Private Lending: Disintermediation in China’s Banking System
The consequences of negative real interest rates and financial repression. We know how this story ends. Keep this one on your radar.
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Long-term interest rates are a series of future short-term rates
On how the expectations theory of interest rates explains why debt-induced depressions are fundamentally deflationary in nature.
The longer we delay, the worse it will be for peripheral Europe
As I see it, we cannot continue with the existing currency arrangement. Countries like Spain (I am reverting to my habit of calling all the deficit countries “Spain” and all the surplus countries “Germany”) simply will not adjust quickly…
How the Federal Reserve came into being
The question after the frightful period in 1907 was what to do to prevent another panic from causing a severe depression. Benjamin Strong, a senior executive at Bankers Trust and later the first President of the Federal Reserve Bank of New…
Total Private Market Debt’s Decline Should be a Glaring Warning Sign
The earnings estimates on the S&P must go down significantly. With the problems in Europe, and then the potential slow-down in China (after building more residential and commercial construction than presently needed) we would have to…
Jim Chanos: China has tons of contingent debt via state-owned enterprises
The overall gist of Jim Chanos' comments on Bloomberg yesterday were that China has off-balance sheet contingent liabilities due to its implicit commitment to state-owned enterprises which are kneee-deep in land and property speculation.…
Monetary Policy and the Future of China
There is a road open for China involving controlled inflation that would lead to re-balancing, both domestically and internationally, which has some uncertainties. These must be compared to those of sustaining the export-led growth model,…
The Pyramid of Liabilities
Leverage is the practice of holding a small amount of government currency in reserve against IOUs denominated in the state’s unit of account while promising to convert those IOUs to currency. This can lead to a “run” on private IOUs,…
Ireland: Is austerity enough or will we see haircuts?
It is high time politicians in Berlin to started to recognise that fiscal austerity is not the be all and end all of the policy issues they now face. Ireland is applying fiscal austerity, but this alone may well not be enough. A better…
Will ARMs de-stabilise the covered bond mortgage system?
Ed asked me to comment on hidden contingent sovereign liabilities of Danish mortgage bonds given the most recent Absolute Return Letter.