Signs of Controlled Disintegration: The Market for Debt, Financial Stability & Prospects for Growth
It has long been our position that the debt market should be viewed as a market for third-party liabilities. Its growth advances leverage and brings with it diminishing returns since more and more funds are needed to produce a dollar of profits and of GDP. The growth...
From the Cacophony of the Fall to the Rhapsody of the Spring: Sovereigns, Risks, and Returns
We just want to erase from our memories the happenings of last fall, when the markets were dropping nervously while searching for signs of life. The swap lines announced by the Fed last November infused hope and allowed the ECB to start the cheapening of collateral...
Strategic Disintegration: Part II
Last week we posted the presentation that Chairman Volcker gave at Warwick University approximately thirty-three years ago. We believe that speech set the foundation for a great economic reversal that revitalized the global economy. As we pointed out in the...
Strategic Disintegration: Part I
It is again with distinct honor and pleasure that we bring to our readers a presentation-talk that former Chairman of the Federal Reserve Board, Mr. Paul Volcker made approximately 33 years ago at Warwick University. At that time Mr. Volcker was President of the...
On Debts, Leverage, and the Sustainability of the Euro Zone: T like Titanic or Taunus
The Eurogroup is meeting one more time on Monday to decide about the second rescue package for Greece. Division among its members regarding the package exacerbates the markets’ uncertainty. In the last few days, the “strong” countries (Germany, Finland, Austria,...
Abyssus Abyssum Invocat: On Liquidity Premiums and the Broadening of the Collateral Base
The calls heard last week from the southern periphery of the EU seem to be coming from the abyss. The Greek economy is in her fifth year of contraction, the official unemployment rate has hit 20 percent, and more austerity is on the horizon for at least the next 3-4...
An Asymmetrical Diaspora of Credit and Capital: Market Upswing and Policies’ Lags
The argument of this commentary is as follows: The market experiences an upswing (which we anticipated and started commenting on December 21, 2011) due to two basic facts: First, the policies’ implemented needed time to work and hence the lag in growth, employment,...
An Exercise in Futility: Can we Add by Subtracting?
Today the EU leaders are gathering again for another summit! More than two years into their crisis, they cannot get their act together while continuing on the same path of an absurd austerity that has only produced higher debts, lower government revenues, lower...
On Capital Flight and Balance Sheets: Capital Accounts in the Era of Black Holes
The news from the United Kingdom this week implied that more quantitative easing and money printing is coming to the U.K. economy soon. When we take into account that high debt of households in the U.K., (see graph below) we could only come to one conclusion:...
Before the Dawn of the Waste Land: Expected Returns, and Economic Performance
The macroeconomic picture – globally - does not look that promising. Trends need to be reversed in order to avoid the dawn of the waste land. However, for the near term measures taken have the effect of addressing some symptoms and provide short-term relief and hope....
