The European Central Bank (ECB) has decided to bailout its bankrupt members, mainly Italy and Spain, by buying their shorter-term bonds ( 1 to 3 years) with newly created money. The idea is to drive down their interest rates to alleviate their debt cost burden, and to send a message to the world (the financial markets) [...]
“The rise in the [Spanish] 10-year yield well beyond 7% carries a very distinct reminder of events in Greece in April 2010, Ireland in October 2010 and Portugal in February 2011,” said analysts at Bank of New York Mellon. “In each case, a decisive move beyond 7% signaled the start of a collapse in [...]
More research notes from Deutsche Bank’s DB Research on Spain, the Eurozone crisis, and QE for the U.S. If you are interested, here is a note on the growing world economic decline as well. It is worth listening to what they think whether we agree or not. Perhaps they should be thinking more about [...]
The debate on how to deal with false or misguiding campaign speech is neither new nor likely to be resolved soon, but as Europe’s economic crisis continues to deepen, and as social and political tensions rise, elemental questions of democracy once limited to seemingly distant European Union institutions are now spilling over to national governments.
In the [...]
The Wall Street Journal is reporting this morning that investors are “fleeing” Spainish bonds (Tesoros).
After a burst of strength Monday morning, Spanish bond yields changed course and began a sharp rise. By afternoon in London, the 10-year yield was at 6.54%, three-tenths of a percentage point higher than Friday’s close. Bond yields rise when [...]
There is risk and there is Risk and Tim Price points out that the Eurozone crisis will not be fixed soon. That stocks are cheap in the Eurozone conflates risk and volatility. Cheap doesn’t mean riskless in this case. Where to go? Gold and non-Eurozone/US sovereigns. Or as he puts it, [...]
While the dust from the latest European bailout announcement is yet to settle and as markets eagerly embark on a (presumably) longer ‘rally on the headlines-fade on the details’ journey, some may be tempted to believe that, alas, Europe’s troubles are finally coming to an end.
If anything, however, the series of events we have [...]