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Loose Central Bank Policies Looking Increasingly Dangerous, BIS Official Warns The latest to take up the refrain is Jaime Caruana, general manager of the Bank for International Settlements, who warned in an unusually frank speech in London that, while the ultra-low interest rates and ultra-easy monetary policy adopted by advanced economy central banks might have been the right response to the crisis when it broke, they are looking increasingly dangerous the longer they [...] Russia has warned of tensions in North Korea slipping out of control, after Pyongyang said it was placing its missile units on stand-by. Russian Foreign Minister Sergei Lavrov warned the situation could slip “toward the spiral of a vicious circle”. Kim Jong-un made the missile order after talks responding to US stealth bomber flights over the Korean peninsula, state news agency KCNA said. The time had come to “settle accounts” with the [...] Minimum wage is an old idea that has failed. It was sold as a safety net to be held up by employers so that employees wouldn’t have to worry about moving on in the job market. They could just camp forever by the minimum wage stream, enjoying the change of seasons, year after year, never having to worry about moving along or building a cabin of [...] We have not been shy about exposing the massive (and unsustainable) bubble of credit being blown into the economy via Student Loans from the government. We have not been afraid to note the dramatic rise in delinquencies among these loans - and the implications for the government. However, as Bloomberg reports, it appears the impact of this exuberance has come back to bite the colleges themselves. In what can only be described as a vendor-financing [...] President Anibal Cavaco Silva called for urgent action to halt the “recessionary spiral”, warning Europe’s leaders that the current course had become “socially unsustainable”. In a speech to the nation, he said Portugal would “honour its international obligations”, but in the same breath called for a tough line with the European Union-International Monetary Fund Troika over the pace of fiscal tightening under Portugal’s €78bn (£63bn) loan package. “We have arguments, and [...]  New Turn in the Euro Zone Financial Crisis The eurozone financial crisis is set to deepen following this week’s release of debt projections for the Greek economy. Budget estimates show that instead of peaking at 167 percent of gross domestic product, as predicted last March when the so-called bailout package was put in place, the debt ratio will hit 189 percent this year, rising to 192 percent in 2014—well above the [...] IMF Fears ‘Credit Shock’ In Spain The International Monetary Fund has issued a veiled warning that Spanish bond spreads could surge to a record 7.5pc and push the country into a deeper crisis if premier Mariano Rajoy continues to drag his feet on a bail-out request. The fund said sovereign debt woes were spilling into the broader Spanish economy, risking a “pernicious feedback loop” for private companies. The danger is another bout [...] Tyson also notes how poverty is much higher in single-parent families than in those with married parents. But while she wants to increase taxes for the rich and pour money into education, she stops short of advocating policies to strengthen marriage.
From NYT: Laura D’Andrea Tyson is a professor at the Haas School of Business at the University of California, Berkeley, and served as chairwoman of the Council of Economic Advisers under [...] From FT: Eurozone leaders have decided to create a banking union to help break the vicious circle between banking fragility and state insolvency. This is a bold move and an adequate response to the growing financial fragmentation of the European currency area. Last week the European Commission tabled its proposals for a single supervisory mechanism. Discussions on concrete proposals will start soon. They are bound to be highly complex, technical and [...] Many feel that Greece’s fate, including its continued membership of the eurozone, rests in the hands of the Troika – officials from the European Commission, European Central Bank and the International Monetary Fund charged with evaluating Greek’s reform efforts, its financing needs and how they should be met. But this is not the entire story by any means. The country’s fate is also closely linked to what happens in Italy and Spain, and [...] The eurozone is in “critical” danger and the European Central Bank should play a bigger role in fighting the debt crisis through more rate cuts, QE and further liquidity provision, the International Monetary Fund has said. “The euro area crisis has reached a new and critical stage. Despite major policy actions, financial markets in parts of the region remain under acute stress, raising questions about the viability of the monetary union [...] I have always been sympathetic to Europe’s politicians in their attempts to deal with the euro crisis. As I wrote here after the recent Euro-summit that concluded nine days ago, the euro area faces a complex set of interlocking problems that require politically difficult solutions if the euro is to be kept together as a common currency. The political complexities have often lead to the impression that any progress being made is [...] EU leaders have agreed to use the eurozone’s planned bailout fund to directly support struggling banks, without adding to government debt. After 13 hours of talks, they also agreed to set up a joint banking supervisory body for the eurozone. Spain and Italy put pressure on Germany to allow the bailout fund to buy government debt in