Posts Tagged ‘Euro’
Delayed Draghi
With unemployment at 11.8%, GDP growth barely positive, inflation at a microscopic 0.7% and the ECB balance sheet a trillion euro smaller than it was in 7/12, Mario Draghi will finally engage in stimulative monetary policy. While buying sovereign bonds won’t happen, negative interest rates, purchases of bank loans and long-term loans to banks at…
Read MoreDaring Draghi
Last week the ECB, finally, agreed to make unlimited purchases of Spanish and Italian short-term bonds if the countries ask for help and agree to make “changes” to their economies. While this will buy time for politicians, it does nothing to solve the deep structural problems including the persistently low productivity of the Southern European…
Read MoreEuroland, no Disneyland
To keep Spain and Italy in the euro, the ECB must buy Italian and Spanish bonds, as nobody else will. And, it can only do so if Merkel allows it. Separately, there’s the possibility that the German Constitutional Court will prohibit Germany from contributing to the European bailout fund. Assuming Germany green-lights everything, Italy may…
Read MoreSluggish Economy
The IMF sees global growth in ’12 slowing to 3.25% from 4% in ’11. It’s because the 17 nation Euro-zone will contract by 0.5% and China’s growth will slow from 9% to 8.2%. Growth here is expected to be 2%; better than ’11 but not enough to really dent unemployment. By suggesting, earlier today, that…
Read MoreEuropeans in Denial
Euro leaders continue to deny the debt crisis they face. Rather than boosting the size of the Euro Stability Fund, which would give investors in Italian and Spanish bonds confidence, they ban short selling for a few weeks, get the ECB to buy 96 billion of Euro-zone debt, and talk about each country passing a…
Read MoreMoral Hazard
Ideally Greece would leave the Euro, default on its debts, and get on with its economic existence. But, leaving the Euro would be a disaster for the Euro zone. So the Europeans won’t let it happen. Neither will the Chinese as they do not want the US Dollar to be the only reserve currency. Since…
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