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The ECB’s interest rate threshold: sovereign bond ceiling caps
It looks like the ECB is about to step forward and engage in quantitative easing, if reports from the German media are to be believed. I am sceptical that the ECB will follow through on this given political pressure in the euro zone against…
FHA’s 30x leverage on mortgages is creating a new “subprime” market
Since there is no appetite in Congress to bail out the FHA as its financial condition deteriorates, Fitch believes that the FHA may end up renegotiating its full protection on these mortgages with the banks who hold the loans. The agency…
FHA’s 30x leverage on mortgages is creating a new "subprime" market
Since there is no appetite in Congress to bail out the FHA as its financial condition deteriorates, Fitch believes that the FHA may end up renegotiating its full protection on these mortgages with the banks who hold the loans. The agency…
Has the Great Rebalancing already started?
In the short term rebalancing may increase the amount of global demand absorbed by China, but over the longer term it should reduce it. Rebalancing will inevitably result in falling prices for hard commodities, and so will hurt countries…
Chart of the day: Nominal Effective Exchange Rates
This Great Graphic comes from an email I received from Thomson Reuters. It charts the nominal effective exchange rates (NEER)of the dollar, euro, Swiss franc and Australian dollar. It is weighted by trade partner, but is not adjusted for…
Food price inflation now visible in China
By Sober Look
China's Ministry of Commerce blamed the increase in vegetable prices on "strong winds and rainfall in the country's eastern regions" that "disrupted production and logistics." Nevertheless vegetable prices are up 15.4% over…
Canada is not the model
Tim Duy has an interesting piece out that dovetails with something I had been saying in the comments here just yesterday. It has to do with austerity as an economic policy response in this post-crisis world. According to Bloomberg News,…
Chart of the day: Breakdown of 1 trillion euros in European bank NPLs by country
I recently wrote two member posts on the NPL problem in Europe. The source is a study by PwC's Frankfurt office that was released to the German-language media. Frankly, this report is everywhere in the German media and I think it's a big…
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…
Gasoline price spikes on lower supplies; will add to consumer woes
The US consumer can't catch a break. As if rising food prices weren't enough - with corn prices at record highs and other food prices expected to move higher next year - we now also have a sharp increase in gasoline prices.