Global Macro

9

George Marshall turns in his grave

Unless you have been living under an economic rock you have probably heard by now that the Euro-elite is once again trying to convince the economic world that they have got a solution to the Greece driven debt crisis in Europe. A leaked draft statement from the summit can be found here. The Guardian UK

4

Hilarious Euro Crisis Song

Here’s my winner for this year’s Eurovision Song Contest. Fellow MacroBusiness blogger, Delusional Economics, has done a great job of keeping us abreast of the potential crisis unfolding in the Eurozone. But in case you are still struggling to understand how Europe got into this position, the below video by the UK’s Guardian may be

5

One for the insomniacs

If you are having trouble sleeping tonight then here is a late night show for you. Episode 46 of the EuroZone Debt Crisis in semi-live blogging format from the UK telegraph. The latest instalment RTRS-DRAFT SUMMIT CONCLUSIONS CALL FOR “MARSHALL PLAN” OF INVESTMENT, GROWTH STIMULATION FOR GREEK ECONOMY RTRS-THREE OPTIONS FOR PRIVATE SECTOR ROLE IN SECOND

4

Fearful symmetry

Find below Westpac’s newish regular economic document, called “Fearful Symmetry”, a monthly chronicle of the Indian economy. The research effort of the institutional bank is hot so right now!

22

Europe spins again

We are now stampeding towards god knows what in Europe. There is still absolutely no consensus on what, who or how the Greek issue is going to be resolved, and still absolutely no one is talking about the fact that without a full monetary and fiscal union, the issuance of true Euro bonds , or

19

Should miners trade in yuan?

A month or so ago, before I was struck down with a monstrous lurgy, Rio announced that it was considering pricing some of it’s iron ore sales in yuan. From The Australian: In another sign of China’s growing power in world markets, the world’s third-largest miner is openly canvassing switching its iron ore settlements from

25

France is next

While I was on holiday over the last week I spent some time musing over the current situation in Europe and just how bad I think it can get. I have been wondering for quite a while when France will finally join the PIIGS camp, given that it to is a highly indebted nation with

3

Satyajit Das: CDS and Greece

Following is a guest post from Satyajit Das. The European Union’s linguistic gymnastics, redefining default as “restructuring” or “re-profiling” and the structure of any final deal on Greek debt has “real” implications for the arcane workings of the CDS market. In the film Casablanca, Rick (Humphrey Bogart) tells Captain Renault (Claude Rains) that he came to the city

9

Crude solution

David Jones may want to blame Julia Gillard, Barack Obama may want to blame Republican austerity nutters and the EU may want to blame rampant ratings agencies, but what we all really need to get things going again is more simple: cheap oil. Last night’s market action delivered slightly cheaper crude, down 2% or so

26

Milky wilkies

What can I tell you? The great boob has delivered. The great baby is lapping it up. QE3 is coming! That’s the simple truth screamed by markets following Ben Bernanke’s testimony last night. The Dow went berko, the $US got trashed, gold hit record highs and commodities (oh commodities!) went limit up in everything from

15

Feeling QEeeeesy

Last night’s market action should leave us in no doubt. Equities and commodities are caught in a paradox of US Fed front running. The market rout emanating from the structural debt problems of the EU and US was arrested briefly last night with the release of new Federal Reserve minutes, which showed, unsurprisingly, a willingness

22

Deepening crisis

Houses and Holes defined the growing Western policy chaos this morning and right on cue the new IMF boss Christine Lagarde has thrown her two cents worth into the mess that is Europe with comments this afternoon that the “IMF hasn’t yet discussed New Greek aid details with EU, nothing should be taken for granted

53

Western policy chaos

Look, I’m not a bear by nature. And frankly, I’m a bit tired with the grim macro outlook. But it is what it is and today it’s most definitely taken a turn for the worse. Contagion is now rampant in ten and two year bonds at the core of Europe. Here are the charts: Italy

8

Mama mia

I’m a long way from the action sitting here in Newcastle but markets were off a little earlier this morning on news stories that the chances of a Greek default had rocketed up the ratings again. It seems that like any rational human being, European politicians are rethinking their stance on default given the ratings

9

Blame the lenders

Exclusively from Michael Pettis’ newsletter: Over the past two years we have become pretty used to the spectacle of Chinese government officials warning the US about its responsibility to maintain the value of the huge amount of US treasury bonds the PBoC has accumulated. More recently we have been hearing complaints in Germany about the

11

Is Trichet jawboning for a full union?