the markets – a measure to contain borrowing costs. Eurozone leaders agreed to begin implementing [...] On Thursday night, Italy and Spain plunged an EU summit into disarray by threatening to block “everything” unless Germany and other eurozone countries backed their demands for help. Mario Monti, the Italian Prime Minister, celebrated the agreement, reached in the early hours of Friday, as a “very important deal for the future of the EU and the eurozone”. He could not resist reminding Angela Merkel, the German Chancellor, that Italy had also [...] EU leaders have agreed to use the eurozone’s planned bailout fund to directly support struggling banks, without adding to government debt. After 13 hours of talks, they also agreed to set up a joint banking supervisory body for the eurozone. Spain and Italy put pressure on Germany to allow the bailout fund to buy government debt in the markets – a measure to contain borrowing costs. Eurozone leaders agreed to begin implementing [...] via guardian.co.uk:
Italian prime minister warns that there is no room for failure in talks between single currency’s big four countries Italy‘s prime minister, Mario Monti, has warned of the apocalyptic consequences of failure at next week’s summit of EU leaders, outlining a potential death spiral whose consequences would become more political than economic. The Italian leader is to hold talks with Chancellor Angela Merkel of Germany, the French president, François Hollande, and Spain’s [...] It also has said it should consider eurobonds and the direct recapitalisation of banks from its permanent bailout fund as it laid out year-long recommendations. The EU today published documents outlining the economic strategy for the euro zone. It directly addressed market concerns about problems in the Spanish banking sector and the cost to the Spanish government of rescuing it. Investors worry that public finances in Spain, which is already struggling to cut [...] I write in the Daily Mail about Europe’s rejection of austerity. It’s not just the French and Greek election results. Within the past ten days, the Dutch and Romanian governments have also been brought down over their attempts to make savings. The same thing will keep happening across the Continent, at election after election. Eurocrats, too, are tiptoing away from cuts, belatedly aware of how outrageous it sounded to argue for austerity in the [...] Published on Apr 19, 2012 by RussiaToday Follow Max Keiser on Twitter: http://twitter.com/maxkeiser In this episode, Max Keiser and co-host, Stacy Herbert discuss huddles and cuddles with the Goombahs of Wall Street and the technical violations that cannot be called by name. In the second half of the show Max talks to Rolling Stone journalist, Matt Taibbi, about the Wall Street mafia, their small and big time rackets and the process of writing these [...] George Soros has been a busy man the last few days. Appearing at the INET Conference a number of times and penning detailed articles for the FT (and here at Project Syndicate) describing the terrible situation in which Europe finds itself – and furthermore offering a potential solution. Critically, he opines, the European crisis is complex since it is a vicious circle of competing crises: sovereign debt, balance of payments, banking, competitiveness, and structurally [...] From FT: Just when you thought it was safe to go outside, it turns out that another storm is gathering on the eurozone horizon. Spain was always on the ‘one to watch’ list. It now finds itself in that most awkward of positions: the financial equivalent of a vicious circle. The interest rate on its sovereign debt is rising, the economy is stalling and the government is fast losing the enthusiasm to [...] http://www.nytimes.com/2012/02/18/op…conomy.html?hp Published: February 17, 2012 Struggling euro-zone economies like Greece, Portugal, Spain and Italy cannot cut their way back to growth. Demanding rigid austerity from them as the price of European support has lengthened and deepened their recessions. It has made their debts harder, not easier, to pay off. This is not an issue of philosophical debate. The numbers are in. As The Times’s Landon Thomas Jr. reported this week, Portugal [...] February 14, 2012 LISBON — As debt-plagued Greece struggles to meet Europe’s strict terms for receiving its next round of bailout money, the lesson of Portugal might bear watching. Unlike Greece, Portugal is a debtor nation that has done everything that the European Union and the International Monetary Fund have asked it to, in exchange for the 78 billion euro (about [...] A man looks down as he walks through a financial district in Tokyo May 19, 2011. REUTERS/Yuriko Nakao
Analysis: Ageing, indebted Japan holds lessons for others LONDON (Reuters) – An asset price bubble pops, hitting bank balance sheets and tax revenues. As growth weakens and the economy flirts with deflation, the real burden of servicing debt increases. Companies race to pay off debt, [...] by ZH Rather than focus simply on the actual adjustments in the real effective exchange rates which shows the UK and US as having used monetary policy to devalue/weaken their currencies since the 2008 crisis really took shape, we look at an intriguing chart from Nomura’s EEMEA FX research team. Google Trends shows, that in the year since Brazil’s finance minister Mantega warned of a currency war’s immediacy, a dramatic pickup in [...] spiegel.de Some European banks may ultimately need state help to meet new capital ratio requirements. SPIEGEL: Mr. Enria, the European Banking Authority was established with the aim [...] |
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