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Tag Archives: Germany

  • Podcast

    David Stockman: The Global Economy Has Entered The Crack-Up Phase

    And will be characterized by these 4 developments
    by Adam Taggart

    Sunday, February 15, 2015, 7:42 PM

    65

    Few people understand the global economy and its (mis)management better than David Stockman — former director of the OMB under President Reagan, former US Representative, best-selling author of The Great Deformation, and veteran financier.

    David is now loudly warning that events have entered the crack-up phase, which he predicts will be defined by the following 4 developments:

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  • Insider
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    Why The Strengthening Dollar Is A Sign Of The Next Global Crisis

    It causes the weaker parts of the system to fail faster
    by charleshughsmith

    Wednesday, November 12, 2014, 3:21 PM

    2

    Executive Summary

    • Understanding the two different ways money flows into the US dollar
    • How currency crises elsewhere can send the dollar skyrocketing
    • Why yen, yuan and euro printing are not the same as dollar printing
    • How these accelerating money flows are creating the next global crisis

    If you have not yet read The Consequences of a Strengthening US Dollar available free to all readers, please click here to read it first.

    In Part 1, we surveyed the key dynamic that is playing out across the globe: the problems revealed by the Global Financial Meltdown of 2008-2009 were not addressed; they were in effect shifted into the foreign exchange (FX) market. Now the risk bubble is in the FX market.

    The complexity of the feedbacks into the FX market is nothing short of mind-boggling, and rather than attempt a comprehensive survey, I’m highlighting the dynamics that hold the greatest risks of triggering instability, not just in finance but in geopolitics, trade and commodities.

    Two Kinds of Dollar Flows

    Let’s start by differentiating between the two kinds of money flows into the dollar:

    1. Money converted from periphery currencies into dollars to pay back loans denominated in dollars
       
    2. Money flowing out of periphery economies and into dollar-denominated assets such as stocks, bonds, real estate and dollar-denominated bank accounts.

    Broadly speaking, both of these capital flows are “risk-off,” but they have different effects.

    In the first case, money borrowed on the cheap in dollars and invested in high-yield periphery bonds earned a tidy profit as the dollar weakened. The trader picked up a double profit: the arbitrage on the interest rates (borrow at .25% and earn 4+%) and the FX profit from the rise of the periphery currency and the decline of the dollar.

    This currency-arbitrage profit reverses when the dollar starts rising, and it quickly wipes out the entire interest-rate profit as it leaps higher.

    The carry trade is “risk-on” because money is being borrowed to speculate in interest-rate arbitrage. Deleveraging this trade is “risk-off” because the only way to stem the potential losses as the dollar strengthens is to…

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  • Blog
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    Ukraine: A Perspective from Europe

    The West's power & influence is on the wane
    by Alasdair Macleod

    Wednesday, August 20, 2014, 3:54 PM

    5

    It is still a mystery to many historians as to how and why this World War I led to the slaughter of nine million people. But analysis of different parties to the original event, pursuing their own vested interests without a grasp of the bigger picture, certainly rings true of the Ukrainian situation today with regards to the West, embodied in a disparate committee called NATO. The similarity with the chaotic diplomacy that led to WW1 stops there: Russia under Vladimir Putin’s leadership appears to have a good grasp of its objective.

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  • Blog
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    On the Path To War

    Putin plays chess, the "markets" play Tic-Tac-Toe
    by Chris Martenson

    Monday, August 11, 2014, 11:25 PM

    23

    The US is clearly now pushing Russia towards war. But if you read the signs correctly, Russia has been preparing for exactly this outcome for many years.

    Out of several reasons that US power brokers specifically — but western power brokers more generally — are deeply unhappy with Russia right now is that Russia is committing a cardinal sin: it is openly, brazenly calling for an end to dollar dominance and has moved aggressively with China to achieve that aim.

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  • Blog
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    What If Nations Were Less Dependent on One Another?

    The Case for Autarky
    by charleshughsmith

    Wednesday, January 15, 2014, 8:13 PM

    12

    Autarky is more than a ten-dollar word for self-sufficiency, as it implies a number of questions that “self-sufficiency” alone might not.

