The headline exaggerates, but not by much. Back in April, a Vanity Fair story about Iceland’s remarkable financial blow up was grist for a Vanity Fair story by Michael Lewis, “Wall Street on the Tundra“. The quick version is that Icelandic men were not merely reckless, that is such a common male pathology as to […]
Read more...Served by Jesse of Le Café AméricainSome controversy was triggered over a line of questioning this morning during Ben Bernanke’s testimony before Congress, as reported on some of the top financial blog sites Zerohedge and Naked Capitalism. We read them both daily and are often envious of the depth and breadth of their expertise. Congressman […]
Read more...Ambrose Evans-Pritchard, who has been consistently alarmed about Europe (and often charged in comments of going overboard in general, and on this topic in particular) sounds a particularly loud alarm on Europe, based on the view that the ECB has not eased enough. I have limited insight here. I have been told that German banks […]
Read more...Lordie, is the media incapable of doing anything more than writing up official remarks? This is the latest headline, the lead story on the Bloomberg home page right now: Dollar Gains as China Says ‘Not Aware’ of Reserve Currency Talk That is a very curious remark, given that the central bank, a mere week ago, […]
Read more...If Alan Greenspan were serious about rehabilitating himself, he could hire himself out to central banks and instruct their officials in the art of Looking Serous and Appearing to Say Important Things While Actually Communicating Nothing. This is a crucial skill for anyone in an important bureaucratic position. The Chinese could use a few lessons. […]
Read more...The optimists that have long assumed that the dollar will continue to reign supreme due to lack of alternatives have just have their sanguine views challenged as China threw down the gauntlet on coming up with an alternative, non-country-specific, reserve currency. The US in fact had this option at the time of Bretton Woods and […]
Read more...Frankly, it is hard to know what to make of the ongoing noise form China regarding the dollar. The most sensible explanation is that China is playing to a domestic audience. China, after all, purchased dollar assets as a integral part of its development strategy. Independent of the fate of the dollar, successful developing economies […]
Read more...Submitted by Edward Harrison of the site Credit Writedowns. As I write this, the U.S. dollar has fallen to new 8-month lows against the British Pound and oil. Sterling is up over 2 big figures to 1.6371 while oil (WTI crude front month contract) has marched up near $68 a barrel. Clearly the sell the […]
Read more...The Fed has a mess on its hands. Yields on ten and thirty year Treasuries have shot up in the last few days as investors have become fixated on burgeoning Treasury supply in coming months and years. and, as belief in the “green shoots” story is rising, a shift to riskier assets. In addition, while […]
Read more...It’s easy for Americans to pooh-pooh bearish talk about the dollar. Yet the sterling was once the reserve currency, and has fallen, what, by 80% since it lost its standing. With increasingly dubious accounting and lax enforcement, the US capital markets no longer stand out by virtue of being better regulated. Yes, they still may […]
Read more...One thing that has me troubled about the financial mess is the degree to which the powers that be are wedded to a system that it clearly broken. In part, that results from financial capture of the government apparatus by the banking industry. But an equally sticky problem is the attachment to a rather recent […]
Read more...Submitted by Edward Harrison of the site Credit Writedowns China is really looking at a lot of other options to get away from the U.S. dollar. The latest report is that it has been building huge gold reserves. There is no doubt that China wants to get out and away from the U.S. dollar now. […]
Read more...We’ve mentioned earlier that it was inevitable that China would reduce its purchases of Treasuries, independent of its desire to diversify away from them. With trade falling (although China still has a high surplus) and hot money inflows reversing direction, China has less reason to buy foreign assets. From the New York Times: Reversing its […]
Read more...In a world of floating rates, driving the value of one’s currency down takes a bit of doing, but as China (since 1994) and Japan (circa 2003) have demonstrated, central banks can lower currency prices. And trashing one’s currency is part of the standard program recommended for countries facing deflation. The preferred method these days […]
Read more...We’ve been treated as being a bit daft when we dared suggest that the dollar’s status as reserve currency was at risk. But after the Fed moved officially to quantitative easing last week (after saying it they might go that route back in December), the euro strengthened. Many have argued that that the ECB lacked […]
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