Archive for the ‘Austerity’ Category

Notes From Underground: My Response To Larry Summers

May 7, 2013

First, the RBA finally cut the lending rate by 25 basis points to 2.75%. By the close of the market, the Aussie dollar remained weak as some were surprised by the move. As I promised my readers of NOTES it is the 2/10 yield curve where the indicator of further currency and bank action will be found. The 2/10 steepened a slight three points, but the action ahead will be the key. Failure to take out recent steepener highs will be an indicator that the RBA has more work to do if it wishes to give a boost to the Australian economy.

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Notes From Underground: Are the French Kicking the Hornet’s Nest?

May 6, 2013

First, the unemployment report offered no surprises as the market was close to the actual release. The real surprise was in the upward revisions to the February and March numbers. The negative surprise was the average work week shrinking by 0.2% of an hour. The shorter work week may be an aberration but it may mean that employers are cutting workers hours so as to keep under the Affordable Care Act mandates, but I caution it is far too early to say that this is definitely occurring. The BOND markets reacted negatively to the “stronger” jobs data and the 10-year note future fell as yields rose by 10 basis points. Investors bought stocks and seemingly sold bonds in a performance of risk-on/risk-off. Again, one day’s action does not a trend make. The pure risk-on/risk-off paradigm has been dormant for quite a while and let’s hope it stays that way.

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Notes From Underground: Europe … No Escaping the Battle For Supremacy

April 28, 2013

The question that is framing the most recent debate in European circles is the one asked by Bernard Connolly for the last 18 years: Whose currency is the euro and who controls its outcome? The media has been full of stories about the gathering forces allied against AUSTERITY:

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Notes From Underground: A Day of Disconnects In Global Markets, Or a Ball of Confusion

April 22, 2013

First, I need to clear the air on an issue that is cited over and over, of which causes me great discomfort. In last Thursday’s Financial Times, Robert Pollin and Michael Ash, the two professors who sponsored graduate student Thomas Herndon of UMass-Amherst–and of recent fame for finding the flaws in Rogoff/Reinhart–published the article heard round the world: “Why Reinhart and Rogoff are wrong about austerity.” I am not disputing the results of their work but I am questioning a causal relationship that they note:

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Notes From Underground: Why is “DEPRESSION” Making its Way Back into the Mainstream Lexicon?

October 2, 2011

The news has been more than dismal for the last three months and the equity markets have certainly reflected fears of a renewed global recession. However, as interest rates are being held at historically low levels and growth continues to stall, the idea of a DEPRESSION is making its way onto the opinion pages of financial news.

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Notes From Underground: Austerity, WHERE IS THOU STING?

June 29, 2011

The question of the impact from the austerity budget passed by Greece will not be visible under the lights of television but will rather be a process drawn out during the coming years. Tears will flow not from the irritation of tear gas but from the “NEGATIVE FEEDBACK LOOP” that has been initiated by the power of Brussels to exact its pain from the citizenry of Greece while applying the salve of credit relief to the global banks and financial entities saddled with the debt of the profligate PIIGS.

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Notes From Underground: CEBS and the ECB roll the dice and it comes up seven

July 25, 2010

The “results” of the European bank stress tests were released Friday afternoon and we learned that seven European banks failed and need to raise about €3.5 billion to meet the needed tier one capital ratios.

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Notes From Underground: Canada raises rates and Austalians are stressed by Europe

July 20, 2010

This morning, the Bank of Canada (BOC) raised rates to .75 percent as the market widely anticipated. The Canadian dollar was sold off after the announcement as the statement following the INCREASE was considered to be rather dovish going forward. Mark Carney, head of the BOC, said the bank was concerned about the European debt crisis and the continued balance sheet repair going on in the household and government sectors in the developed economies. The BOC felt that investment was tepid due to the cited global uncertainties. It raised rates but still believes that ample monetary stimulus is in place and its removal will be very dependent on the global growth story.

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