In light of the ECB rate rise yesterday the Wall Street Journal has a great article on the current perceived contradictory position held by the European Central Bank. The European Central Bank is trying to rescue the euro and keep a lid on inflation. It will find it can do one of these, but not both.

13

Europe slowing – Italy joins watch list

From the AFP Private sector activity in the eurozone was weaker than forecast in June, hitting 20-month low level with recoveries slowing in Germany and France, a key growth indicator showed on Tuesday. The data showed that output fell in Italy and Spain while Ireland continued to record a “very modest” pace of expansion, according

15

S&P – It’s a default

This morning I said we were waiting for ratings, and I said on my later post that it all hinges on the rating agencies. Tonight they have spoken and it would seem that the Greek crisis is far from over. Two rollover proposals being touted for Greek debt would amount to a selective default, ratings

67

Pencil in September

As I have been talking about this for months now, nothing is actually being fixed in Europe. Until the less productive countries actually default or Europe creates itself a real fiscal/monetary union then the “debt show” will roll on. The Wall street Journal reports today that the next act for Greece begins in September. Euro-zone

23

Saul Eslake on commodity prices

Saul Eslake, Director of Productivity Growth Program at the Grattan Institute, yesterday presented a paper at the International Conference of Commercial Bank Economists in Amsterdam, the Netherlands, on some of the longer term demand and supply factors shaping the behaviour of commodity prices, over the past decade and over the next 5-15 years. The full paper is below and

25

Has Greece asked Argentina?

As my readers would know I have been discussing Europe’s financial issues for quite some time. I have stated many times that Greece’s issues are far bigger than just internal fiscal policy, and that I consider Greece’s default an inevitability due to its macro-economic position within the European marketplace. Overnight PIMCO added their voice to

16

Sell the rallies

So, the Dow and euro are up as the latest debt crisis passes, again. I wish it were so. We have had a stonking sell-off and I suspect it’s time for a technical bounce, with some evidence beginning to flow through that lower commodities are boosting US purchasing power, and Bernanke likely to offer QE2.5

41

Greece: End of days ?

Another day, another episode in the soap opera that is European economics. It seems more detached from reality the longer it goes on. From Reuters: Euro zone finance ministers postponed a final decision on extending 12 billion euros ($17 billion) in emergency loans to Greece, saying Athens would first have to introduce harsh austerity measures.

26

Four dark clouds

The Dow went up a bit last night. Hooray! But if you think this correction is over, think again. This is the correction we have to have. Think about it. There are four big economies in the world: Japan, EU, China and the US. A dark cloud hangs over each. Japan is far worse than

29

The debt that killed the UK economy

Back in April, Dr Oliver Marc Hartwich from the Centre for Independent Studies wrote an article in Fairfax on the worrying parallels between the UK and Australian economies and housing markets. The current mood in Australia triggers eerie memories for me. I feel as if I have experienced this scenario before – not in Australia

29

Goosing the stockmarket

Regular readers will know that I am confident that QE3 is on the way sometime after markets get their swoon on. There are a number of reasons why I’ve formed that judgement. First, it’s because, in my view, the US economy is driven by markets, not the other way around. As Alan Greenspan argued in

11

Global energy amusement

On the day that OPEC trashed Ben Bernanke’s greatest hope of a bounce in the US economy, we offer the following global energy roundup from BP, chock full of interesting detail on production and consumption of oil, gas and coal. Makes for hours of scary reading! (h/t Zero Hedge)

21

No milky wilkies

Below find the full text of Chairman Bernanke’s speech this morning. No comfort here for markets. The upshot? No milky wilkies until you waaaaiiil… Chairman Ben S. Bernanke At the International Monetary Conference, Atlanta, Georgia June 7, 2011 The U.S. Economic Outlook I would like to thank the organizers for inviting me to participate once