Central Banking – The Bank for International Settlements again Questions Prevailing Central Bank Policies.
The BIS has recently published two reports. In one, appearing to embrace the Austrian School of economic thought, it attributes the weakness of the present advanced economy recoveries to (...)
Problems executing QE cause market confidence in the ECB to dip. What policy changes should we expect from the ECB in 2016?
Reports from the European Banking Authority and Bank of England claim that banks are healthy, but weak measures of capital are (...)
US regulations blamed for banks turning away deposits. Will this add further impetus to non-banking deposit and payment businesses?
Even More Bad news from Deutsche Bank. Can the Bank be Turned Around?
Despite abundant and increasing evidence of loose monetary policies being the cause of emerging market economies moving from boom to bust, there are none so blind as those who refuse to see.
Central Bankers want to abolish cash in order to be able to set substantially negative interest (...)
China devalued its currency by 3%. Financial markets responded disproportionately, but we explain that it is quite understandable, given government policies in the rich countries.
We then investigate the devaluation’s effect on the US and EU financial markets as well as on the currencies of (...)
Ultra Low Interest Rates have destabilized the global Economy whose capital markets now show signs of Illiquidity.
Stress testing of banks by central banking authorities has come to prominence as reliance on the traditional accounting standards has waned. Europe’s banking system was (...)
As the US vs European recovery story swings our way, what lessons can Europe learn from the strong swing to the centre right in Britain’s elections? Is there a possibility of Brexit?
Banks have been hit with more fines, but more importantly, also with Criminal Convictions. Is this banking out (...)
Most media optimism, both in the US and Europe, continues to focus on the dizzy levels of stock and bond markets, but in our view these index levels have been driven up by professionals front-running QE in the US and Europe.
In the past month, a Bulgarian court appointed two experts to (...)
Bank for International Settlements has labelled the impact of recent European quantitative easing as “unprecedented”. Worrying effects are not only the negative interest rates, but also very high price volatilities of asset. This development may soon hit not only economic, but also legal and even (...)
The ECB’s deal with Greece still leaves it exposed. Despite the rhetoric that countries must get their own finances in order, the ECB’s sister agency has started work on a new programme of $319 bn of mutualised debt.
US banks all pass their stress tests. However, that is not necessarily (...)
Is the standoff between the ECB and Greece in any sense subtle, or simply a car crash waiting to happen? We explain why being the first to defect may in fact
benefit Greece. With low sympathy for formal (fiscal) debt forgiveness, we expect pressure to increase further on the ECB.
Only two countries remain opposed to QE, although even they realise that measures about to be implemented are QE in all aspects but the name. Meanwhile, ground is being prepared for ECB to shift blame if “unconventional stimulus” ends up not working.
Russian sanctions work. Or so we are led to (...)
Despite the attention offered by the media to Russian banking and foreign exchange markets, tensions are growing in the ECB. Some ECB Board members are unconvinced of the stance the ECB President is taking, doubting that the introduced policy would be effective, let alone constitutional. We (...)
The Asset Quality Review (Stress Test) results confirm system wide solvency. Yet, regulators announce the rewriting of bank risk models and the ECB plans large scale asset purchases.
Although Scotland voted in September to remain in the United Kingdom, both sides hailed the high voter turnout as recognition of democratic engagement and growing European dissatisfaction with over-centralised, bureaucratic, seemingly unaccountable government. The effect has been to raise (...)
Low interest rates contribute to weak labour markets
A new measure of Unemployment and Labour Market Conditions gains support at the Annual Jackson Hole Conference. Doubts continue about European QE as near-zero interest rates may actually be preventing employment from picking up.
BIS has doubts about monetary policy in the Euro area
Latest BIS Report says that present monetary policies risk permanently destabilizing the global economy. It calls for A New Policy Compass, focussing on the ‘Financial Cycle’, not the Business Cycle.
Banks remain fragile and imbalances (...)
Confidence in the ECB wobbles as commentators on all sides question the effectiveness of supposedly growth stimulating new policies.
Markets and Investment
At least two big takeover deals are being negotiated in Europe now, both with heavy government involvement. The strategies (...)
Three fundamental questions have emerged, but clear answers still have not:
Free floating for the hryvnia?
New bureaucrats in Brussels?
New rules for high-frequency trading?
Recovery has started, according to some data. Is it sustainable? Or is it based on asset prices inflated by easy monetary policies? Inside this newsletter:
* Bond markets and the real economy * Central Banking – The Illusion of Tapering * The Return of (...)
The quality of the recovery remains questionable. In the meanwhile, banks must deal with new regulation and investors look for higher yields.
European growth stutters along as fear of deflation exerts pressure on the ECB to loosen monetary policy further.
Leaders, institutions and markets are all looking for guidance to get out of the present crisis. Government confidence is at stake, institutions’ credibility is jeopardized and banking is close to fraud and collusion.