. Having read the article, I would say there is nothing extraordinary in his commentary. None of his positions have changed. Let me explain what he said below.

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Some brief thoughts on Brexit negotiations and the Norway model

Some brief thoughts on Brexit negotiations and the Norway model

All negotiations are mechanisms to split the benefits of mutually acceptable outcomes. The point is to figure out if there actually is a mutually acceptable outcome, and then to get as much of the benefit for one’s side as possible. The threat of walking away from a deal is the most powerful tool in extracting benefits.

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Britain's Prime Minister Theresa May welcomes European Commission President Jean-Claude Juncker to Downing Street in London, Britain April 26, 2017. REUTERS/Hannah McKay

After Juncker-May, Britain as a tax haven is more credible

Right now, everyone is parsing what the ‘disastrous’ May-Juncker dinner means for UK-EU negotiations and for the British general election. My immediate thought, however, was about Britain as a tax haven. Let me outline why.

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France: What Macron means when he says the EU must reform or face Frexit

France: What Macron means when he says the EU must reform or face Frexit

At the weekend, French Presidential election frontrunner Emmanuel Macron told the BBC that EU leaders “have to face the situation, to listen to our people, and to listen to the fact that they are extremely angry today, impatient and the dysfunction of the EU is no more sustainable”. He then warned that if EU leaders do not correct this dysfunction, either France would exit the eurozone or the National Front would take over or both. I think what he says is true and let me explain why.

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Why the euro crisis will happen again and Italy will be involved

Why the euro crisis will happen again and Italy will be involved

What happened in 2010 with Greece, Spain, Portugal and Ireland will happen again. But this time, Italy will be the first domino to fall. And when it does fall, Italian sovereign and bank credit risk will skyrocket. Caveat Emptor.

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Why Macron is a risky bet for France and for Europe

Why Macron is a risky bet for France and for Europe

About two months ago I wrote about Emmanuel Macron as a risk, rather than a saviour. Today, following his 1st round presidential victory in France, I feel even more that he represents a risk that is unappreciated. Here’s why.

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