LONDON | Ratings agency Fitch released on Monday the conclusions of its latest survey of the opinions of a hundred fixed-income asset managers with an estimated $7.2-trillion business volume. More than 80% of respondents work at the top 20 and 50 investing houses in Europe, so their views on the euro zone’s future are meant to be telling. And they are: fiscal integration is seen as the final station of…
MADRID | Draghi’s apparent resoluteness in shouldering the euro has dramatically turned the tide. No action has followed his words and yet the July nightmare has switched this month into a soothing dream. Undoubtedly investors were eager to take on board any good news reversing the excessive downside overshoot in the markets. Europeans leaders have also helped by wholeheartedly enjoying their holidays. For once, they have refrained from voicing the…
By Luis Arroyo, in Madrid | In this excellent analysis, Tim Duy forecasts a moderate but continued 2 percent GDP growth rate for the US unless global risks drag it down. But the debate over there seems to turn around what else could have been done to fill the gap the breaks open in 2008, as it clearly appears in the chart, between actual and potential real GDP. The dilemma,…
The Corner continues with its summer series of interviews about the future of Europe seen by international experts. Today, New York University Economics Professor Lawrence White gives his take. He has been with New York University Leonard N. Stern School of Business for more than 30 years. His primary research areas of interest include financial regulation, antitrust, network industries, international banking and applied microeconomics. He is coauthor of Restoring Financial…
MADRID | The importance of being a central banker was starkly shown by the dramatic change in market mood following Thursday’s soothing statement by Draghi. His open commitment to support the euro skyrocketed share quotes and drove sharply lower Spanish and Italian risk premium. All of the sudden doomsday scaremongering vanished, an overwhelming wave of up-beat optimism taking its place. Draghi’s closing remarks that the ECB would keep to its mandate…
The European Commission announced Friday it had temporarily approved a bridge recapitalisation via the Hellenic Financial Stability Fund (HFSF) for Alpha Bank, EFG Eurobank, Piraeus Bank and National Bank of Greece. The injection of public capital will be provided under EU State aid rules to ensure the entities’ financial stability. But, at the same time, the Commission said it had also opened four in-depth investigations to examine whether the measure…
At the end of the first quarter of 2012, the government debt to GDP ratio in the euro area stood at 88.2%, compared with 87.3% at the end of the fourth quarter of 2011. Eurostat said that in the EU the ratio increased from 82.5% to 83.4%. Compared with the first quarter of 2011, the government debt to GDP ratio rose in both the euro area (from 86.2%) and the EU (from 80.4%). At…
By CaixaBank research team, in Barcelona | The worsening climate in peripheral Europe has affected the corporate bond markets. Whereas, during the previous months, this market stood out for its remarkable ability to resist the adversities of the euro area crisis (from the point of view of issuances and the extent of capital flows), in May investor mood and the issuance of corporate bonds had been fully infected. In addition,…
MADRID | Everyone seems to skip the nagging fact that stress tests undertaken by Oliver Wyman and Roland Berger only focused on credit risk. Thus, the extra capital requirements only reflect shortcomings in the banking book due to potential bad loans. But any serious test has to embody securities risk in general and sovereign bonds in particular. The European Banking Association has performed it every time it has put European…
Depicted more often than not these days as the number 1 enemy of the global economic recovery, even we at The Corner cannot help but wonder the big what-if question: couldn't the European Monetary Union just manage to orderly dismantle itself before it causes further damages? After checking the figures from the Review of the International Role of the Euro paper by the European Central Bank, the answer is that…