The Organization for Economic Cooperation and Development (OECD) believes that eurozone banks still have much work to do to strengthen their capital. They warn that many of the entities currently are still below a capital ratio of 5% of total assets, a ratio the OECD believes ensures the strength of the financial system. To reach this threshold, banks in total need about 400 billion euros.
Read more ›Weekly »
![All Hail Mario Draghi: The Spanish Bank Run is Over for Now](https://webarchive.library.unt.edu/web/20130113002747im_/http://creditwritedowns.wpengine.netdna-cdn.com/wp-content/uploads/2012/10/Spain-235x140.jpeg)
All Hail Mario Draghi: The Spanish Bank Run is Over for Now
3 January 2013 at 13:04The Spanish bank run caused by redenomination risk is over. And Spanish bond yields are now back to around the 5% level today. Apparently, the ECB’s monetisation scheme...
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The fiscal cliff deal still means US taxes are going to rise
Happy New Year! Last night I was on BBC World News and BBC Radio talking about the fiscal cliff. I stressed the...
1 January 2013 at 08:23 -
Japan’s prime minister threatens to unify monetary and fiscal policy
Greetings to you all on Christmas Eve. I think the big deal today is not America or Europe, but Japan. The incoming...
24 December 2012 at 10:31 -
2013 risk repricing to be feared since last one in 2009 caused sovereign debt crisis
Over the American thanksgiving holiday three years ago in 2009, the relatively small sovereign-linked debtor Dubai...
13 December 2012 at 08:35 -
Google thinks it’s winning the mobile “war” with Apple. Is it?
Bloomberg News recently conducted a wide-ranging interview with Google Chairman Eric Schmidt and the headline comments...
12 December 2012 at 14:13
Members »
![Buiter expects writedowns on Dutch mortgages, recommends debt jubilee](https://webarchive.library.unt.edu/web/20130113002747im_/http://creditwritedowns.wpengine.netdna-cdn.com/wp-content/uploads/2010/12/amsterdam.jpg)
Buiter expects writedowns on Dutch mortgages, recommends debt jubilee
11 January 2013 at 17:38The Dutch press is reporting that Willem Buiter, the Dutch-born Chief Economist of Citigroup, believes that we are going to witness a slew of writedowns in the Netherlands...
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The IMF wants even more austerity in Portugal
The IMF has told Portugal that the draconian austerity budget it has passed for 2013 will not be enough and has...
11 January 2013 at 11:37 -
Converting Irish debt controlled by Troika
Back in October of last year the Irish Finance Minister Michael Noonan said that his government’s goal is...
11 January 2013 at 11:11 -
Spanish bond auction is a success
This morning, the Spanish government initiated its bond auction process this year. The auctions were a success...
10 January 2013 at 07:34 -
Ireland regains market access for both government and bank bonds
In yesterday’s links, I pointed to two links showing that Ireland had regained bond market access. Here is...
9 January 2013 at 10:42
Daily »
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Links: 2013-01-11
11 January 2013 at 10:42The Terrifying Danger of the Trillion Dollar Coin “The bottom line is that the Trillion Dollar Coin removes profit the financial system makes on the interest payments...
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Links: 2013-01-09
North America Letting the payroll tax cut expire was a terrible idea; extent of terribleness unclear | FT Alphaville “While...
9 January 2013 at 23:53 -
Links: 2013-01-08
North America Consumers Take on More Debt – Real Time Economics – WSJ “U.S. consumers’ overall...
8 January 2013 at 15:55 -
Links: 2013-01-07
I have a ton of links here since I haven’t been able to post since New Year’s Eve. I hope to have a...
7 January 2013 at 01:09 -
Links: 2012-12-31
Here is the last links post for 2012. See you on the other side. Edward Japan Japanese 115-Year-Old Becomes...
31 December 2012 at 15:16
Economy »
![Larger US Trade Deficit to Weigh on Q4 GDP Estimates](https://webarchive.library.unt.edu/web/20130113002747im_/http://creditwritedowns.wpengine.netdna-cdn.com/wp-content/uploads/2013/01/dollar-bill-235x140.jpg)
Larger US Trade Deficit to Weigh on Q4 GDP Estimates
11 January 2013 at 09:38By Marc Chandler The November US trade deficit widened sharply and this will likely prompt economists to cut estimates of Q4 GDP. The first estimate is to be released...
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Chart of the Day: Euro area unemployment rate hits a record 11.8%
The unemployment rate in the euro zone hit 11.8% in November according to the numbers released by the EU this morning....
8 January 2013 at 15:29 -
Chart of the Day: Japan’s Sectoral Balances
Let’s talk about deficits for a second. The term deficit has some pretty serious negative connotations. So...
7 January 2013 at 09:55 -
Helicopter Ben alert: The Fed really is printing money
I got the following spam email yesterday. It was sent from an email address with the sender name BEN BERNANKE: We...
