Notes From Underground: PIIGS Fly?

We’re coming above ground until next Thursday. We want to see if PIIGS fly. In the meantime, we will be airing some of our greatest hits. Notes From Underground: The FED has created a ball of confusion (Aug. 6)

Some more hits:

Fed was already preparing for QE2

The Fed’s Zero Rate Policy is Destroying America

Second Chance for Barney Frank?

Midterm Elections are Close

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5 Responses to “Notes From Underground: PIIGS Fly?”

  1. Danny Says:


    What is your feeling on the EUR.CHF? It seems like the Euro’s rise relative to the Swiss Franc might be more attributable to USD weakness caused by the prospects of quantitative easing in the US – not so much improving Euro macro-fundamentals vs. Swiss Franc. Is there any opportunity given the tremendous “risk-on” asset performance over the last month in this area?


  2. yra Says:

    Danny the recent eur/chf seems to be do to the fact tha the euro is needed much more as a reserve currency and I think several central banks got caught off by being underweight the euro—do the technicals and see where the eur/chf resistance is—also remember the SNB is long a shit load of euros that they are now making a pretty nice amount of money on

  3. Arthur Global Practice Says:

    Interesting Yra your comment about SNB. Today, Moody’s report looks to Finland – to explain Ireland, Spain… Three consecutive years of negative Finnish GDP growth followed, with unemployment rising from 3 per cent to 16 per cent, and households embarking on years of painful deleveraging. It wasn’t until around 1994 — after devaluing and floating its currency — that Finland’s economy began recovering.

  4. Danny Says:

    Arthur and Yra,

    Extrapolating the thought a bit…two notions that stand out to me:

    1. The PIIGS will be subjected to a substantially longer period of slow resolution in comparison to the Finland scenario simply because they do not have the ability to devalue and quite frankly they have explicitly given up a fair amount of their tool kit for managing their own specific economies given the current economic institutional setup.


    2. During this extended workout period, the Euro will periodically have some significant downside risk against the Swiss Franc as the political or economic troubled stemming from the PIIGS could resurface at any given time.

    Any thoughts?

  5. yra Says:

    danny–in florence right now .It seems that Italy would be healthier with a weaker currency as it cannot pick up any pricing advantage to help aide its economy–would be a cheaper destination but it seems as if the common Italian is happy with the EURO as it has relieved the buffunos of making mischief with the bank of italy and the the finance ministry can be a little less dishonest—but Greek rates have softened as the chinese have raised hopes—unbelievable that the world does not pay attention to the chinese game of how to move markets

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