by Chris Becker For almost five years, MB has been calling for an inevitable default in Greece, not borne out of bearishness but the realpolitik of the situation that was at hand and has now unfolded. Delusional Economics wrote this earlier in the year as the new Syriza government was installed: Nearly 4 years ago I
From BofAML: The European proposal is asking three times more fiscal measures than what the former Greek government was willing to accept, despite a much lower primary surplus target. The Greek proposal is not specific enough on reforms, while insists on pre-election promises that we believe are unacceptable to the other side—reversing labor market reforms
China A cautionary tale from the muddy waters of Chinese business – FT.com Weak Chinese Demand Is Pummeling Mining Stocks Everywhere, Except in China – Bloomberg China pushing ‘build now, pay later’ model to emerging world – Bruegel Development Finance with Chinese Characteristics? – Project-Syndicate The Irresistible Rise of the Renminbi – Project-Syndicate China getting
Courtesy of James Shugg and Sean Callow at Westpac Global Economics: The Eurogroup of finance ministers and central bankers met in Riga last Friday amidst (accurate) speculation that little progress would be made towards reaching an agreement between the Greek government and its creditors on the measures Greece must (re)commit to in order that the long-delayed
From Mr Krugman: How easy will it be to explain that ‘victory’ to the Greek people?
Greece blinked first then: Eurogroup statement on Greece The Eurogroup reiterates its appreciation for the remarkable adjustment efforts undertaken by Greece and the Greek people over the last years. During the last few weeks, we have, together with the institutions, engaged in an intensive and constructive dialogue with the new Greek authorities and reached common
From the FT: …A high-stakes meeting of eurozone finance ministers over the future of Greece’s bailout unexpectedly broke down early in deliberations after Athens angrily objected to a proposal that it continue with the terms of its current €172bn bailout, calling it “absurd” and “unacceptable”. The draft text, obtained by the Financial Times, states that
Cross-posted from Yves Smith at Naked Capitalism. Even though the US has waded into the Greece versus Troika impasse to press Eurozone officials to soften their position on austerity, the battle lines seem only to get harder. Today, February 11, an emergency meeting of the Eurogroup, a committee of 19 Eurozone finance ministers, officially begins
From Goldman Sachs: EMU Peripheral Yields Have Decoupled from Greece in Levels … Greek sovereign bond yields have been going up since last September and, since January, the term structure has become inverted. Explaining the divergence with the rest of EMU have been a number of factors including: the approaching end of the ‘troika’ funding
There’s no better illustration of the coma cast over markets by central banks right now than Grexit insouciance. Equities are blase and bonds much the same with only small moves higher in peripheral European bond yields. UBS sees breaking this spell as a key step in preventing the worst case outcome: The terms of a
Another week in the history of the European economic mess and, aside from the Ukraine, it’s all eyes on Greece. As I mentioned 2 weeks ago I feel this entire episode is far too politically innocent on the Greek side and the idea that the Greeks could simply front up to the Troika and say “let’s
Cross-posted from Michael Pettis‘ blog: European nationalists have successfully convinced us, against all logic, that the European crisis is a conflict among nations, and not among economic sectors. Today’s Financial Times has an articlediscussing the travails of Greece’s new Finance Minister, Yanis Varoufakis as he takes on Germany: In a small but telling sign of the
New Greek Finance Minister Yanis Varoufakis calls out extend and pretend with superbly simple logic:
Nearly 4 years ago I authored a post on MB titled “Greece’s inevitable default” in which I outlined why I suspected that Greece would continue to stumble from bailout to bailout while the economy slowly imploded. … I am simply going to explain what has happened so that I can explain why under the current
by Chris Becker It’s getting close to three very important dates on the economic calendar that all investors should watch and prepare their risk management accordingly. First, the German 2014 GDP print later this week will precede the first ECB meeting of 2015 on the 22nd of January where some sort of QE program is likely
Cross posted from The Conversation by Gregory T. Papanikos Honorary Professor, Department of Economics at University of Stirling Germany has sent the message that a Greek exit from the eurozone might be the lesser of two evils. It has been interpreted as a warning to the Greek electorate ahead of its January 25 election as
by Chris Becker Normally, you should cheer on lower inflation as your disposable income becomes more valuable. And with oil prices falling and mortgage rates at record lows, its doubly cheerful! But in Europe, unless you’re German, tough luck. Overnight we saw two very important prints that will shake the ECB up when it meets
by Chris Becker We’re seeing two stories emerge from yet another Greek crisis over the weekend, as the people head to the polls for what is likely to be a lose-lose election outcome. First, the real occupiers of power in Greece, the Germans, publicly contend that they want the beleagured nation (or is it dominion?)
