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Posts Tagged ‘EU bailout’

Increasing Pressure on DSK and the Euro-Zone

Posted by Larry Doyle on May 23rd, 2011 8:58 AM |

Despite areas of concern both here at home and around the world, most eyes remain fixated on developments within the Euro-zone at large and specifically on the case of former IMF head Dominique Strauss-Kahn.

The temperatures are rising on both the dethroned former international banker extraordinaire and the peripheral countries of the EU. Our market is opening sharply lower this morning on the heels of weakness in the EU. Let’s navigate.

People the world over want to know what really happened a week ago this past Saturday in the suite occupied by DSK at the Sofitel Hotel in New York City.  (more…)

European Bank Stress Tests? Nein, Danke!!

Posted by Larry Doyle on June 1st, 2010 8:58 AM |

How do you think the wizards in Washington are feeling about the European bailout structured two weeks ago at their behest? In those two weeks, the Euro has plummeted another 5%, equities continue to suffer, and credit spreads continue to widen.

Our Washington wizards are looking back into their bag of tricks and now recommending another of their ‘shell game’ proposals to their European counterparts. Which proposal might this be? How do you spell charade? Try, bank stress tests.

Treasury Secretary Geithner is pressuring European central bankers to perform and release bank stress tests as a precursor to restoring financial health and stability into the European system. The Wall Street Journal highlights Geithner’s recommendation this morning in writing, U.S. to Push Europe on Stress Tests:

The U.S. intends to urge Europe to disclose publicly the results of bank stress tests as a way to calm jitters over the health of the Continent’s financial system, U.S. officials said. (more…)

Rogoff: EU Bailout Will Not Stop Defaults

Posted by Larry Doyle on May 19th, 2010 8:57 AM |

Kenneth Rogoff

Shock and awe? The trillion dollar bailout of the debt-ridden nations within the EU was supposed to backstop the Euro and put investors at ease. As of this juncture, the politicians and central bankers are likely the only individuals left shocked and awed.

Rather than writing checks and overpaying for debt, perhaps these politicos and their central banker friends should call on those who have studied global economic and financial crises. Like who? Harvard’s Kenneth Rogoff, who pointedly details that the very structure of the EU-bailout will be insufficient in forestalling defaults within the EU. (more…)

The Euro Is Retreating like Napoleon from Moscow

Posted by Larry Doyle on May 11th, 2010 12:28 PM |

If those involved in the European bailout thought the trillion dollar package would quickly support the Euro and, in turn, the economies of the EU, well guess what? After a quick, short covering rally for the Euro yesterday, the common currency for the EU has turned tail and is retreating faster than Napoleon from Moscow.

The Wall Street Journal addresses the Euro’s retreat in writing, Euro Falls as Aid-Plan Euphoria Fades:

Unnerved by the euro zone’s giant bailout mechanism and the prospect of patchwork politics in the U.K., investors herded back into the safety of the dollar and yen Tuesday, sending the euro and the pound lower. (more…)

Is the Federal Reserve Behind the European Bailout? Audit the Fed!! [UPDATED with video]

Posted by Larry Doyle on May 10th, 2010 12:52 PM |

Is the American taxpayer ultimately bailing out the European Union? Far fetched? Don’t be so sure.

While the focus of the European bailout has been on the European Central Bank, the European Union, and the IMF, little attention is being given to swap lines which were reopened between the Federal Reserve and the European Central Bank.

The ECB has steadfastly fought the idea of breeching the principles which formed the European common currency (the Euro) in order to fashion a bailout for the EU. Did the ECB crater to political pressure by the EU? Or, did the risks of the bailout shift from the ECB to another large central bank? Such as? The Federal Reserve! (more…)

Euro Crisis Merely Delayed, Not Averted

Posted by Larry Doyle on May 10th, 2010 8:39 AM |

They blinked.

The European Union and European Central Bank stole a play from the wizards in Washington to avert an immediate currency crisis in the EU and the potential ripple effect around the world. Did they do the right thing? For me, the question of addressing the fiscal crisis within the EU is not one of right or wrong; rather, when the crisis comes, how large will it be and how long will it last?

The trillion dollar package provided by the European Central Bank, the European Union itself, and the IMF is a combination of loan guarantees and quantitative easing. Shock and awe and punish those who would dare sell the Euro short, right? Clearly, the massive injection of capital will squeeze those who have shorted the Euro, but what about the long haul?

The EU is subverting the very tenets upon which the union was founded. Those tenets precluded this type of financial bailout. (more…)






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