5 January 2013 at 09:36
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The Disastrous Consequences Of Not Raising The Debt Ceiling
As we face another brutal fight over the federal debt ceiling at a time when the economy still remains fragile, the stock market is oddly complacent. Even if the debt ceiling crisis is resolved, the result would be some combination of spending cuts and tax increases that would weaken the economy in 2013. A settlement, however, is far from a done deal as both sides remain far apart and determined to defend their positions. Far worse, if the debt limit is not raised or eliminated, the effect on the economy and markets could be disastrous.
Read more ›Larger US Trade Deficit to Weigh on Q4 GDP Estimates
The November US trade deficit widened sharply and this will likely prompt economists to cut estimates of Q4 GDP. The first estimate is to be released at the end of the month. The pace of growth had appeared to be about half the pace of the 3.1% rate seen in Q3. Today’s report risks even slower growth. The real deficit, which adjusts for prices, widened to almost $52 bln from $46 bln.
Read more ›Review: How My Ten Surprises for 2012 Fared
Last year, I started my weekly newsletter out with Ten Surprises for 2012. The goal was to give you a list of things that investors only assigned one in three odds of occuring that I believed had a fifty percent or better chance of occurring. So if I was right, then I should get 5 out of ten predictions correct, while 3 to 4 out of ten should have been expected by investors. Let’s see how I did.
Read more ›Chart of the Day: Euro area unemployment rate hits a record 11.8%
The unemployment rate in the euro zone hit 11.8% in November according to the numbers released by the EU this morning. That is a record. The EU-27-wide unemployment rate was 10.7%. This contrasts very unfavourably to the unemployment levels in other large advanced economies: 7.8% in the United States and the United Kingdom, 4.1% in Japan, and 3.1% in Switzerland.
Read more ›The Trillion Dollar Coin would be bullish for Treasurys
I just wanted to follow up on Randy Wray’s last post to look at this Trillion Dollar Coin idea from an investing perspective. I believe the coin would be bullish for Treasuries because it lowers average Treasury duration and alters private portfolio preferences in a manner similar to quantitative easing. Otherwise, it has no real economy effects.
Read more ›The Trillion Dollar Coin is a duration trade
The Platinum coin has been all over the blogosphere as well as the media. Some have been arguing it will cause hyperinflation. How can issuing a coin to be held at the Fed to allow the Treasury to spend up to budgeted amount lead to hyperinflation? It’s technically a viable solution to the debt ceiling. Proof that when you look at the mechanics of our Monetary System you discover that the Fed ALWAYS ‘monetizes’ the deficit. QE is just a duration trade.
Read more ›More on Abenomics: Japan’s Thermidor
The rise of nationalism does not bode well for Japan’s participation in the Trans-Pacific Partnership, an attempt to build a free-trade area covering both sides of the Pacific. Although it was somewhat controversial for the DPJ, it had seemed to be moving in a supportive direction. The LDP (and the interests it represents) seem more hostile.
Thus far, there seems to be little push back against thrust of the LDP’s monetary and fiscal policies. The purposeful depreciation of the yen has not spurred protests by other countries, but we suspect that a continued sharp decline will antagonize Japan’s competitors, including South Korea and China.
Read more ›Chart of the Day: Japan’s Sectoral Balances
Let’s talk about deficits for a second. The term deficit has some pretty serious negative connotations. So when we use that word, usually the implication is that the deficit is bad. Here’s the thing though; as I have written here a number of times, any economic agent’s net deficit is offset by another economic agent’s net surplus. So in the context of trade, current account or budget deficits, these all net to zero. This is accounting 101.
Last year I was complaining about people not getting this. But we have shown this to you for the US (more than once), for Italy, for Ireland and France, for the Eurozone (more than once). So by now, I imagine you understand the concept.
Here’s Japan’s version of the same chart.
Read more ›Helicopter Ben alert: The Fed really is printing money
I got the following spam email yesterday. It was sent from an email address with the sender name BEN BERNANKE
Read more ›The Difficult Part of US Fiscal Negotiations Is Still Ahead
The explosive market rally following the fiscal cliff agreement was based more on what didn’t happen than what did. What didn’t happen was the implementation of automatic tax increases and spending cuts that would have shaved about 5% off GDP and cause a recession. What did happen was an agreement that would still reduce GDP by about 1.5%, an amount that still looms as significant in light of an economy that is only slogging along at a growth rate of about 2%. Even more important is the potential mess that lies ahead. The Treasury Department’s extraordinary measures to extend the debt ceiling runs out at the end of February or the beginning of March. The sequester requiring automatic across-the-board spending cuts of $110 billion for 2013 goes into effect on March 1st. The federal government’s spending authority for the current budget expires on March 27th.
Read more ›Stephanie Kelton does MMT
Here’s a very good video on MMT with Stephanie Kelton, the chair of the Economics department at the University of Missouri at Kansas City talking to Lauren Lyster of RT’s Capital Account. As you know, despite my Austrian bias and my remaining allegiance to what Marshall Auerback calls “deficit terrorism”, I think MMT’s descriptive framework is compelling in many regards. [...]
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