U.S. is in worse shape than Greece. U.S. unemployment is on the rise again – it has reached nine point six per cent, the first increase in four months. Some economists are arguing that the Obama administration needs to introduce another stimulus program to create new jobs. But Larry Kotlikoff, professor of economics at the Boston University, believes the U.S. needs to start cutting spending immediately – or face bankruptcy…
Sep 05
The discussion is extremely well-informed. CDOs, CDS, SIVs, ratings agencies and securitization are topics. A+ satire.
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Sep 03
The City’s dominance of the world’s foreign exchange and interest rate derivative markets grew during the financial crisis, even as London’s banking sector imploded, new figures from the Bank of England show.
The UK accounted for 37pc of the $4 trillion (£2.6 trillion) of global forex activity in April, compared with 35pc in April 2007, when it was already “the single largest centre” in the world. London also retained its pre-eminence in over-the-counter (OTC) interest rate derivatives, increasing its share of the $2.1 trillion global market from 44pc to 46pc over the same three-year period.
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Sep 03
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Market Hits $4 Trillion a Day as Investors Chase Profit in Growing Economies
Currency trading volume around the world has hit $4 trillion a day, fueled by investors in the wealthiest nations looking to diversify beyond their home markets in a time of economic turmoil.
The $4 trillion mark represents a 20% gain from $3.3 trillion in 2007, the last time the global foreign-exchange markets were surveyed, according to the Bank for International Settlements. While the survey found continued growth in currency trading, it did reflect a slowdown in the market’s growth from the prior survey, when trading volumes had soared 69% from $1.9 trillion in 2004.
The BIS survey, taken every three years in April, this time provides a snapshot of the currency market during the height of the European debt crisis and at a time when lightning-fast computer models have juiced trading volumes.
Sep 01
I would love to see Geithner replaced. How about you?
Aug 26
The Swiss National Bank appears to have abandoned efforts to halt the appreciation of the `Swissie’ after losing 14bn francs (£9bn) over the first half of the year in a failed effort to stop money flooding into the country, some of it coming from German citizens in Bavaria opening precautionary accounts.
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Aug 21
Hedge fund manager Kyle Bass (who bet correctly on the subprime mess) was on CNBC Aug 17 to explain his current thinking.
He won’t say whether his conviction is as strong now as it was in 2008, but it sounds like it might be. Click Here for more.
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Aug 18
Taylor discusses last week’s NFP report, which he calls a “goldilocks” number as liquidity will be ample, gives his perspective on the upcoming Fed decision, which he agrees with Goldman will be just the MBS roll off proceeds reinvestment into treasuries (which he thinks is already priced in), but he considers it a very small amount of money in the big picture. The result would be a weaker dollar “but only for a number of weeks.” The catalyst for the turnaround will be “things getting much worse.” Taylor does not see any unintended side effects of a new monetization phase, because, once again, the total amount will likely be small (we are not sure we agree with this: with the amount of margin for OTC products, commodities will likely benefit materially from a new QE round). Taylor repeats the old mantra that unlike Europe, the US has control over its currency, and that Europe is certainlyl unhappy with a weak dollar (a trend we believe we will see a lot of increasingly shorter frequency, higher amplitude moves in over the next few quarters). Taylor concludes by discussing his current trade: the short EURUSD pair. He does not see the euro going far beyond 1.35, and his target of 1 to 1.10 he sees as very realistic. As pertains to Europe, he sees the ECB easing in Q4, and due to the FX mismatch in global assets mostly denominated in dollars, he anticipates a major short squeeze in USD positions in Q3 and Q4, when the “economy starts to roll over.” He concludes by presenting his two sure bankruptcy candidates: Greece and Spain. We believe that with the European vacation season drawing to a close, the riotous festivities in the PIIGS may be upon us very shortly once again.
