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Asmussen: The ECB will start buying peripheral bonds again to eliminate redenomination risk premia
An extremely important interview with ECB board member Joerg Asmussen was carried in the Frankfurter Rundschau recently. Below is a translation with key bits highlighted. Afterward I will interpret his remarks in light of ongoing…
Study of European bank NPLs suggest underreporting and large losses for equity and bond holders
This week's second weekly-length post is just another review of the Price Waterhouse Coopers study that is big news in the German press. I have now seen the numbers in a bit more granular detail and I wanted to run through them for me…
Redenomination risk in Spain causes bank deposit run as house price slide accelerates
Quick post here to highlight then continued losses in Spanish property markets and the effect on Spanish banks. House prices in Spain were down 11.2% year-on-year in July. That's the largest fall since March 2011 and it brings all in losses…
The end of European bailouts and the beginning of monetisation
In the German press, there have been a number of stories recently that indicate that the German government will not commit any more money to bailouts in the euro zone. Specifically, the reports of greatest interest have to do with Germany's…
Indian deficit will grow to 6.2% as industrial output shrinks again
According to recent media reports, the Indian Prime Minister Manmohan Singh is about to announce the appointment of University of Chicago professor and former International Monetary Fund Chief Economist Raghuram Rajan as India's chief…
Europe looks cheap if the ECB pulls out the unlimited backstop bazooka
Despite my increased pessimism on Europe, it is clear that European equities are undervalued compared to the US. My call at the beginning of the year was for European equities to outperform because of relative value vis-a-vis the United…
More on the global economic slowdown and the drop in corporate earnings
I want to tie a few threads together regarding the synchronised global slowdown and the related drop in corporate earnings. US firms had been insulated on earnings due to not increasing staff and the global nature of their profiles. With…
The municipal meltdown in double-dip Europe is a clear warning sign
I think it goes without saying that the problems for Spanish and Italian regional governments are due to the austerity-induced double dip recession those economies are suffering. The real insight here is that this municipal - double dip…
Spanish regional governments unable to refinance 15.8 billion euros of maturing debt as debt…
Today, Spanish newspapers confirmed that a number of regional governments on the verge of bankruptcy must follow Spanish banks in requesting aid from the central government. However, with Spanish central government itself facing record euro…
Grantham and Faber legging into Europe as values begin to proliferate
My thesis at the start of the year was that European equities would outperform despite the sovereign debt crisis because of relative value vis-a-vis the United States. It seems that Jeremy Grantham and Marc Faber agree with those sentiments…