Category Archives: Currencies

Whatever You Do, Don’t Pay Attention to the Rising Eurozone Stresses

One of the noteworthy elements of Davos, at least according to media accounts, was the cheery, self-congratulatory tone among the Davos Men, at least until the final day, when the emerging markets rout began. But one of the front they thought they’d gotten under control, Europe, may be about to enter a new phase of political stress.

New York’s Benjamin Lawsky Rattling Banks With Currency, Servicing Probes

It’s been so long that America has had a regulator that is serious about regulating that it’s hard to remember how they operate.

Philip Pilkington: Paul Krugman Pushes Factually Inaccurate Arguments About Argentina to Support Discredited Monetarist Ideas

Yves here. With Argentina one of the emerging markets economies whose currency has taken a huge tumble, its aggressive pro-labor, redistribution-oriented policies have come under attack (as an aside, one has to note that Turkey, which was touted as a model emerging economy a few years back, is also fighting a currency downspiral). And a predictable by-product is that some of Argentina’s policies have been misrepresented. For instance, it’s widely accused of “living beyond its means”. Yet as this post shows, the government ran surpluses in eight of the past ten years.

The Supreme Position of the U.S. Dollar in New Financial Innovations and Instruments

New financial innovations and instruments contributed to halting the declining trend of the dollar as a debt-financing currency and reversed the falling role of the dollar in the 2000s.

Yanis Varoufakis: Germany’s Choice: Authoritarianism or Hegemony? (*)

For those of us who grew up under totalitarian regimes, it is noteworthy that Europeans are resorting to a time-honoured tradition: telling jokes as a form of defiance.

Market Rout Continues, Proving Abject Failure of Fed’s Forecasts and Policies (Updated)

In case you missed it, it’s ugly out there. US markets swooned as an unexpectedly weak manufacturing report, the ISM, was so bad it couldn’t be attributed solely to bad weather and deepened investor funk.

Emerging Markets Contagion Starting to Hit Eurozone

Emerging markets-related disruption continued overnight, as the Nikkei fell nearly 2%, pounded by the rise in the yen due to its status as a flight currency. Other Asian markets took a hit as well, with only Australia emerging relatively unscathed.

Ignacio Portes: How the Left Underestimates Chile’s Right-Wing Keynesians

Yves here. Please welcome Igancio Portes to NC. He’s a sophisticated young writer who has a sharp eye for power dynamics and is keenly interested in why the left (the genuine left as opposed to the fake version we have in the US) so often fails to achieve its intended results when it gets control of a government. He’ll be providing posts from time to time on Latin America, which is too often covered in a cursory and propagandized manner in the mainstream English language press.

Former IMF Chief Economist, Now India’s Central Bank Governor Rajan Takes Shot at Bernanke’s Destabilizing Policies

As Bernanke is about to take leave of office, attacks on his policies are becoming louder, thanks to financial markets turmoil resulting from the Bernanke/Geithner approach to the crisis: do whatever it takes to restore as much of status quo ante as possible. The problem, of course, is that status quo ante is what got us in this mess in the first place.

George Mangus Warns of Broad Impact of Emerging Markets Turbulence

In the runup to the global financial crisis, George Magnus, who was then chief economist at UBS, was one of the most insightful commentators and was early to call how bad things might get. He’s back to sound alarms about the emerging markets turmoil.

Mr. Market is Getting Frazzled Over the Fed’s Neglect of Its Pet Wishes

A brief surge of optimism, in the form of a short-lived rally in the belegured Turkish Lira and South African rand after their central banks raised interest rates to try to halt the plunge in currency values, has fizzled. And the Fed reducing its dosage of market tonic, in the form of QE, only soured investors’ already bad mood.

Will China Stop Taper?

That is the question today. Let’s first ask markets.

Death By A Thousand Cuts: The Silent Assassination Of European Democracy

The European Union is riddled with fatal flaws and defects. Chief among them is the single currency which, rather than serving as the Union’s springboard to global dominance, could well be its ultimate undoing.

Essays in Monetary Theory and Policy: On the Nature of Money (Continued)

Yves here. I thought this essay on money was useful in and of itself, and it also contains a useful primer on the views of major schools of thought in orthodox economics.

Goodbye Price Stability, Hello Exchange Rate Volatility

Yves here. This post makes a deceptively simple but important observation. Despite claims otherwise, central banks are giving top priority to interest rate stability, over that of other mandates they have been given explicitly, such as the health of the financial system, price stability, and full employment. This is further confirmation of the idea that central banks are desperate to keep asset prices aloft.