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In Europe 12th June 2014

Simon Wren-Lewis and the real asymmetry between monetarists and fiscalists

SAO PAULO | By Mark Sadowski via Marcus Nunes’ Historinhas | Simon Wren-Lewis has written a response to a post by Giles Wilkes in which he addresses the nature of the disagreement between monetarists such as Scott Sumner, David Beckworth and Marcus Nunes, and fiscalists such as Paul Krugman, Simon Wren-Lewis and Jonathan Portes. I want to start in the middle because this is the part I have the biggest disagreement with the following statement.

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In Europe 6th June 2014

Draghi asserts his authority

MADRID | By JP Marin Arrese | A couple of years ago, Draghi rescued the Euro from its plight. Yesterday, he saved Europe from a protracted economic performance. By delivering more than expected by markets, he changed the rules of the game in monetary policy. His bold rate cut bringing funds hoarded by banking institutions into negative territory seems close to unconventional manoeuvring. His targeted 4-year massive 400 billion liquidity injection will prop up credit to enterprises and individuals, providing a robust boost to growth.

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In Europe 30th May 2014

Why does the ECB feel so uneasy?

MADRID | By J.P. Marín Arrese | Markets are discounting an easing in European monetary policy in the forthcoming days. Yet, the mood in the ECB is far from cheerful. It feels being dragged into action by political constraints.

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In Europe 29th May 2014

Draghi highlights credit constraints and risk of disinflationary expectations taking hold

LONDON | By Barclays analysts | ECB is going to cut its policy interest rate and/or announce targeted liquidity measures, with a view to support bank lending at the 5 June Governing Council meeting. In his remarks at the ECB Forum on Central Banking being held in Portugal, ECB President Draghi highlighted the risk of a negative spiral between low inflation, falling inflation expectations and credit for the euro area.

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Markets 23rd May 2014

Market chatter: S&P, you’re late (Spain already gets AA+ treatment)

MADRID | By Jaime Santisteban | S&P has upgraded Spain’s credit rating for the first time since stripping the country of its AAA grade in 2009, increasing its assessment to BBB from BBB- and saying the outlook is stable. But ten-year Spanish bond yields stay at 3.004% following last week’s auction, while the U.S. benchmark 10-year note yield, was up 1.5 basis points at 2.550%, according to Tradeweb. A BBB player is getting more or less the same treatment in the market as a AA+.

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Markets 22nd May 2014

Market chatter: Debt, stock and currency markets in full swing

MADRID | By Jaime Santisteban | Spanish Treasury broke a new record on Thursday amid the ECB’s easing hopes. “Spanish bonds reduced spread vs. the equivalent German benchmark almost 20 points in just a couple of days. Stock markets are moving forward without a clear direction, although uncertainty is smaller than in public debt markets” The Corner senior analyst Francisco López explains. 

 

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In Europe 21st May 2014

Preparing for the ECB’s June action(s)

LONDON | By Barclays analysts | The latest disappointing inflation and growth data have reinforced market expectations of ECB action(s) in June. The significant rally of short rates seems consistent with expectations of a policy rates cut, as well as a chance of additional liquidity injections. At this stage, we see limited room for a further rally and suggest paying tactically 1y Eonia.

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In Europe 19th May 2014

Is Germany the euro’s owner?

MADRID | By Miguel Navascués | Nobody questions Germany’s big efforts in the EZ, but Spain accumulates an external debt of 100% of GDP as Germany accumulates capital abroad amounting for 100% of its. When a country does not cease to make external surpluses, it generates parallel deficits in others. These gaps are corrected by means of a rate exchange appreciation- depreciation or by reinvesting the surplus in the countries in deficit. Neither of which is happening today.

Credit expansion

In Europe 15th May 2014

To control credit expansion is tricky

MADRID | By Luis Arroyo | In his beautiful and easy-reading blog Fixing the Economists, Philip Pilkington recently posted about the difficulties of the monetary policy to stabilize the economy. The most interesting aspect is perhaps that his comments are based on old and forgotten economists who wrote very well and had clear ideas. In this case, he chooses Kaldor and Harrod, two smart Keynesians.

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In Europe 12th May 2014

Time for ‘Draghilogists’

FRANKFURT | By Lidia Conde | Experts don’t agree about what can happen in the short and medium term in the Eurozone. The main critical voice is the president of Munich’s Ifo Institut, Hans-Werner Sinn, who believes that Europe is in a “resting phase” before the storm hits again. According to Germany, now is the time of the “Draghilogists”, i.e. those analysts who try to elucidate the ECB’s next step.