Dixon, H. (2014) “A New Euro Crisis?“, Reuters Breaking Views, 20 Οκτωβρίου. The markets are right to worry about the euro zone, the epicentre of last week’s fright. Its three big economies -Germany, France and Italy- are, in their own ways, stuck. There is, in theory, a grand bargain that might shift the malaise. This would involve deep structural reform by Berlin as well as Paris and Rome; quantitative …Read More
The ECB Changes Its Mind Which Bonds It Will Monetize, Then It Changes It Again
Durden, T. (2014) “The ECB Changes Its Mind Which Bonds It Will Monetize, Then It Changes It Again“, ΘZeroHedge, 20 Οκτωβρίου. To get a sense of just how chaotic, unprepared, confused and in a word, clueless the ECB is about just its “private QE”, aka purchases of ABS, which should begin in the “next few days” (but certainly don’t hold your breath) – let alone the monetization of public …Read More
The British origins of the US endowment model
Chambers, D. & Dimson, E. (2014) “The British origins of the US endowment model“, VoxEU Organisation, 20 Οκτωβρίου. Yale University has generated annual returns of 13.9% over the last 20 years on its endowment – well in excess of the 9.2% average return on US university endowments. Keynes’ writings were a considerable influence on the investment philosophy of David Swensen, Yale’s CIO. This column traces how Keynes’ experiences managing …Read More
International Debt and Financial Crises
Joyce, P. J. (2014) “International Debt and Financial Crises“, Economonitor, 09 Οκτωβρίου. The latest issue of the IMF’s World Economic Outlook has a chapter on global imbalances that discusses the evolution of net foreign assets (also known as the net international investment position) in debtor and creditor nations. The authors warn that increases in the foreign holdings of domestic liabilities can raise the probability of different types of financial crises, including banking, currency, …Read More
The German experiment has failed
Mitchell, B. (2014) “The German experiment has failed“, Mainly Macro Blog, 07 Οκτωβρίου. In the last week, several new data releases have shown that the Eurozone crisis is now consolidating in the core of Europe – France, Italy and … yes, Germany. The latter has forced nonsensical austerity on its trading partners in the monetary union. And, finally, the inevitable has happened. Germany’s factories are now in decline because …Read More
Eurozone Asymmetries
Wren-Lewis, S. (2014) “Eurozone Asymmetries“, Mainly Macro Blog, 05 Οκτωβρίου. Suppose a large Eurozone country – let’s call it France – decided that it needs to substantially increase its minimum wage in order to reduce poverty. The increase is sufficiently large that it leads to a sustained increase in average French wage inflation, which in turn decreases the competitiveness of France relative to the rest of the Eurozone. France …Read More
Economists Are Blind to the Limits of Growth
Buchanan, M. (2014) “Economists Are Blind to the Limits of Growth“, Bloomberg View, 05 Οκτωβρίου. For all their calculating nature, economists are surprisingly optimistic about humanity’s ability to have as much prosperity as it wants. Express concern about the negative impact of excessive growth on our planet’s ecosystems, and many will simply chuckle and say you don’t understand what growth means. Nobel laureate Paul Krugman, for example, chides natural …Read More
Europe’s Losing Battle For Recovery
Andrews, N. (2014) “Europe’s Losing Battle For Recovery“, Evergreen Gavekal, Daily The wobble in world markets continues, with stock indices across all time zones down steeply in recent sessions. Investors are not only realigning their exposure in anticipation of tighter liquidity conditions as the US Federal Reserve finally brings its asset purchases to a close later this month. After today’s European Central Bank (ECB) meeting they are also looking …Read More
Debt Rattle Oct 1 2014: Europe Is Crumbling Into Collapse
Ilargi Meijer, Ρ. (2014) “Debt Rattle Oct 1 2014: Europe Is Crumbling Into Collapse“, The Automatic Earth, 01 Οκτωβρίου. For me, the quote of the day is this one: “If there’s a periphery of the eurozone’s periphery, that’s Naples.”. The city of Napoli hosts ECB boss Mario Draghi and the heads of Europe’s central banks this week in some very posh former Bourbon family royal palace, and the contradictions …Read More
The Eurozone’s Unresolved Situation – Can market forces prevail in the Eurozone?
Tavares, E. (2014) “The Eurozone’s Unresolved Situation – Can market forces prevail in the Eurozone?“, ΘZeroHedge, 28 Σεπτεμβρίου. With another round of central bank intervention coming four plus years after the start of the Eurozone debt crisis, this is a question worth considering, at a time when the Southern Eurozone members – Italy, Spain, Greece and Portugal, which collectively account for over 30% of the GDP of the early …Read More