It certainly does feel like 2014 all over again, at least in terms of sentiment and the air of a carefree attitude. There are dramatic differences, of course, but with regard to emotion there truly doesn’t seem to be much daylight between now and three years ago. All that was left to cap the comparison was for Greece to take [...]
The simple fact of the matter is that 2012 wasn’t supposed to happen. By every orthodox prediction and theory about the set of tools deployed after the Great Recession (after it, the first clue) there was no reason to suspect anything but the usual cyclical occurrences. Sure, the recovery would be weak because the recession large, but retrenchment was never [...]
As it turns out, Mario Draghi is no stranger to blanket promises. In October 2008 as head of the Bank of Italy, Draghi joined Italian Finance Minister Giulio Tremonti in promising “as much as necessary” for Italian banks via a 5-year government guarantee of their bonds. The government standby would be available all the way through the end of 2009, [...]
Recognizing the danger of overdoing it on Greece today, I think there is another important and complimentary factor that the uncertainty about default there is revealing. In addition to the economic re-awakening about how nothing much has really changed with Greece, including its fiscal impediments that endure despite its default three years ago, the financial theme that has provided such [...]
The Agence France Trésor of the French government reported on May 7 that its bond auction of Obligations Assimilables du Trésor (OAT) across three maturities was lightly subscribed. That wasn’t their assessment, of course, as the government simply reports the figures and the credit market makes value judgments. The October 2023’s were bid-to-cover of only 1.58; the May 2025’s were [...]
With Germany’s bond market spooking fixed income all over the world, every rate system has fallen under increasing suspicion. US rates seemed to have bowed to the same ghosts, as the benchmark 10-year treasury rose in yield to an intraday high of around 2.30% last week. That was a sharp increase in only a few days, a trading week, that [...]
With Greece relenting on its game of chicken with the Eurozone noose, you have to wonder how much the ELA and the threat of total financial meltdown pushed that direction. From the view of credit markets in Europe, there was an unusual almost confidence in such an outcome from the moment of the election last month. Small wonder when Europe [...]
The growing appeal toward unease about the terms of Greece’s ongoing strangulation is more than just a simple, fleeting sense of déjà vu. It is exactly the same process only pushed forward three years. At the height of the “last” challenge that began in earnest in 2010, and nearly re-ignited a global bank run (among only banks) for a second [...]
Just as China grapples with the scale of economic waste induced by heavy monetarism, Europe has that old 2011 feeling again of financial waste. Mario Draghi’s July 2012 promise to “do whatever it takes” was taken by banks and financial “investors” as a free-for-all to ride severely discounted sovereign debt to tremendous profit. They did so much of that the [...]
Sovereign debt is the tangible pivot by which everything in Europe depends. That speaks not just to persistent fiscal imbalances that remain, years later, unresolved, but the unspeakable financial equivalent to a doomsday scenario. The damage to the European economy from the last financial panic is slowly being revealed (as with the unrequited and un-criticized promises of central banks), which [...]
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