    The ability to survive without trade or aid from other nations, for example, is not the same as the ability to reap enormous profits or grow one’s economy without trade with other nations. In other words, 'self-sufficiency' in terms of survival does not necessarily imply prosperity, but it does imply freedom of action without dependency on foreign approval, capital, resources, and expertise.

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  • Podcast

    Alasdair Macleod: Europe is a Hot Mess

    Its banks are the weak point in the global financial system
    by Adam Taggart

    Sunday, July 28, 2013, 2:42 PM

    7

    It's almost August, the month everyone in Europe takes off on holiday to forget their troubles. This year may be different, though, as not only can many not afford a vacation, but Europe's troubles loom so large that forgetting them won't be easy…

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  • Insider
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    Iceland – The Model the Bankers Would Like to Forget

    The one successful victor over the banks
    by Chris Martenson

    Friday, June 28, 2013, 6:27 AM

    9

    As the 2008 banking crisis unfolded, a lot of secret decisions were made that essentially boiled down to this: The bankers did not want to absorb the losses that resulted from their decisions.  The name of the game was who is going to eat the losses? And the early target, as always, was taxpayers.

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  • Insider
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    Where Will the Minsky Moment Occur?

    Which country will start the next crisis?
    by Alasdair Macleod

    Tuesday, June 25, 2013, 9:36 PM

    4

    Executive Summary

    • Spain: after tens of €billions in bailouts, its banks still need more
    • Germany: its largest banks are ridiculously levered
    • France: its banks are deteriorating fast with the sinking French economy
    • UK: bail-ins are now on the table

    If you have not yet read Part I: Europe's Precarious Banks Will Determine the Future available free to all readers, please click here to read it first.

    Spain and Bankia

    The true state of the Spanish economy (i.e., it is in depression) should be uppermost in our minds when we consider recent developments at Bankia, the Spanish mortgage bank formed only thirty months ago out of the wreckage of Spain’s regional mortgage banks. Bankia underwent a subsequent bail-out only a year ago and has been a continuing disaster, as shown by the share price in the chart below.

    Having fallen from an adjusted €106 to only 68 cents as recently as last November, the share price tells us that Bankia is simply bust. The new G20 bail-in rules cannot have helped Bankia hold on to its deposits; the only deposits left should be those of the small depositors prepared to rely on government insurance.

    The Cyprus bail-in precedent has undoubtedly made Bankia’s position worse than it would otherwise be. At March 31st Bankia…

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  • Blog
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    Europe’s Precarious Banks Will Determine the Future

    Ticking time bombs
    by Alasdair Macleod

    Tuesday, June 25, 2013, 9:09 PM

    6

    Crying Wolf?

    It is easy to get the impression that the naysayers are wrong about Europe. After all of the predictions of Armageddon, ten-year government bond yields for Spain and Italy fell to the 4% level, France (which is retreating into old-fashioned socialism) was able to borrow at about 2%, and one of the best-performing bond investments has been until recently – wait for it – Greek government bonds! Admittedly, bond yields have risen from those lows, but so have they everywhere. It is clear, when one stands back from all the usual euro-rhetoric, that, as a threat to the global financial system, it is a case of "panic over."

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  • Daily Digest
    Image by Leonid Mamchenkov, Flickr Creative Commons

    Daily Digest 4/17 – Cyprus Braces For Russian Exodus, Half NYC Workforce On Food Stamps

    by saxplayer00o1

    Wednesday, April 17, 2013, 6:37 PM

    2
    • Ohio’s $500 Billion Oil Dream Fades as Drillers Misjudge: Energy
    • Cyprus braces for Russian cash exodus
    • Italy May Cut $6.6 Billion in Defense Spending This Year
    • Detroit's encroaching blight as seen through Google and Bing maps
    • Smithsonian to close galleries due to budget cuts
    • Three-fold increase in demand for Gold: Jewellers
    • Bailouts push German debt to new record
    • Italy's temporary layoff scheme runs out of cash, sparks protests
    • Almost half of NYC workforce on food stamps
    • Let them eat vegetables: Egypt's wheat farmers hit hard by diesel price hikes
    • South Korea Proposes $15.3 Billion Stimulus Budget
    • EU warns of budget constraints as Cyprus seeks more aid

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