World Economy | MJ Economics

Posts Tagged ‘world economy’

When one trillion dollars is not enough…

The 85 billion euros bailout of Ireland is starting to send chills down the spine of Mr. Market (at last!). Portugal and Spain just stated they do not need a bailout which means a bailout is needed big time. Remember Greece? Ireland? Please note that this 85 billion euros rescue for Ireland is a drop in a bucket because the Irish Banks owe more than US$600 billion to foreign banks (UK, Germany, France, US).

Now the big one: Spain. Ironically, Spain is too big to fail and too big to bailout. The EU AAA rescue fund of 440 billion euros …

Monday, November 29th, 2010 Tags: Euro, European Economy, Irish Economy, Spain economy, spanish economy, world economy
Category: Economic Recovery, European Debt Crisis No Comments

Trouble in European Paradise…

The ECB and IMF would really like Ireland to stop this nonsense and take the money to bailout the bankers and implement austerity measures in exchange (great deal!). The Irish Times this morning was stating that PM Cowen was still opposed to a bailout. Mind you this is politics.

Meanwhile in Austria, they confirmed they are withholding 190 billions euros – their tranche in the Greek Rescue Fund – because they want to see how Greece can come up with the money through taxes. Greece was not able to demonstrate that it was able to do this. Big surprise here. …

Tuesday, November 16th, 2010 Tags: debt, Financial Crisis, Irish Economy, recession, world economy, world recession
Category: European Debt Crisis No Comments

Looks like the Fed did not buy the NBER “end of recession” news…

Yesterday the Fed indicated that they would keep their rate stable. No news there as they said since the beginning of the crisis that they would keep their rates low for an “extended period”. But what is interesting (but not surprising) is their indication that, fearing deflation like the plague, they are prepared to provide additional support to the economy via large-scale purchases of Treasuries (QE). They had already done it on a smaller scale last month using their proceeds from mortgage backed securities to buy Treasuries.

I know it’s not customary to find people like central bankers very funny but …

Wednesday, September 22nd, 2010 Tags: Bank of Canada, Canadian Economy, debt, Financial Crisis, recession, world economy, world recession
Category: Economic Recovery, Monetary Policy No Comments

Pensions Ticking Time Bomb

According to a report by BNY Mellon Asset Management, the US Corporate Pension deficits widen in June, falling by 6 percentage points to 74%. Unfortunately this is going to become front and center news sooner than we think.

Public and corporate pension plans (defined benefits especially) are an accident waiting to happen. Here is a little overview. Most pension plans operate in a perfect storm: most assume 8% returns (not going to happen); low interest rates (can’t have your cake and eat it too!); horrible demographics. How big is the problem? In the US, the states public pensions are underfunded …

Wednesday, July 14th, 2010 Tags: Benefit cuts, pension cuts, pension reduction, world economy, world recession
Category: The Welfare State No Comments

Waiting for the V-Shape Recovery

V-Shape recovery, where are thou? If Obama listens to Paul Krugman he will have a debt crisis on his hands sooner than he thinks. One thing that escapes most people is that the ones you think are in charge are not really (not even the G20? Shocking!).

Tuesday, July 6th, 2010 Tags: debt, Financial Crisis, recession, world economy, world recession
Category: Economic Recovery No Comments

Recovery? What recovery?

What? No recovery? Well it would be hard to end a recession if one has never gone away in the first place. Yes a correction is a very nasty thing but it actually comes as surely as death and taxes after a major credit expansion. Investors are slowly realizing that there was no recovery – just more debt – and here are the signs: Dow is down, consumer confidence in the US is down, foreclosures and houses are still on a downhill slope, China had less growth than expected in Q1 of 2010 (is that a surprise?).

Now over in …

Wednesday, June 30th, 2010 Tags: debt, Financial Crisis, recession, world economy, world recession
Category: Economic Recovery No Comments

China’s floating yuan? Be careful what you wish for

China has announced this week end that it will slowly allow the yuan to move within a range, i.e. quit (but not too fast…) the peg to the dollar. Many see that China finally caved in to the demand of the US to let its yuan floats and let it appreciate in order to help “rebalance” trade. In the context of the global financial crisis and the G20 meeting, I think the announcement and the move per se are more show than substance but it also points to something more fundamental: monetary systems built on fiat currencies are fragile things …

Tuesday, June 15th, 2010 Tags: Chinese Yuan, Trade with China, world economy, Yuan
Category: Monetary Policy No Comments

How fast can you depreciate?

It’s easy to see that the debt crisis in Europe is far from over but many would like you to believe it is something very recent. In fact, most nations in the EU were on the verge of bankruptcy long before the debt crisis began in Greece. Credit rating agencies started downgrading Greece and now it’s Spain (France is worried about keeping its AAA rating – why they have such a rating is beyond me!) but the real question is how can these agencies give AAA ratings to countries in such a dire situation? Mind you, they were still rating …

Tuesday, June 1st, 2010 Tags: debt crisis, Euro, European Economy, Financial Crisis, world economy, world recession
Category: European Debt Crisis, Monetary Policy No Comments

Liquidity, Liquidity where are thou?

The markets are down – 3 words – Spain, Italy and Korea. The Libor is now at 0,53%, the euro is down and new Fed-ECB rescue facilities are rumoured to be eminent. Oh and after the markets opened this morning, the NYSE is still broken. Well you know things are bad when a bank run by the Catholic Church goes broke: the Bank of Spain just nationalized Cordoba-based CajaSur. It’s not a big bank (0,6% of banking sector in Spain) but this collapse is reviving fears over the health of Spanish banks à la subprime in the US. CajaSur is …

Tuesday, May 25th, 2010 Tags: Financial Crisis, NYSE, recession, TSE, world economy, world recession
Category: European Debt Crisis, Monetary Policy No Comments

Bailouts! More Bailouts!

Sunday night the EU (read Germany) and the IMF agreed to help Greece with a 3 years $147B loan in return for austerity measures (like bringing Greek % debt/GDP below 3% in 2014 – it is 14% now!).

Tuesday, May 4th, 2010 Tags: Greece bailout, Greek bailout, recession, world economy
Category: European Debt Crisis No Comments