LATEST POSTS Reports of plans for a break-up of the euro are premature Very quickly, I have grave reservations about the Reuters story claiming that top German and French officials have had "intense consultations" on plans to reshape or "prune" the currency bloc, reducing it to a manageable core. The Brussels press corps do not believe it. Nobody seems to know which German official is briefing behind the scenes that "you’ll still call it the euro, but there will be fewer countries." The claims do not remotely reflect the stated position of Chancellor Merkel and President Nicolas Sarkozy. Merkozy… Read More Here we go. The European economy seems already to have gone over the edge of the cliff, and that's before any of the eurozone 17 has technically defaulted. This morning's industrial production figures from Italy were a disaster, with output down a staggering 4.8pc in September. OK, so Italian IP tends to be quite volatile – the previous month was sharply up. But regrettably, it's part of a pattern, only the worst in a bad bunch. In the same month, French industrial production was down 1.7pc and German industrial output by 2.7pc. The "mild recession" predicted by Mario Draghi, the European Central Bank's new president, last week, may already be a very… Read More Barack Obama greets Hu Jintao, the Chinese President (Photo: AP) As we watch Italy's 10-year bond yields near 7.5pc and threaten to detonate the explosive charge on €1.9 trillion of debt, it is time for the world to reimpose order. You cannot allow the biggest bankruptcy in history to run its course – with calamitous domino implications – before all options have been exhausted. One can only guess what is happening in the great global centres of power, but it would not surprise me if US President Barack Obama and China's Hu Jintao start to intervene very soon, in unison and with massive diplomatic force. One can imagine joint telephone calls to… Read More Robert Jenkins, a member of the Bank of England's Financial Policy Committee, does a good job in setting out the potentially disastrous economic and financial consequences for Greece and the wider European Union if Greece is allowed to default via exiting the eurozone in this morning's FT (£). That possibility was admitted for the first time by eurozone leaders at the Cannes summit last week. Obey or leave the club was their message. But, as Mr Jenkins explains, the consequences, not just for Greece but everyone else in the eurozone, would be potentially catastrophic. Once Greece goes, the other PIGS would sit there like ducks in a row,… Read More Impressive and scary at the same time. The illustrations in this blog, drawn from a recent IMF spillover assessment, show just how exposed to financial services the UK really is. No comment is required from me, other than to point to the first image, which shows that the UK has a bigger external balance sheet than any other country in the world. And because the UK economy is relatively small, it therefore uses up a greater share of global liquidity (last graphic). This is not necessarily a bad thing. HSBC, for instance, has much of its business in the Far East. These earnings are presumably a net benefit to the UK,… Read More Italy's debt crisis is gathering pace The eurozone debt crisis has again conformed to pattern this morning; just as one fire abates, temporarily at least – with news of the formation of a government of national unity in Greece – another lights up. Lamentably, this one – Italy – may be too big to douse. The yield on ten year Italian debt rose to 6.59pc this morning, widening the spread on German bunds to an unprecedented 4.81pc. These are the sort of levels at which Greece, Ireland and Portugal began to find themselves shut out of markets. Yet this time, there appears nothing… Read More It wasn’t great, good or, depending on whether your glass is always half full or empty, even that encouraging. But there was nothing in the latest US jobs report that has had anyone borrowing the doom-laden language that Europe has had a recent monopoly on. 80,000 jobs were created in October, and the tally for August and September was revised upwards by a total of 102,000. According to the Bureau of Labor, people have been hired at a rate of 125,000 a month for the last year. There was a decline, too, in the long-term unemployed – a group you belong to in the US if you’ve been without work for more than six months. That figure fell 366,000…Read More Italy's debt problems are not crippling Regular readers of mine will know that, whilst I have long regarded Greece as certain to default and very likely to leave the euro, I have been very sceptical about the idea that there is any significant problem with Italy. Recent days have seen a spiking up in Italian bond yields and a rise in the spread over German bunds. Many commentators are now suggesting or implying that we are approaching the point at which a liquidity crisis for Italy might turn into a solvency crisis. I find this an extraordinary claim, greatly at… Read More Stick to the sermons, Archbishop Religion and commerce never mix well, but for Rowan Williams, the Archbishop of Canterbury, to throw himself onto the bandwagon already occupied by the Vatican, Jose Manuel Barroso, Uncle Tom Cobley and all, and back calls for a "Robin Hood" tax on financial transactions demonstrates very little understanding of the real world. This is one of those superficially attractive ideas that in practice would have catastrophic consequences for the UK economy for no obvious benefit other than to the freeloaders of the European Commission. The Archbishop claims to share the "the widespread and deep exasperation with the financial establishment"… Read More I rarely write about this poor and benighted, yet still free, isle. But Paul Krugman’s latest attack on the Government’s austerity policy – "Cameron’s Fantasy" – cannot go unchallenged. He ridicules Cameron’s claim that fiscal discipline has brought down British borrowing costs and averted a debt crisis, more or less depicting him as clueless. I happen to be a Krugman fan, not least because it is a delight to see a great economic mind at work – in real time, so to speak. He deserved to win the Nobel Prize, and he has been largely right about the shape of our global economic crisis over the last four years. However, he is wrong about the specific case… Read MoreEconomics
Sorry, there is no euro break-up plan – yet
Italy is sinking into depression, and that's before any act of default
America and China must crush Germany into submission
Once Greece goes, the whole euro project will unravel
UK is the world's biggest country – judged by its liabilities
Italy on the brink as yields soar past point of no return
America ignores long-term unemployment at its peril
Italy is neither insolvent nor illiquid
Dear Archbish – do shut up
Paul Krugman and Cameron’s realism
Saturday, 12 November 2011
NOVEMBER 10TH, 2011 12:52
700 Comments
NOVEMBER 10TH, 2011 12:06
NOVEMBER 9TH, 2011 11:44
NOVEMBER 8TH, 2011 12:33
NOVEMBER 7TH, 2011 11:52
NOVEMBER 7TH, 2011 9:34
NOVEMBER 4TH, 2011 21:56
NOVEMBER 4TH, 2011 17:33
NOVEMBER 2ND, 2011 17:15
NOVEMBER 2ND, 2011 12:54
Posts
