The contentious drop in gold prices is parallel to so many other assets at the moment that it cannot be anything but a liquidity event. At this point, the proximate cause is really academic; Bank of Japan, China, taper, etc. However, despite protestations, and vehement at that, that the euro crisis has been buried, the opposite is again becoming reality. [...]
The rumors of the ECB rate cut had become rather ubiquitous in the past few weeks. Confidence in the European economy has been indirectly proportionate to those rumors, particularly as Germany seems to be heading south again after a short-lived reprieve. France is just a downright mess. But the rate cuts that were just announced will have no impact on [...]
Ever since the first warning of crisis in August 2007, indications of global banking health and liquidity have been turned upside down. Nowhere is that more evident than European banking, especially in the periphery. Observers have been looking for lower interest rates and reduced reliance on the ECB as evidence of “normalcy”. Starting with the chief interbank rate in Europe, [...]
In yesterday’s post on the price of gold and its direct relation to collateralized liquidity I linked the shortage of collateral to QE. For the sake of space I omitted the demand for liquidity part of the equation. This post aims to fill in that variable, particularly in the context of the gold price shamble. We should not forget that [...]
Following up on yesterday's post about ECB interventions, I had noted the ELA accounting under the line item “Other Claims on Euro Area Credit Institutions Denominated in Euros”. For the most part, ELA usage has dropped since December 19, 2012, when the ECB reinstated Greek debt as eligible collateral for financing programs. The ELA was supposed to be a last resort [...]
The 21st century, global, economic saga continues to provide plenty of nuance. The past few weeks, we've been introduced to a few new characters, Cyprus and Russia. There is a bit of a rogue element with Russia. Regardless, the same common themes are present for analysis: leverage, speculation, global capital imbalances and the accompanying political, fiscal, and monetary responses. Cyprus [...]
There should be much closer scrutiny on attaining success through monetary means. As with the Federal Reserve in the United States, the ECB seems to be judged solely on the asset prices of a select group of asset classes. But somewhere, someone should be monitoring the actual efficacy of all of these interventions. I think it tends to get lost [...]
It was only a few months ago that everyone was told to move on, the euro was fixed and the Eurozone was on its way to recovery and eventual prosperity in uniform political solidarity. There was some apprehension because that proclamation was the third made in as many years, but this time was supposed to be different because there were [...]
Could tiny Cyprus with a population of less than 1 million be the undoing of the Euro experiment? It seems surreal to think that such a tiny country, representing less than a quarter percent of Euro GDP could be the trigger for the unraveling of an entire continent's currency but it is often small countries that reveal big problems. Thailand [...]
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