From Westpac’s Elliot Clarke: At its simplest, the purpose of the ECB’s recently announced asset purchase programs and the TLTRO’s are to repair the policytransmission process through the provision of liquidity to the system and (it is hoped) confidence to market participants. The dilemma for the ECB is that there is no real guarantee that borrowers are willing
Last night the EU cut its growth forecasts again. The European Commission said it now expects gross domestic product in the eurozone to grow 0.8% this year, down from 1.2% it forecast this spring. Goldman Sachs models are now seeing renewed contraction: RETINA retreats further into Q3 contraction Bottom line: We are less than a fortnight away from
by Chris Becker It doesn’t get any better for the EU/EZ with its powerhouse economy – and where the real power resides – Germany again showing signs of a very steep slowdown. Last night saw the release of a whopping near 6% reversal in exports for August: This release confirms the shocking factory orders print,
By Chris Becker Last nights monthly industrial production stats for Germany – the powerhouse of the great European experiment – were shocking, down 4% month on month and reversing to a nearly 3% retraction on an annual basis. There is now open talk of Germany possibly going into recession, joining its southern “brothers” as the
by Chris Becker ECB President Mario Draghi failed to provide two solutions last night following the ECB’s monthly rate meeting, where the refinancing rate was kept at 0.05% and deposit rates in the negative. First, no real solution to the ongoing European deflation/unemployment quagmire and secondly, no pumping of the asset markets with liquidity to
by Chris Becker Last night saw the release of monthly unemployment statistics for the EU, and specifically Germany and Italy alongside the monthly CPI print. Although there has been almost no monthly change the readings are still way too high (even for the Germans): German unemployment (September) at 6.7% (no change on last month) Italian unemployment
by Chris Becker Last night saw the release of two key important metrics in the ongoing fight against deflation in the Northern Hemisphere by the ECB and the Fed. First, following some very lacklustre Euro-wide consumer confidence figures (something that’s been repeated worldwide), the very closely watched German CPI print for September came in as dead
by Chris Becker The divergence between the US and European economies, including that of the real central power in Germany, continues with the recent economic data reinforcing this belief. Earlier in the week the monthly manufacturing and services PMIs were released and Germany surprised on the all important former with a result barely scraping above
by Chris Becker The ECB President, Mario “whatever it takes” Draghi is letting the QE cat out of the bag stating last night that he wants governments to do some heavy lifting on restructuring while he grabs the “unconventional” printing lever: The ECB stands ready to use additional unconventional tools and tweak its existing efforts
by Chris Becker You know, there’s no shortage of derision on tap when it comes to central bankers these days – and the European flavour does not disappoint this morning, following the G20 finance minister/central banking wow-pow in Cairns this weekend. From Bloomberg: “We will judge the combined effects of the measures, the measures of
From Westpac’s excellent Elliot Clarke: Through 2014, we have cautioned over becoming too optimistic about the likely trajectory of European growth. The nil result in Q2, preceded by six negative quarters then four (soft) positive results, gives credence to this position. Underlying this soft aggregate growth trend is a tug-of-war between reform and growth-stifling rigidities; the result will determine the
Risk markets might get a fillip from this today: Portugal will spend 4.9 billion euros ($6.58 billion) to rescue its largest listed bank, testing the euro zone’s resilience to another banking crisis just months after Lisbon exited an international bailout. The rescue of Banco Espirito Santo, which was unveiled after a frenzied weekend of discussions between Portuguese
