The mere announcement of an intervention by the ECB has already had a clear effect on the evolution of the yields on Spanish and Italian bonds in the shortest time. The Spanish two years bond that skyrocketed in July to 7.1%, has fallen to 3.072%. A very different story is however the 10 years bond, currently at 6.57%, far from the peak of 7.7% in July but still very high….
Governments and markets are anxiously waiting for Draghi’s words to know what the ECB plans to do. They might be deceived by the lukewarm message he is likely to deliver. Central bankers have a keen expertise in saying as little as possible. Greenspan was an outstanding master in playing that game. Draghi while following his path, still needs some training to develop a fully persuasive oratory laden with a string…
Spanish SMEs pay the higher interest rates of the past four years at the time of borrowing, while the cost for German companies is at historic lows, according to financing costs for families and businesses in the euro zone published on Monday by the ECB. This trend puts markedly divergent increasingly southern European companies at a competitive disadvantage to rivals in Northern Europe. “We all know that financing costs are…
Almost all analysts have interpreted Mario Draghi’s comments about the “legality” of buying bonds with a duration of less than three years as a preview of what the ECB iwill announce on Sept. 6. JP Morgan’s Executive Director of Global Equity Sales Hugo Anaya believes such statements “are within the new idea of the ECB to intervene in the short term, justifying it by saying that it’s helping the transmission…
As European financial crisis enters a critical stage, should the ECB have the power to supervise all euro zone banks as well as those in non-euro zone countries that choose to become part of a single mechanism or shall it focus on monitoring only the big, systemic banks instead? European commissioner for economic and monetary affairs Olli Rehn believes in the first approach; German Finance Minister Wolfgang Schaeuble has rejected…
By Tania Suárez, Madrid | Three resignations are likely to take place soon in the Bundesbank: Weber, Stark and now Weidmann. Barclays experts say “the death rate in this institution seems unusually high.” The Bundesbank is impressive in its power and majesty, but analysists consider “their lack of ability to adapt to the circumstances” is going to lead to its disappearance. Barclays team suggests that “the ECB’s adaptation contrasts with…
By Tania Suárez, Madrid | Global growth will remain below trend until later this year, according to JP Morgan expectations. Rates have dropped less than 50bp from their peaks in 2011 and are projected to fall further 20bp until late 2012. Developed markets authorities believe that “the limit of zero interest rates has eliminated the possibility of conventional action.” Meanwhile, emerging markets with still flexible rates, have “persistently high inflation…
Renowned scholar on EU law, Gunnar Beck was an adviser to the House of Commons, a practicing barrister and a professor at the School of Oriental and African Studies in London. He believes that Germany’s guilt complex and short-term reasoning will lead her to continue defending the euro, while Chancellor Merkel’s policies show that Germany has still not become a properly sovereign and democratic nation yet. This article was recently…
Famous for his provocative views on international economics and China’s rise, Andy Xie is an independent economist who predicted the Asian bubble in 1997. Based in Shanghai, he is a former Morgan Stanley star chief Asia-Pacific analyst. We interviewed him for our summer interviews on China’s challenges, the eurodrama and his forecast for the future. For Mr. Xie, Wall Street bankers are viewed in China as “a bunch of corrupt…
By Luis Arroyo, in Madrid | German Chancellor Angela Merkel the executioner recently said that austerity is the right path, and that Canada should provide a good enough example for non-believers. Should we have a closer look into her claims?, of course we must. Unfortunately for her, it clearly appears to be the case that Canada’s success has been supported by a monetary policy absolutely at odds with the European Central…