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Consequences of Syriza’s election and economic program
Right now Syriza is neck and neck with New Democracy in Greece for the upcoming elections in Greece. So it is worthwhile to take a look at what Syriza is actually saying and what the consequences of their program would be. I have a copy of…
The Spanish death spiral has begun
The situation in Spain has turned decidedly worse today. After yesterday's 3-notch downgrade by Moody's, yields on Spanish 10-year bonds are now hovering just around 7%. Credit default swaps for Spanish debt are now trading at 605 bps with…
Why the German government is already debating relaxing Greece’s austerity targets
In late April, I wrote a post predicting why the EU is temporarily dropping the 3% hurdle. The gist of the post was that in the euro zone and in Europe more generally, the economy was decelerating much faster than anticipated. To get ahead…
On the coming EuroTARP bank bailout in Spain
As I first described here in late April, the Spanish bailout is looking like a bailout of Spanish banks instead of the sovereign. Spain's debt to GDP is still relatively low and so the thinking is that the sovereign debt problems there are…
Weak global economic data signal likelihood of global recession
The economic data today from a number of different corners has been poor. In Asia, Europe and the US, manufacturing data point to continued slowdown. In the US, weak jobs numbers do as well. It has been clear for some time that growth was…
The crisis in Spain has reached the breaking point
We are now in another existential crisis for the euro zone with yields on sovereign debt from Spain and Italy spiking well over 6%. We have been here before, most recently in November. Then, it was Italy in Spain's position as the lead…
Weekly: On risk assets, the global growth slowdown and likely policy responses
This week's newsletter is going to focus on how risk assets are setup given the continuing global growth slowdown and likely policy responses to it. The overall thesis is that shares and high yield bonds in the US are short-term oversold…
European banks pull out of Latin America, currency plummets in Argentina and Brazil
This is a quick note here on Latin American economies where currency issues are the main story. Argentina has been most often in the news, but the slowdown in Brazil should be top on the radar. I also note that some European banks are…
Germany: Merkel faces domestic political hurdles on fiscal pact
The European fiscal compact which calls for EU countries to stay within the Maastricht treaty government deficit hurdle of 3% of GDP has already been signed off on by all 27 EU governments except the United Kingdom and the Czech Republic.…
India will be worse than China
When I listed my Ten Surprises for 2012 in January I predicted that China would have a hard landing, defined as quarterly growth below 5% annualised by the end of this year. But I also said that India would be worse than China. And it is…