Relevant and even prescient commentary on news, politics and the economy.

Fractional Money Multipliers

by Rebecca Wilder Fractional Money Multipliers Money multipliers – the stock of money divided by a measure of base money (generally reserves plus currency in circulation) – are dwindling to fractions of what they used to be. FT Alphaville draws our attention to this fact on the Euro area (EA) using SocGen’s analysis. The money […]

Merry Christmas!

by Rebecca Wilder    Merry Christmas! Here’s a nice little model I discussed in 2007: The Economics of Christmas! Hope that you enjoy; I do. (This commentary was written in my more ‘academic days’ when I was inundated with models of theoretical macro.  As you have no doubt noticed, I’ve gone the applied financial route […]

The Broad Sovereign Downgrade

by Rebecca Wilder The Broad Sovereign Downgrade Recently I’ve spent time thinking about global bond investors, especially those conservative investors that stick with the high-quality sovereigns. I’ve got news for them: the share of high-quality investment grade sovereigns – BBB- and above is investment grade – is shrinking. Some bullet points comparing ratings in December 2007 […]

EA Infernal Devaluation Progressing

by Rebecca Wilder EA Infernal Devaluation Progressing The EU answer to rebalancing portfolio and trade flows within the Euro area (EA) without currency devaluation is recession and deflation. They call this ‘internal devaluation’ – shifting relative prices by reducing domestic demand in the debtor countries, thereby shifting the terms of trade. Marshall Auerback calls it ‘infernaldevaluation’. […]

EA Spreads: Why Should the Trend Change?

By Rebecca Wilder  EA Spreads: Why Should the Trend Change? They changed the title; but originally the NY Times reported “Euro Zone Agrees to Reinforce Maastricht Rules“.  That’s exactly what EA policy makers agreed to last week – not much to bring home. The real shift in policy came from the ECB. Ambrose Evans-Pritchard highlights […]

Krugman, Roubini, and the Eurozone

Krugman highlights but provides no link to Nouriel Roubini’s address to the 2006 Davos meeting (direct link to Economonitors here). What I would say is that this incident exemplified something that was going on all along the march to the eurodebacle. Serious discussion of the risks and possible downsides was simply not allowed. If you […]

EA BoP Guide: CA and KA – EA too Dependent on Portfolio Inflows?

by Rebecca Wilder EA BoP Guide: CA and KA – EA too Dependent on Portfolio Inflows? This is part two of my multi-post commentary on the Euro area Balance of Payments (BoP). Yesterday, in part one, I compared the EA current account balance to its country-level cross section. Today’s post will be more instructive in […]

EA Balance of Payments: the Current Account

by Rebecca Wilder EA Balance of Payments: the Current Account I’ve been doing quite a bit of research on the balance of payments flows within the Euro Area (EA). Given the complexity of the balance of payments, there are too many angles to tackle in one post. Therefore, spanning the next week I will dedicate […]

European Policy Makers Don’t Understand But Markets Do

By Rebecca Wilder European Policy Makers Don’t Understand But Markets Do So here we are: the Italian yield curve is flat at above 7%; the government institution is in question; and the ECB is using its SMP purchase program as a carrot to drive austerity implementation in and Berlusconi out. Some would argue that the […]

The Euro Area Precedent for Policy Failure

by Rebecca Wilder The Euro Area Precedent for Policy Failure Last weekend, a leaked Troika report (Troika = ECB + EC + IMF) revealed that European policy makers now comprehend that the Greek policy prescription is not working (bold by yours truly): The growth and fiscal policy adjustments assumed under the program individually have precedent […]