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Entries Tagged as 'Eurocrisis'

Fasten Your Seatbelts For Italy’s New Budget

August 29th, 2018 · Comments Off on Fasten Your Seatbelts For Italy’s New Budget

Italy is likely to come back into focus for financial markets next month, when they will present their new budget. There are numerous plans circulating like a flat tax and a EUR 80B infrastructure blitz; the one thing they have in common is busting public finances. This could set off Italy against the bond markets […]

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Tags: Eurocrisis

Meet The Perpetual Bailout Mechanism That Keeps The Euro Afloat

June 16th, 2018 · Comments Off on Meet The Perpetual Bailout Mechanism That Keeps The Euro Afloat

The creation of the euro has been flawed from the beginning; it’s most definitely not an optimum currency area. It has a tendency to expand differences, rather than diminish them through one-size-fits-nobody monetary policy and potential vicious cycles. However, there is one curious mechanism that sweeps much of these problems under the proverbial carpet and […]

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Tags: Eurocrisis · Target 2

A Misplaced Rally

June 16th, 2018 · Comments Off on A Misplaced Rally

Markets reacted euphorically after the US job numbers and the installation of a new Italian government. We think they are misplaced on both counts, more especially on the Italian government. It’s really difficult to see anything positive coming from Italy embarking on reflating its way out of its debt trap. Source: A Misplaced Rally | […]

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Tags: Eurocrisis · Italy

Italy’s Coming Stealth Eviction From The Eurozone

May 30th, 2018 · Comments Off on Italy’s Coming Stealth Eviction From The Eurozone

The fiscal plans of the incoming Italian government will trigger a bond crash, capital flight, a bank run and a clash with the EU. They are simply not compatible with staying in the euro. Since an Italian debt crisis is already a matter of time anyway, minds have to concentrate on orderly ways out of […]

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Tags: Eurocrisis · Italy

3 Vicious Cycles Threatening To Blow Up Financial Markets

May 29th, 2018 · Comments Off on 3 Vicious Cycles Threatening To Blow Up Financial Markets

Despite economic tailwinds and a massive bond buying program by the ECB, Italy hasn’t been able to even dent its debt/GDP ratio. When the ECB ends its bond buying program and/or economic tailwinds turn and the new government embarks on fiscal largess, things will turn pretty rapidly. The eurozone framework makes the situation that much […]

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Tags: Eurocrisis · Italy

The Euro Tends To Worsen Economic Crisis, Can Anything Be Done About That?

April 12th, 2018 · Comments Off on The Euro Tends To Worsen Economic Crisis, Can Anything Be Done About That?

Countries suffering from economic crisis have no recourse to normal adjustment mechanisms like devaluing or independent monetary policy tools. What’s more, there is no automatic redistribution through a big federal budget, and capital flows are likely to be perverse, going from the weak to the strong. On top of that, all the adjustment pressure is […]

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Tags: Eurocrisis

Someone Should Explain To The Germans And Dutch How The Euro Works In Their Favor

December 5th, 2017 · Comments Off on Someone Should Explain To The Germans And Dutch How The Euro Works In Their Favor

The workings of the European Monetary Union are still not well understood by many citizens, especially in countries which are the main beneficiaries of the euro. The system is rife with dysfunctions that are only papered over by economic tailwinds and vigorous ECB action. But fundamentally, not much has changed and the system is very […]

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Tags: Eurocrisis

The Next Eurozone Battle Is Shaping Up

August 11th, 2017 · Comments Off on The Next Eurozone Battle Is Shaping Up

The structural design deficiencies in the eurozone have been papered over by the cyclical tailwinds in the economy and balming ECB action. But at the first sight of headwinds, these will reassert themselves with a vengeance. Remedial action is already very difficult as it involves a leap forward in European integration for which there is […]

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Tags: Eurocrisis

The Hard Euro Is An Assault On Democracy

May 30th, 2017 · Comments Off on The Hard Euro Is An Assault On Democracy

The euro is basically unbreakable as the cost of leaving has increased. The amount of discipline necessary to keep the euro together is unprecedented. And countries have shown willingness to undergo that discipline, and others to function as the disciplinarian. This means that economically, the euro is a lot stronger than many probably think. However, […]

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Tags: Eurocrisis

The Euro Can’t Break Up

March 31st, 2017 · Comments Off on The Euro Can’t Break Up

The euro is highly dysfunctional, it confers few economic benefits, has been an economic disaster and is a source of political problems within the EU. It was never easy to leave the euro, but on balance, for countries like Greece, Portugal, and Italy, it seemed a good idea. But new collective action clauses in bonds […]

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Tags: Eurocrisis