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

Europe’s at it again…

Key European CDS are starting to turn in the more northern direction again, as the German-French ‘pact for competitiveness’ faces near-unanimous pushback across Europe. Credit default swaps (CDS) are a market security used by investors to buy 5-yr protection (in this case) against default (or the like). As the spread rises the implied probability of […]

Third Time, Someone Will Believe: Manage Risk or It Manages You

As the late Allison Snow-Jones noted, economics depends on working mathematics. Mathematics, in turn, depend on the conditions being described correctly. If I build a model in which two things are independent, they have to be independent for my model to work. Or, to quote a quoting: Many months ago, I quoted the brilliant Janet […]

European policy…really?

This week Trichet laid down the ECB’s hand, (effectively) announcing his intention to maintain inflation at the ECB’s target rather than allow it to overshoot. For all intents and purposes, 2% inflation stabilizes the real exchange rate rather than furthering real depreciation in the Periphery and real appreciation in Germany (or the Core). Ambrose Evans-Pritchard […]

A Diverging Eurozone

I am sick today and had to cancel plans with a friend tonight. I decided to look at Eurozone unemployment rates to pass the miserable time. According to the Friday Eurostat press release, The euro area1 (EA16) seasonally-adjusted unemployment rate was 10.1% in November 2010, unchanged compared with October4. It was 9.9% in November 2009. […]

Steve Randy Waldman Explains It All to You

Not certain this link will work, but at Interfluidity, SRW replies to Karl Smith, closing with a sentiment with which I am very much in sympathy: It is not technocratic economists who will win the day and pull us out of our cul-de-sac, but angry Irishmen and Spaniards who challenge, on moral terms, the right […]

Joachim Voth Tells the Truth and Shames the (German) Devil

Echoes of Japan, echoes of the Great Depression. One of the few economists who knows history closes a post by presenting the proper context for the choices: A quick exit [by Ireland, from the Euro] may still be better than a decade of slow, grinding deflation combined with Zombie banks and Zombie household balance sheets […]

Can Someone Please Explain Germany’s Reputation for Fiscal Conservatism to Me?

Assume I believe in risk-adjusted return on capital. That is, I don’t buy a bond yielding 12% instead of one yielding 6% without first considering that the yield difference is affected by the likelihood of Principal return being lower. (But I will buy the 12% bond if I believe the risk premium is too high […]

Ireland is Bankrupt…a letter from an Irish citizen

A letter sent from Ireland (updated): For less than what the US spent to save AIG, a corporation, with relatively easy terms; a country sinks below the financial waves. TBTF reaches across the ocean. As posted by Zeus-boy, his comments on his homeland of Ireland. (introduction by run75441) Ireland is Bankrupt Herman Van Rompuy, President […]

Irish Bailout–impact on taxes uncertain

by Linda Beale Irish Bailout–impact on taxes uncertaincrossposted with Ataxingmatter As plans for the $100 billion bailout of the Irish economy and banking system by the European Commission, International Monetary Fund and European Central Bank continues, Ireland’s downtrodden prime minister (who will call elections after the budget is finalized) has said that it “will not” […]

Ireland Will Apply for Bailout Package

The NYT notes this morning: Ireland Will Apply for Bailout Package Irish finance minister Brian Lenihan confirmed today thatIreland had formally applied to Europe and the InternationalMonetary Fund for a bailout package. He would not give an exact figure but said the amount wouldbe in the tens of billions of euros and that the final […]