The Mother of all Carry Trades
14 January 2012
The ECB’s decision to lend EUR 498 billion at an average rate of 1% for 3 years to European banks is turning into the mother of all carry trades.
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The European Debt Crisis in 2012
08 January 2012
The year 2012 will be critical to the resolution of a number of economic issues, primarily in Europe. Unfortunately, it is highly likely that whatever solutions will be found will be very temporary in nature, and will address symptoms rather than root causes. At least in Europe, there is critical awareness that these issues will have to—at some point—be resolved. In the United States or Japan, where much the same problems exist, the recognition of even the symptoms of the problem does not appear to have reached a societal critical mas
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Cypriot Bank Exposure to the Greek Debt Crisis
30 December 2011
Cyprus and its three main banks were downgraded in November 2011 by the three major credit ratings agencies, in no small part due to their exposure to the Greek debt crisis as well as the declining situation in Cyprus. This downgrade was followed by the publication of the banking sector’s January - September 2011 financial results, which revealed a write-down of nearly EUR 1.5 billion of Greek government bonds (GGB) by the Bank of Cyprus, Marfin Laiki and Hellenic Bank, as well as rising impairments due to non-performing loans (NPL) in the private sector.
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The Greek Green Energy Bubble – II
30 December 2011
The first confirmation of the coming pricing problems in the Greek energy sector became visible yesterday with the publication of the first official proposal on energy price increases by the Hellenic Ministry of Environment and Energy (YPEKA) and the Public Power Corporation(PPC).
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Public Sector Cutbacks and Political Paralysis in Greece
19 December 2011
In May 2011 I attended a conference in Barcelona, at which a European Commission spokesperson gravely assured me that political cooperation between the then ruling Socialist party and the main opposition party, New Democracy was a precondition for success for the bailout programme.
In November, this condition was realised when a...
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The Coming Crash of the Green Energy Bubble in Greece
10 December 2011
Since George Papandreou came to power in the October 2009 elections in Greece, a central policy priority has been the promotion of “green energy.” As part of this policy, between EUR 10-15 billion in renewable energy (RE) projects have been licensed. These include large, industrial-scale wind and photovoltaic projects, as well as smaller installations of up to 1-5 MW.
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To Bank or not to Bank
02 December 2011
One of the inevitable consequences of the Greek and European debt crisis is the question of whether bank account deposits are safe. This question has been asked a number of times recently, but no clear answer is possible given the rapid changes in the financial sector. Another frequent question concerns...
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Greece, the Eurozone and the 6th Installment
01 December 2011
The meeting of the Eurozone finance ministers yesterday agreed (according to Greek press reports) to release the 6th instalment of the first bail-out package. Worth EUR 8 billion, the instalment is desperately needed to pay government salaries and unpaid debts, as well as international bond and Treasury redemptions worth between...
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The End of Leverage
26 November 2011
We are clearly present in an era of great unwinding. In financial terms, we could call it the end of the Age of Leverage. In simpler, ordinary terms, it’s the great unwinding. The unwinding of the trust which underpinned the great political experiment of the Eurozone. The unwinding of the social contract between the baby boomers who put the West together after World War II, only to see their pensions and healthcare systems collapse. The unwinding of the idea that any family could aspire to buy a house in a real estate market with 5-7% per year appreciation and loans 20-30 times their annual salaries. The unwinding of 80% debt:GDP ratios, which were formerly considered ‘safe’.
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