In order to give some context to the disparities which so bedevil relations between countries in the Eurozone, one thing we can consider is the tally of net private indebtedness to banks (i.e., the sum of household and private, non-financial corporation loan balances less their deposits). To make these truly comparable, we take into account both the size of the population (ranging from Germany’s 80-odd million to Ireland’s 4 1/2) and also Eurostat’s estimate of median household income. We also take the opportunity to widen out the snapshot so as to include the Eurozone’s Scandinavian fellow-travellers in Sweden and Denmark.
Category Archives: Macro
We Will All Go Down Together
When we last wrote, some brave analyst at a Chinese brokerage was making headlines by talking of there being at least another CNY2–2.5 trillion in ‘shadow’ margin debt to add to the peak CNY2.3 trillion registered on the exchange ( that latter now already shrunken by over a third). Since then, the ante has been upped by one of our hero’s competitors, who added another CNY1-1.2 trillion to that already gargantuan guess. The man from Huatai Securities also suggested that half of the total was effectively being financed by the nation’s banks, whether they are strictly authorised to do so or not. Continue reading
Timeo Danaos (et Romanos)
It is now largely overlooked, but the 19th century had its own precursor to EMU in the shape of the Latin Monetary Union, set up principally to try to solve the hoary problems of silver:gold bimetallism. But, if much of the Union’s history was dogged by the narrow technical issues of how, firstly, to structure its members’ own monetary system and, thereafter, to align it more closely with those of the non-members, there were other features, too, which are still very much germane today.
Unrealistic expectations, short-term politics, and – as ever – too much debt plagued both Greece and Italy in those days, too, with repercussions for the other LMU members as well as for their trading partners in the wider world.
[The following appears as Chapter II in my book ‘Santayana’s Curse’ available on Kindle]
When Every Problem is a Nail
It is increasingly hard not to fulminate at the latter day lunacy of blind CPI targeting. It seems hard to imagine that, 25 years ago, the brave little RBNZ was breaking new ground by adopting the goal of keeping price rises to 0-2% p.a. in order both to provide an anchor for its own broader policy aims and, believe it or not, as a way for it and the government of the day to wean the wider public sector off the levels of increasingly obstructive interventionism which had long been its practice to undertake.
‘Income £20-0s-0d. Expenditure £20-0s-6d’
In our previous ‘Money, Markets & Macro’ monthly publication, we devoted some time to a consideration of the fact that the growth in US payroll costs was beginning to outstrip that of business revenues, a state of affairs which we suggested could not long be endured. Continue reading
ECB Excesses
With last week’s report of monetary developments in the Eurozone, we again have evidence both of Draghi’s monetary monomania and of the sheer futility of his constant refrain that the ECB is just buying time until member states undertake the ever-promised, but never-delivered ‘structural reforms’ which they all so patently require.
Bill White & True Sinews: In-Depth Part II
Please find the concluding part of our discussion where, among other topics, we touch upon the arbitrary and even capricious nature of the policy goals we are pursuing at such cost in the attempt to shore up what Bill disparagingly calls the ‘Non-System’.
Bill White & True Sinews: In Depth Part I
Please find here the first part of the lengthy discussion – organized by the Cobden Centre with kind assistance from Hinde Capital – which we held in March with William White, that most distinguished elder statesmen of finance and one of the few to really understand that if we are ever to find the right answers to the problems confronting us, we must at least be prepared to ask difficult questions. Part II will be posted shortly.
Monday Morning Macro
Though the punditocracy has become much more aware of the sheer scale of China’s equity bubble in recent weeks, it is still arguably the case that reality is running ahead of reportage even as more and more evidence emerges of just how dire things are in the world beyond the brokerage screens.
The South (China) Sea Bubble
The first hard data release of the month for China was hardly guaranteed to reassure. Two-way trade in USD terms dropped 6.3% in the first quarter from its level of a year ago, the second most severe setback since the Crash and only the third such instance in the whole era of ‘Opening Up’.