ECB

As for Italy itself, the country runs a primary fiscal surplus. As George Soros has noted: “Italy is indebted, but it isn’t insolvent.” Its fiscal deficit to GDP ratio is 60% of the OECD average. It is less than the euro area average. Its…

This chart from Der Spiegel shows you that the ECB has been buying a lot of periphery bonds. But, no matter how much they have bought, their purchases are dwarfed by the absolute magnitude of bonds coming due next year in Italy, over 300…

If the Federal Reserve were to load up on Italian bonds, the Fed would be exposed to default on foreign currency assets. If Italy defaults, then the Fed is on the hook. Offic

The German Christian Democrats hold a party congress next weekend. There are a number of proposals that members are trying to get incorporate into the party position and platform. One such proposal is to give the national central banks…

European stocks, Italian bonds and the euro are rebounding after Italy’s BTP auction and ECB containment strategy. European political uncertainty remains dominant driver; Australia employment better than expected. Bank of Indonesia…

Since everyone is talking about sovereign deficits, austerity and the ECB’s duties and legal limitations, let’s go straight to the Lisbon Treaty text. Below are the most relevant parts of the Lisbon Treaty governing how the EU is supposed…

This is a translation from a Handelsblatt interview with Amgela Merkel. MUST READ.

The scale of the Italian challenge is far greater than Greece's as Italy's sovereign debt is bigger than Greece, Ireland, Spain and Portugal's put together. Greece has, prior to the coming haircuts, about 350 bln euros of debt. Italy has to…

Right now everyone is looking at monetisation and thinking this will save the day. You saw the Lakshman Achuthan video; clearly punters don’t think the US is going to double dip. Buy gold then. Maybe they are right, but I see weakness…

If you are still inclined to give Greece the benefit of the doubt, I suggest you study the works of Egan-Jones, a credit rating company located in Haverford, Pennsylvania. Contrary to most other rating companies, Egan-Jones does not receive…