Europe

We see no easy way out of the current turmoil. The result of enough fiscal austerity to relieve the debt pressures is a severe recession or depression. Historically, independent nations undergoing austerity have accompanied the policy with…

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

When you run through the scenarios, really the only medium term solution that makes sense is to allow the ECB to put a permanent bid on Italian and Spanish bonds. The problem with such a move is that it reduces pressure on those governments…

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…

I continue to predict that Europe will move to change its constitution to include greater fiscal integration but also include explicit mechanisms for countries to leave the euro area.

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…

I have been saying for some time that the euro zone is coming apart at the seams. This makes a lot of sense. The question is how to do it. Here’s my suggestion from a few days ago.

We are experiencing a European bond market crash. There’s not much time left. Make your trades now because a policy response is imminent; I’m thinking by Monday morning.