An Alaric Moment for the Euro Zone: Liquidity Concerns in the Times of the New Visigoths
Almost 1600 years ago the first signs of Rome’s demise appeared in the horizon. Around 411 AD the Visigoths under Alaric’s leadership attacked and ravaged the city. Smoking ruins and destructions was left behind. This was not the first sign that the end of the Western...The Athens-Rome Express: Next Stop Paris
Since early July we have posted comments about Italy’s shaky position. In late 2009 the ten-year spread of Greek bonds over the German Bunds was approximately 400 bps. Greek ten-year bonds were yielding about 7%, as the graph below shows. Two years later the spread is...The ECB and the Eurozone Crisis: The Role of a Lender of Last Resort (LLR)
As those lines are being drafted, the ECB announced – under its new leadership – a reduction in its interbank lending rate by 25 bps. The EU and the US markets seemed to like it, in the midst of the Greek political and economic developments. It is widely expected that...On the EU’s Substitution Effect: Haircuts and Market Realities
We have the feeling that we needed a surgery and we got a counseling session. The “landmark” deal announced in the early morning hours (EU time) yesterday, is full of uncertainties and ambiguities. Moreover, it seems that is another band-aid that seems to kick the can...The Abyss of a Credit Freeze: EU Imbalances and the Enigma of Market’s Exostosis
An abnormality (exostosis) has been developing in the markets that involves an a priori assumption that the EU will solve its debt and banking problems. On the surface it seems that this exostosis is benign and can be fixed with the expected enhancement of the EU’s...Sign Up for Our Publications
