Category Archives: Globalization

Germany: Just Another Weak Man of Europe?

Wolfgang Munchau, in the Financial Times, revives a line of thought that was voiced from time to time during the financial crisis: that some countries (the UK, Germany, the Netherlands, Switzerland) had banking sectors that were so large that it was an open question as to whether they could credibly backstop them. One of the […]

Germany’s Short Selling Bans: Prudence, Populism or Bank Protection?

Some commentators on the surprising and not terribly well received unilateral move by Germany to ban naked credit default swaps on sovereign debt and shorting of bank stocks assumed it was intended to placate domestic voters. Merkel’s move to join the Eurozone rescue effort was wildly unpopular at home; taking a tough line with speculators […]

Should Greece Follow Argentina’s Playbook?

Some readers and commentators have argued that the EU should not have bailed out Greece, but instead should have restructured its debt. The logic is that Greece is a goner; there is no way it can meet its existing obligations, and a bailout serves to throw good money after bad. Better to engage in triage […]

Papandreou Weighs Legal Action Against US Banks for Role in Greek Crisis

At first blush, Greece’s prime minister George Papandreou statement that he is looking into litigation against banks that worsened the country’s financial woes sounds like pandering to his electorate. From Bloomberg: Papandreou said the decision on whether to go after U.S. banks will be made after a Greek parliamentary investigation into the cause of the […]

Volcker Talks of Possible EU Breakup (Loose Lips Sink Ships Edition)

I would imagine that some EU policymakers are not happy right now. We’ve put up links in Links from various European media outlets yesterday and today which describe the unusual lengths (by modern geopolitical standards) that Obama took to push Eurozone leaders to agree on a bailout package last weekend. Obama reportedly depicted the financial […]

EU to Rein in Hedge and Private Equity Funds

In March, the EU announced plans to restrict the operations of private equity funds. This is far from surprising, since US and UK firms have exhibited a nasty propensity to lever up firms, pull out a lot in the way of special dividends, and too often overdo the cash extraction and leave a bankrupt hulk […]

Herd Leading, Undisclosed Conflicts, and the Euro Crisis

Just because you are paranoid does not mean they are not out to get you. And just because skepticism of Eurozone salvage operations is warranted does not mean that all of the criticisms should be taken at face value. Andrew Dittmer pointed out a speech he correctly deemed to be “surprising” by Lorenzo Bini Smaghi, […]

Alford: EU Shock and Awe Violates Powell Doctrine

By Richard Alford, a former economist at the New York Fed. Since then, he has worked in the financial industry as a trading floor economist and strategist on both the sell side and the buy side. The EU, IMF and friends have rolled out the shock-and-awe bailout package for Greece and the Euro. This package […]

Eichengreen: It is not too late for Europe

By Barry Eichengreen, from VoxEU: EU and IMF efforts to rescue Greece have failed to stabilise Europe’s financial markets. Now there are significant concerns about Spain and Portugal’s financial circumstances. This column says Europe needs to wake up, face the facts, and take action. It outlines what the IMF, ECB, and Eurozone members need to […]

EU to Defend the Euro

The only moderate reduction in market havoc on Friday has all eyes on the European officialdom. Will they mount a credible enough plan over the weekend to buy them a bit of breathing room so they can come up a better salvage operation for the euro experiment? The odds are against both steps in the […]

On the Fat Fingered Trade and Market Freakout

We’ll know in due course, now that an investigation is underway, why the equity markets in the US went into complete freefall for about twenty minutes, with the Dow dropping 998 points. Per Bloomberg: Larry Leibowitz, chief operating officer of NYSE Euronext, said trades sent to electronic networks fueled the drop. While the first half […]

Greece, Germany, and the Dangers of Beggar Thy Neighbor

Investors continued their flight from risky assets as the wobbling Greek rescue looked ready to morph into a broader sovereign debt crisis, compounded by fears that a China’s expansion, once seen as inevitable and enduring, is now looking at risk of fading as the officialdom tries to dampen inflation. But the focus on the Greece […]

Auerback/Mosler: Greece CAN Go it Alone

By Marshall Auerback, a fund manager and investment strategist and Warren Mosler, a fund manager and co-founder and Distinguished Research Associate of The Center for Full Employment And Price Stability at the University of Missouri in Kansas City. Greece can successfully issue and place new debt at low interest rates. The trick is to insert […]

Guest Post: “Beyond Repair”

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 […]

Bank Runs in Greece – Harbinger of Another Axis of Euromarket Risk?

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 […]