European Disintegration and the Mystery of Institutional Hangover: Living in the Times of Capital Flight
There are good chances that the EU – as we know it - may be headed towards its last tango, made in Berlin. It seems that the EU has lost its innocent anonymity and is disillusioned to the point of not just encouraging capital misallocation but rather losing its...
On the Road to Damascus: Amplifying Spillover and Applying Sick Prescriptions to Dying Markets
It seems that the regime in Syria is going through its last phase. The emerging civil war may wrap up the first phase of the face-lift in the Middle East. Almost 2000 years ago, on the road to Damascus someone else set the foundations that changed the face of history....
Socrates Meets QE3: Welcome to the Ether of Financial Purgatory
I am of the opinion that one of the many things we should always remember from the great teacher is that the “unexamined life is not worth living”. It seems that we are trying to apply treatments/solutions to the serious problems of the global economy (but primarily...
From Dreaming to Screaming: Strategic Disintegration Part V
People are wondering these days: “Where is the stock market going?” Analysts look at charts, at P/E ratios, at profit margins and several other figures and try to make pronouncements as to the market’s direction. We think things might be a bit more complex than that....
Capital Structure, Dollar Shortages, and Malinvestments: Implications for Portfolio Holdings
A general perception that the global economy is slowing down seems to prevail. At the same time the Euro zone crisis – in spite of the measures taken - will be exacerbated by the known and unknown liabilities that exist in the financial and public sectors. We wrote...
The EU, the Strings of the Market and the Phantoms of Credit: Seeking the Deus ex Machina
The markets celebrate today the outcomes of the EU summit. The delusion that through more debt and political manipulations the cancer can be treated is truly the amalgam of illusion in the garden of fantasy. No real substance, which reminds me of what a dear friend...
Emergency Liquidity Assistance (ELA) and Financial Tremors: Useful Idiots Part III
About two weeks ago, we were assured by the government in Spain that they only needed about €50 billion for their banks. All of a sudden the €50 billion became €100 billion and we are still counting. Welcome to the new math where besides addition through subtraction...
Parasitic Structures and Monetary Entropy: Basic Instructions Before Disintegration
Fifteen years ago the global markets were getting ready to “welcome” the Asian financial crisis. The cause of that crisis? Declining multifactor productivity from Thailand and Taiwan, to Indonesia and S. Korea. The symptoms of that crisis? Trade deficits, overvalued...
European Shocks and Strategic Disintegration Part IV: Useful Idiots in the Land of Ds
I love dogmas (our first D). I know that in politically correct terms, dogma is an antiquated term that should die. However, dogmas are like the oxygen. You may not be able to see the oxygen with the naked eye however you cannot live without it. There are some...
On Bank Losses, Hedging, Fiat Currencies, and Risks: The Role of Anchors
Last Thursday evening, JP Morgan Chase admitted to losses of at least $2 billion on a $100 billion derivatives bet, baptized as hedging. As time goes by, the actual losses may increase. For review purposes, it is helpful to revisit the worldwide $700 trillion monster...
