It most certainly is ugly out there. Yesterday, CDS spreads gapped out on all sovereign risk trades, with dealers reporting that there was big protection buying any time spreads eased All risk aversion trades are back. The euro continues to fall versus the dollar, dropping from 130 to 125 in a mere 24 hours. The […]
Read more...An article by Edward Harrison originally posted at Credit Writedowns. I am 100% sure that the U.S. will go into hyperinflation. Not tomorrow, but the problem with the government debt growing so much is that when the time will come and the Fed should increase interest rates, they’ll be very reluctant to do so and […]
Read more...Reader Hubert sent along this post, with permission, and the following note: My friend Erwin has published a book out of ten years of columns for the German paper “Die Welt”. He put an Intro in front of it where he lays out why Germany will go down the tubes as everybody else. It is […]
Read more...Sometimes I can miss the blindingly obvious. Like other observers of the widening sovereign debt crisis in Europe, we’ve commented on the fact that the big reason for Germany to work towards a rescue (more likely, the end game is a restructuring) of Greece and other Club Med members at risk is that its own […]
Read more...A version of this post appeared yesterday at Credit Writedowns. I am running a poll on whether Greece will default. Please click here to vote. And feel free to comment on why you voted as you did. German Chancellor Angela Merkel is feeling pressure to force German banks to take a haircut on Greek debt […]
Read more...This post originally appeared at Credit Writedowns. The news about Greece’s bailout has me thinking a lot about Creditanstalt, the Austrian bank which collapsed in 1931. This account bears remembering because we should see the 1929-1933 descent as a two-part episode, with the second part starting in the Spring of 1931 with Creditanstalt. It should […]
Read more...A 15 year veteran of Wall Street who put us on to Magnetar disappeared unexpectedly, much to our concern. He resurfaced recently and gave us a bulletin: Sorry I’ve been out of touch so long. It’s just that I’ve become quite disappointed/disaffected by the whole thing. We have failed and “they” have won. All the […]
Read more...We met last week with a savvy German investor, one who unlike many of his peers, is well aware of the German bank exposure to Greek and other Club Med debt. He argued that Greece will default within six months. That view might have seemed extreme a week ago, but as Wolfgang Munchau points out […]
Read more...William White, the former chief economist at the Bank of International Settlements (BIS) gave an important speech at George Soros’ Inaugural Institute of New Economic Thinking (INET) conference in Cambridge. While everyone is casting about for the one magic bullet solution which would have prevented this and future crises, he placed the blame for the […]
Read more...By Marshall Auerback, a fund manager and investment strategist who writes for New Deal 2.0. The Maginot Line, named after French Minister of Defense André Maginot, was a line of defenses which France constructed along its borders with Germany and Italy after suffering appalling damage and casualties during World War I. The French thought they […]
Read more...By Gonzalo Lira, a novelist and filmmaker (and economist) currently living in Chile Critics of free-market capitalism, especially of the Marxist persuasion, love talking about its “systemic contradictions”. Especially European critics—they adore using that steam-roller phrase: “systemic contradictions”. It sounds so thrillingly lapidary, so discussion-ending, so terminal. Nothing can escape its grasp, or the base […]
Read more...Yves is holed up at the Institute of New Economic Thinking (INET) conference in Cambridge. The effort, sponsored by George Soros, is a much needed collaboration of ideas to help prevent a crisis like the one we are now experiencing. She claims they are working hard of course. Hence, her lack of posts. Marshall Auerback […]
Read more...For the majority of us, the credit crisis we are living through has come rather unexpectedly. And because it has been both a surprise to many and a traumatic experience to yet many more, we are all trying to contextualize it using past economic and historical periods. Unfortunately, this is a tricky exercise because it […]
Read more...By Marshall Auerback, a fund manager and investment strategist who writes for New Deal 2.0. Arthur Conan Doyle’s literary creation, Sherlock Holmes, once solved a murder by noting the dog that didn’t bark. It doesn’t take Holmes’s ingenuity to see that the plan on offer for Greece is clearly a rescue package which doesn’t rescue. […]
Read more...Credit default swaps played a much more central role in the financial crisis than is widely understood, and they continue to get a free pass in financial reform proposals that they do not deserve. As we have discussed on this blog, and recount in more detail in the book ECONNED, central clearing and/or putting them […]
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