Posts filed under “Currency”

Soros Calls on EU to Start Joint Debt Fund

Billionaire investor George Soros speaks about Europe’s sovereign-debt crisis. Soros called on Europe to start a fund to buy Italian and Spanish bonds, warning that a failure by leaders meeting this week to produce drastic measures could spell the demise of the currency. He spoke yesterday with Bloomberg Television’s Francine Lacqua in London.

 

Source: Bloomberg, June 25 2012

 

Transcript after the jump

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Category: Currency, Video

Just Another Panic Monday in Euroland

Last week’s rally in Euroland was short lived with today’s big sell-off (see charts below).  The political tensions are coming to the surface and markets don’t like want they see and don’t see a positive outcome. As the Germans think out loud about a Euro breakup (see cover Der Spiegel below)  here’s an excerpt from…Read More

Category: Currency, Think Tank, Trading

Drachma: Feta Accompli ?

Faced with financial ruin, Greece votes to stay within the European Union and enact strict austerity measures — but no one bothered to tell the drachma. The Daily Show with Jon StewartGet More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook Monday June 18, 2012 (04:55)

Category: Currency, Weekend

Those Crazy Austrians…

As if they don’t have enough to worry about in Europe these days, what with the relief of the Spanish bank bailout fading within hours yesterday and with a Greek election looming this weekend that could lead to a disorderly exit of the nation from the currency union, now there’s apparently a “loose cannon” by…Read More

Category: Bailouts, Currency

Uncollateralized Trillion Euro Perpetual Zero Coupon

Michael Belkin is the author of the eponymously named Belkin Report — a highly respected institutional quantititative/technical service that looks at global markets in equities, commodities, currencies and bonds. His report this week is tongue-in-cheek titled “Where Else Are You Going To Put Your Money?” and begins with this delightful spoof of the Euro bailout…Read More

Category: Bailouts, Currency, Derivatives, Humor

THE EURO – WHAT SHOULD HAVE BEEN

June 04, 2012 THE EURO – WHAT SHOULD HAVE BEEN “I think more of the little kids from a school in a little village in Niger who get teaching two hours a day, sharing one chair for three of them, and who are very keen to get an education. I have them in my mind…Read More

Category: Currency, Think Tank

Visualized Economic Markets

A world map used by Erik Penser Bankaktiebolag to visualize economic markets. The map contains approximately 3,000 coins and every continent is built out of its countries’ currencies. Used in various medias during 2009. Click to enlarge: ˜˜˜ ˜˜˜ ˜˜˜ Source: Erik Penser Bankaktiebolag

Category: Currency, Weekend

The Weakening Euro

The New York Times – In Spain, Bank Transfers Reflect Broader Fears Ángel de la Peña, a Spanish government worker, is seriously considering the once unthinkable: converting some of his savings from euros to British pounds. Alvaro Saavedra Lopez, a senior executive for I.B.M. in Spain, says many of his corporate counterparts across the country…Read More

Category: Currency, Think Tank

Chinese Purchases Of U.S. Treasuries

Reuters – U.S. lets China bypass Wall Street for Treasury orders China can now bypass Wall Street when buying U.S. government debt and go straight to the U.S. Treasury, in what is the Treasury’s first-ever direct relationship with a foreign government, according to documents viewed by Reuters. The relationship means the People’s Bank of China…Read More

Category: Currency, Think Tank

Are concerns over a Greek Euro exit overdone ?

The press and the market continues to speculate about the negative impact of an exit of Greece from the Euro (expectations seems to be over 50%) and both the financial consequences of such an exit on the EZ (indeed everyone else) and, in particular, on the adverse contagion issues in respect of the other PIIGS and core EZ countries, for that matter. Yes it is true that the Greek party Syriza (comprising leftist anti bail out elements) came a surprising second in the last elections and, until recently, has lead in the polls. However, the most recent polls suggest that the Greeks may well be rethinking. New Democracy (23.1%) is narrowly back in the lead (with indications that its support is increasing), followed by Syriza and then Pasok some 10 points behind. If the next elections (due on 17th June) reflect recent polls, a coalition comprising New Democracy and Pasok will be able to form a working majority in Parliament, something which I believe the market has not picked up on as yet

Early days, but I for one believe that the trend away from Syriza will continue. Greeks, by an overwhelming majority (between 75% to 80%) want to remain in the Euro, as they realise that the reintroduction of the Drachma will result in an effective devaluation of at least 50%, by all accounts. The resultant hardship (the need to close the current account deficit to zero immediately) will make the current austerity plans seems like a mild dose of influenza, compared with the pneumonia that will follow an Euro exit. Yes the EZ will be negatively impacted, but the Greeks will make up their minds, based on the likely impact on themselves. This suggests to me that voters will swing away from Syriza and to New Democracy, in particular.

Whilst the Greeks want to remain in the Euro, they do not want to abide by the austerity measures, which their previous administration agreed to. Yes the austerity measures are tough, very likely too tough, but Greece needs to sort out the fiscal mess which it created for itself. The EU suggests that the Geeks will be offered some “sweeteners” if they chose to remain in the Euro, including some kind of growth measures (whatever they are) and possibly a watering down some aspects of the austerity measures. Will this be enough to persuade the Greek voters from following the nonsensical path proposed by the head of the Syriza, Mr Tsipras. Personally, I am beginning to believe that it may. Am I convinced - certainly not, but as days go by, I would not be surprised if the polls indicate that support for Syriza ebbs away and New Democracy’s lead increases.

If I’m right, markets should begin to recover. Personally, I just wish that Greece goes away. The gloom and doom scenario guys are overstating the impact of a Greek exit in my humble view. Yes, there will be huge losses for the EZ, but certainly not of the order of E1tr suggested by Mr Dallara of the IIF – do you think he has a vested interest – of course he does, as he acts for the small group of remaining private sector bondholders who will lose everything if Greece exit’s the Euro. He has every interest in exaggerating the size of the potential losses, in an attempt to get the EZ to offer more assistance to the EZ. Estimates of losses for the EZ (including banks etc) from a Geek exit, range from E150bn (too low in my opinion) to Mr Dallara’s E1tr (ludicrously high) – big numbers in any event. However, a Greek exit will force the ECB to act. Citi estimates that the ECB will have to provide some E800bn in liquidity to mitigate a run on EZ banks in the event of a Greek exit. In addition, the ECB will lower interest rates, buy Spanish and Italian bonds (quite possibly other country bonds) in size and introduce QE, etc, etc, something which is necessary. Draghi will have the perfect excuse to act. As a result, after the initial shock, I for one believe that the EZ will finally have begun to take the action necessary to start to resolve the crisis – there would be no alternative. Consequently, I really hope that Greek voters follow Syriza, but I fear that they wont.

Trying to predict anything involving the Greeks is virtually mission impossible. However, I am beginning to wonder whether the current excitement/panic is way overdone. I have closed all my shorts and remain hugely cashed up, but may well nibble away a bit more in coming weeks. However, it is impossible, in my humble view, to come up with an informed view at present and, as a result, extreme caution is the name of the game. There will be time.

 

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Category: Bailouts, Currency, Think Tank