Monetary System

On Friday, I asked why CAM’s credit default swaps were soaring. This is why? Clearly someone had inside information.

Each time the treasury spends or taxes, a complex series of steps is required that involve the treasury, the central bank and private banks. The central bank and the treasury develop such procedures to ensure that government is able to…

Europe is way over banked and the chart illustrates the monumental task and cost of recapitalizing some of their largest banks. The size of the largest four banking institutions in France, for example, represents over 300 percent of the…

The data have shown that deposit flight out of the euro zone into the US just isn’t happening. But what about intra-euro zone deposit flight? Here’s a chart from the Council on Foreign relations that suggests this could be a story supported…

Paul Davidson argues that a theory is the way humans describe real world observations on the basis of a model that starts with a few axioms. An axiom is an assumption accepted as a universal truth that does not need to be proved. From this…

My friend Rob Parenteau doesn’t think it will. His argument against it is similar to the one I have been making about the origins of this crisis. Here’s what I said.

Last week Moody's cut the ratings of 12 British lenders, including Royal Bank of Scotland and Lloyds Banking Group. This week the other two ratings agencies, S&P and Fitch cut the ratings of 10 Spanish lenders.

Moody's decision to place Popular's ratings on review for possible downgrade is driven by our view that the combined entity emerging after the integration with Pastor is likely to have a weaker credit profile than Popular's standalone…

Whether the writedowns make investors feel relieved because of the alleged balance sheet transparency remains to be seen. However, the balance sheet woes at Erste highlights how active banks within the EU are in cross-border relationships.

As we reported on Friday, Dexia, the troubled Franco-Belgian bank, has been nationalised over the weekend. At the time, I indicated this would be a negative for the sovereign’s creditworthiness. Moody’s, the ratings agency, agrees and has…