Fixed income markets drying up by the day. There is more liquidity in the Atacama desert #JunkBonds #HYCDX #ITraxx
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Europe Channel: Latest Posts
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Europe
Total Failure
With the crisis once again nipping at their heels, European policymakers accomplished exactly what was expected of them. Absolutely nothing. From the FT: European leaders put off any decisions on shoring up the region’s banks at a late-night summit on Wednesday despite rising concerns that instability in Greece was undermining confidence in the eurozone’s financial sector. Instead, [...]
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Europe
Chart of the Day: The Grexit Decision Tree
The Financial Times has gone through the very useful exercise of creating a decision tree on what a Greek exit from the euro zone entails. I think the Europeans are now actively preparing for a Grexit because to not do so would be folly. But that doesn’t mean that they want Greece to be forced [...]
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Europe
Calm Before the Storm?
A relatively calm start to the week. Can it last? Almost certainly not. It will get worse before it gets better. A few themes popped since last Friday that are worth considering. First is that some calmer voices have come to the forefront, arguing that a Greek exit is not really all that likely. See [...]
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Peterson Institute for International Economics
Implementing Basel III in the European Union: A Deeply Flawed Compromise
By all accounts, EU member countries have for months been debating how to implement the minimum bank capital standards agreed under Basel III. Their arguments have unfolded as the EU works to complete its fourth Capital Requirements Directive (CRD4) and its Capital Requirements Regulation (CRR); (see Véron 2012). Three issues have been contentious: (i) whether [...]
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Europe
Turning Periphery Economies Around: Moving from Austerity to Economic Growth
The debate has finally moved forward. There is growing official acceptance that austerity policies have failed. Going forward, however, IMF forecasts show that Eurozone countries will continue to incur budget deficits into the future. All else equal, this means that public debt will continue to increase, year-by-year, particularly in periphery countries where budget deficits will [...]
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RGE Analysts
Ireland Should Vote Yes on the Fiscal Compact
With fewer than ten days to go until the Irish referendum on the fiscal compact, a huge percent of the population remains undecided about how they are going to vote. According to a recent opinion poll, 37% of respondents will vote in favour of the fiscal compact, 24% against it and 35% are undecided. While [...]
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Peterson Institute for International Economics
Endgame in Greece: Don’t Look for an Imminent ‘Grexit’
As the countdown toward a new Greek election heads toward June 17, most analysts predict an imminent Greek exit from the euro area. Almost anything can happen, but a few possibilities are worth considering. Any newly elected Greek government will have trouble implementing the current austerity program called for by euro leaders and the International [...]
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Peterson Institute for International Economics
Is Europe Ready for Banking Union?
Systemic fragility in the European banking sector predates the Greek fiscal crisis. It was revealed by the subprime/Lehman shock of 2007–08, and has never been properly addressed since then in spite of successive stress tests. In recent weeks, several senior policymakers have become more explicit on the need for a banking union—in other words, a [...]
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Europe
Today Germany Is the Big Loser, Not Greece
Given the German electorate’s long standing aversion to “fiscal profligacy” and soft currency economics (said to lead inexorably to Weimar style hyperinflation), one wonders why on earth Germany actually acceded to a “big and broad” European Monetary Union which included countries such as Greece, Portugal, Spain and Italy. Clearly, this can be better understood by [...]
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Europe
Weighing the Week Ahead – Any Help from the European Summit?
The turmoil in Greece and the potential contagion have once again taken center stage. While the economic and debt problems are well-known, the question for many is why should Greece be so important? The answer lies in whether there is a threat to global financial stability, or whether the rest of the world will experience [...]
