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…
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.
Jul 13
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A third of Spain’s city councils are in dire straits and may be forced to suspend payments by the end of the year, replicating the woes in the US, where many states are bearing the brunt of fiscal tightening.
The great majority of councils in Andalucia are already in deep crisis – either insolvent or muddling through from day to day. More than 400 of the 8,000 councils across the country have stopped paying electricity, water and telephone bills, according to Spanish newspaper El Economista.
“I am deeply ashamed to know that I won’t be able to pay our staff. They have got mortgages, children. What am I supposed to do?” said Jesus Manuel Ampero, mayor of Cenicientos, near Madrid. “We were not able to cover our payroll in June. Neither I nor our councillors have received anything for two years. I’ve had two heart attacks. My health is cracking. If we cannot solve this, I’m resigning.” Click Here For More Of This Story
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Jun 22
Bloomberg — Jim O’Neill, chief global economist at Goldman Sachs Group Inc., talks about China’s relaxation of a two-year peg of the yuan against the dollar. He speaks with Andrea Catherwood on Bloomberg Television’s “The Pulse.”
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Jun 03
Martin Weiss, president of Weiss Ratings, says the asset quality of Bank of America, Citigroup and SunTrust Banks has weakened and is a concern. He tells CNBC’s Karen Tso and Sri Jegarajah that the U.S. banking system is vulnerable to shocks from Europe’s debt crisis.
May 10
BRUSSELS (AP) — A bold $1 trillion rescue by the European Union halted the slide of the euro on Monday and sent markets soaring worldwide in a gambit that may ultimately be seen as the moment Europe truly became a union.
The sweeping cash injection was greeted with euphoria on Wall Street, where stocks rocketed to their biggest gain in more than a year.
Still, the package did not resolve the basic dysfunction at the heart of Europe’s monetary union: Governments can still spend recklessly and saddle their partners with the bill.
