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2018-05-24

European Commission warns Italy it must act to cut national debt

EU’s stability and growth pact requires governments to work to bring their debt levels below 60 per cent of GDP.

Pierre Moscovici, the EU’s economy commissioner, said that Italy’s debt is “set to decline slightly to 130.7 per cent in 2018 and 129.7 per cent in 2019” based on a “no policy change” scenario.

2018-05-23

Goldman "liquidity is the new leverage"

Goldman conclude that, when it comes to market risk factors, "liquidity is the new leverage" in a world in which HFTs are the marginal price setters

Fast forward to today when Goldman strategist Charles Himmelberg is back with a new report, which picks up where his last piece left off, defining "Liquidity as the New Leverage", and asking - rhetorically - "Will Machines Amplify the Next Downturn?"

The answer, of course, is "yes" as we have warned non-stop for almost 10 years now, but it is always gratifying to hear some non-tinfoil hat-wearing Goldmanite, i.e. FDIC-insured recipient of taxpayer bailouts, confirm it


Fotnot: High-frequency traders (HFTs)


2018-05-22

Italy’s new rulers could shake the euro Wolf

Between 1997, when the eurozone was launched, and 2017, Italy’s real gross domestic product per head rose 3 per cent — a worse performance than that of Greece.

Today, debtor and creditor positions inside the European System of Central Banks surpass their scale during the crisis of 2012.

In 1991, I argued of monetary union: “The effort to bind states together may lead, instead, to a huge increase in frictions among them. If so, the event would meet the classical definition of tragedy: hubris (arrogance), ate (folly); nemesis (destruction).”



Italy The bond markets have woken up to the enormity of what is happening

a country that cannot be easily crushed into submission “à la Grecque”, 

and that is big enough to destroy monetary union.


The Bundesbank’s Target2 credits to the ECB system - mostly to Italy and Spain - are €927bn and rising.

Ambrose Evans-Pritchard 21 May 2018

2018-05-21

the trigger for a crisis could be anything if the system as a whole is unstable. William White

Moreover, the size of the trigger event need not bear any relation to the systemic outcome.

The lesson is that policymakers should be focused less on identifying potential triggers than on identifying signs of potential instability.

Today’s high-yield bond market - I think the crisis will begin there. The problem will be massive illiquidity. 

John Mauldin 11 May 2018



Italy's insurgents enrage Germany and risk ECB payment freeze Ambrose

Professor Clemens Fuest, head of Germany’s influential IFO Institute warned that the ECB would have to cut off Target2 credits to the Bank of Italy within the internal payments system, potentially bringing the crisis to a climactic head. 

“If they start to violate eurozone fiscal rules, the ECB will reluctantly have to act. 


It will be like the Greek crisis. 


Italy will have to introduce capital controls and will be forced out of the euro,” he said.


Ambrose Evans-Pritchard 17 May 2018


2018-05-20

Italy illustrates the way to liberal democracy’s demise Münchau

If liberal democracy fails to deliver economic prosperity for a sufficiently large portion of the population over long periods, it ends — along with the financial and economic institutions it has created.

Wolfgang Münchau FT 20 May 2018


"Everyone in Italy must understand that Italy's future is in Europe and nowhere else, and if this future is to be in Europe, there are rules that must be respected," France's economy minister said.




2018-05-19

The only sustainable debt burden is one that can be managed even during cyclical downturns

Regulatory authorities should take particular care to prevent real-estate bubbles

Michael Heise Project Syndicate 15 May 2018


Michael Heise is Chief Economist of Allianz SE and the author of Emerging From the Euro Debt Crisis: Making the Single Currency Work.

2018-05-16

Ett svenskt medlemskap i euron är inte aktuellt just nu.

Ulf Kristersson 16 maj 2018

Moderaterna inför EU-valet 2014: 
"Vi är i grunden positiva till en gemensam valuta"
VI TROR PÅ EUROPA


Läs mer här



Argentina peso boosted as central bank auction deemed a success

The central bank agreed to pay 40 per cent interest rates on the notes

“This could be a turning point,” says Marcos Wentzel, a partner at Puente, a local investment bank

FT 15 May 2018

2018-05-14

In an old-style economic cycle, recessions triggered bear markets.


Economic contraction slowed consumer spending, corporate earnings fell, and stock prices dropped. 

That’s not how it works when the credit cycle is in control.


John Mauldin 11 May 2018

If financial crashes trigger recessions, of course, you can't see them coming by reading the mainstreet entrails or looking for telltale recession warnings in the infamous "incoming data" from the Washington statistical mills.

The story is essentially the same in the run-up to the financial crisis and Great Recession. Even after the subprime fissures broke out in the spring and summer of 2007 and the stock market stalled at its new peak of 1550 in October and November, the incoming data appeared solid, as shown below.

Indeed, the stock peddlers declared that it was an age of goldilocks


David Stockman 11 May 2018

Read more here

The ECB has soaked up €300bn of Italian debt

Italy has pulled off an “internal devaluation” within the eurozone, albeit at the cost of a deeper depression than the 1930s. 

Matteo Salvini, the Lega strongman and soon to be Italy’s co-leader

His goal is to set off a chain of events that leads to German withdrawal as the “cleanest” way to end what he calls the “infernal instrument of the euro”.

Ambrose Evans-Pritchard Telegraph 13 May 2018



2018-05-12

When Argentina issued its so-called “century bond” in June last year, many held it up as the peak of bull market insanity.

After all, what sane individual lends money for 100 years to a serial-defaulter?

Robert Smith FT Alphaville 11 May 2018



After all, as Jay Powell, the Fed chair, observed this week: 
“Some investors and institutions may not be well positioned for a rise in interest rates.”

Gillian Tett FT 10 May 2018


2018-05-07

Germany’s finance minister’s obsession with surpluses will damage EU neighbours

Germany has been running current account surpluses of around 8 per cent for the past couple of years.

Mr Scholz’s ambition is to push the budget into a surplus of 1 per cent of GDP or higher. Such a surplus would, over time, eradicate all public debt. 

At that point Germany will have reached ordo-liberal utopia: it will have become like Nicolae Ceausescu’s Romania, which boasted a surplus of $9bn in 1989, just before the dictator was overthrown.


Wolfgang Münchau FT 6 May 2018


2018-05-06

The idea of secular stagnation

is that the private economy — unless stimulated by extraordinary public actions especially monetary and fiscal policies 

and, or, unsustainable private sector borrowing — 


will be prone to sluggish growth caused by insufficient demand.

Lawrence H. Summers, FT 6 May 2018



2018-05-03

Låt er inte luras – vi ser en kollapsad bomarknad - Patricia Hedelius

Frågan är vad som händer med alla dem som i år ska flytta in i sin nyproducerade bostadsrättslägenhet.

En stor andel av dem har idag boenden som måste säljas för att finansiera inflyttningen och slutbetalningen till bostadsutvecklaren.

Det betyder i sin tur att det är på gång ett stort utbud från den här gruppen. Det kan röra sig om stora tal. 

I fjol var det runt 15 000 lägenheter som färdigställdes i Stockholms län



2018-05-02

Bankerna kam få problem eftersom två tredjedelar av de pengar de lånar upp är utländsk valuta.

Håller vi på att återuppleva 2007?

Om utlänningar börjar bli nervösa över hur det står till i landet så kan bankerna få problem eftersom två tredjedelar av de pengar de lånar upp är utländsk valuta. 


Birgitta Forsberg, SvD Näringsliv 30 april 2018


2007 and all that