MADRID | April 9, 2015 | By JP Marín Arrese | As the recovery pace of the US economy softens, FED policy makers are growing increasingly reluctant to raise rates too early. The March FOMC minutes released yesterday reveal they could only agree on deleting “patience” when referring to the foreseen tightening of the monetary stance. Members seem split on the timing, with many openly advocating postponing the move until the end of this year or even into 2016.
MADRID | March 24, 2015 | By J.P Marín-Arrese | On face value, Europe is recovering from a bad spell while the US is growing at an invidious rate. However, the wild currency swing may yet destabilise the global economy. Janet Yellen’s remarks on the threat of an overvalued dollar were designed to preserve a balanced performance, and indeed sparked a quick reaction in exchange rates. Yet, as the ECB unfurls its massive quantitative easing programme, volatility in the currency markets could inflict further damage.
MADRID | March 17, 2015 | By JP Marín Arrese | The cliffhanger tactics applied by Varoufakis have backfired. He has lost precious time in his bid to baptise the barbarous Troika under the more Christian and palatable name of Institutions.
MADRID | March 15, 2015 | By JP Marín Arrese | The markets have discounted an unchallenged drift upwards of the US currency, after the ECB embarked on its ambitious asset-buying scheme. Yet few anticipated the move might come so soon and reach such a rapid pace. As the Euro turns its retreat into a disorderly rout, emerging economies like Brazil are falling under unbearable pressure. The dollar’s swift upsurge has pounded global markets.
MADRID | March 13, 2015 | By JP Marín Arrese | The quantitative test conducted under the Dodd-Frank Act showed a comfortable capital cushion for all eligible banks. Yet both Santander and Deustche Bank subsidiaries blatantly failed the qualitative review undertaken by the Fed under the Comprehensive Capital Analysis and Review (CCAR). In short, the banking supervisor considered their capital plans and risk management to be utterly inconsistent. It has delivered a damaging blow that should prompt swift action to redress such an appalling outcome. Santander has already announced a major overhaul in its US banking arm, but the Group as a whole badly needs to address its failures.
MADRID | March 3, 2015 | By JP Marín-Arrese | Greek Prime Minister Alexis Tsipras has unwisely accused Spain and Portugal of intentionally trying to block a solution for his country’s troublesome discussions with the Euro group at a Syriza party meeting. The reaction has gone beyond any reasonable limit. The two targeted nations filed formal claims to the European Commission asking it to take action against Greece. One wonders why their Foreign Ministries did not warn of the utter ridicule such a step would precipitate. Worse still, the row between EU partners might leave longstanding scars.
MADRID | February 26, 2015 | By JP Marín Arrese | The FED is back in business after years of loose monetary policy aimed at redressing an ailing economy. With the business climate markedly improving, the time is ripe to raise rates. Yet, Janet Yellen has repeatedly warned against a swift hike, instead emphasising the need for patience until the upward trend is solidly anchored. In her testimony before the Senate Committee, she noted that policy would only cover the next two FOMC meetings, sparking speculation that the move could well start in June.
MADRID, February 23,2015 | By JP Marín Arrese | The agreement reached on Friday averted a full-fledged crisis but did not dispel mutual mistrust and acrimony. EU partners remain far from convinced the Hellenic government will honour its commitments. Irritation accumulated in the days following the deal, which Mr Schäuble underlined with his the grossly impolite and scathing remarks that “ Greeks certainly will have a difficult time to explain the deal to their voters”. This acrimonious climate points to further clashes flaring in future. The last-minute truce will not entail a stable peace.
MADRID | By JP Marín Arrese | With the request for a six-month extension of the current bailout being flatly rebuffed by the German Finance Minister, hopes for a compromise at the Eurogroup meeting today are dwindling. Even if talks collapse, keeping Greece afloat lies almost entirely in Mario Draghi’s hands.
MADRID | JP Marín Arrese | The markets have shown utter dismay at the dim prospects of the euro zone striking a deal that would cut short uncertainties over the current Greek imbroglio. Tsipras seems ready to fight until the very end in a bid to undermine his European partners. As the Brussels bureaucracy works feverishly to broker an honourable truce, Tsipras appears increasingly reluctant to offer anything short of unconditional surrender. His blunt refusal of any rescue linked to the current conditions is eroding confidence in the Greek government’s political wisdom, its brand of refined brinkmanship seems unlikely to bring Athens to a less intractable stance. A devastating crisis may loom ahead should the sides fail to yield ground in the current tug-of-war.