2011

Jim Grant spoke to Bloomberg News earlier today about the sovereign debt crisis. He says the fundamental question is "What will the European Central Bank do next?" His answer: they will "print money". He believes that all of the central…

By Rick Bookstaber In a recent post I discuss six policies that spurred the Industrial Revolution in England – opening up immigration, weakening the guilds, investing in infrastructure, privatizing agricultural land, forcing a move to new…

As for Italy itself, the country runs a primary fiscal surplus. As George Soros has noted: “Italy is indebted, but it isn’t insolvent.” Its fiscal deficit to GDP ratio is 60% of the OECD average. It is less than the euro area average. Its…

Germans really are sceptical of the euro and many miss the days of the Deutsche Mark. I think Merkel is trying to make the case for why the German people have never been given a direct vote on any major euro area decision. No one wants…

We see no easy way out of the current turmoil. The result of enough fiscal austerity to relieve the debt pressures is a severe recession or depression. Historically, independent nations undergoing austerity have accompanied the policy with…

This chart from Der Spiegel shows you that the ECB has been buying a lot of periphery bonds. But, no matter how much they have bought, their purchases are dwarfed by the absolute magnitude of bonds coming due next year in Italy, over 300…

Here’s an interesting video clip that reinforces our view that almost all new innovation and technology is labor saving/destroying and that U.S. unemployment is much more structural than most perceive (click here to view video). Even the…

If the Federal Reserve were to load up on Italian bonds, the Fed would be exposed to default on foreign currency assets. If Italy defaults, then the Fed is on the hook. Offic

When you run through the scenarios, really the only medium term solution that makes sense is to allow the ECB to put a permanent bid on Italian and Spanish bonds. The problem with such a move is that it reduces pressure on those governments…

The German Christian Democrats hold a party congress next weekend. There are a number of proposals that members are trying to get incorporate into the party position and platform. One such proposal is to give the national central banks…