lender of last resort

Warren Buffett was on CNBC this morning for three hours talking about a whole range of issues from the European sovereign debt crisis to too big to fail to housing in the US to penalties for corporate crime. The video of Europe is below,…

Italian 10-year yields are now down below 6.5%, that’s a full percentage point lower than on Wednesday. Market players suspect ECB intervention is behind the sizable move. Still, everyone is breathing a sigh of relief as we head into the…

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…

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.

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

Countries like Italy are simply not going to be able to grow their way out of the problem. Everyone is recognizing this now. Until Italy was at the heart of the crisis, we could all delude ourselves that this crisis could be met with…

Let’s talk about credible government bond backstops for a bit.

If a central bank guarantees investors credibly that they can invest in certain debt instruments and not suffer principal or interest repayment risk, but only currency and inflation risk, some investors are almost definitely going to buy…

Yesterday I was on RT with Demetri Kofinas (@CoveringDelta) talking about the future of the euro zone. Lauren Lyster asked us where this was headed and we both agreed that it really was all about Italy. I just posted on why questioning…

Imposed austerity does directly alter output and employment- for the worse. Additionally, for all practical purposes, there is universal global support for austerity as the means supporting global output and employment. So even if the euro…