Tag: Europe

  • LOTS OF FROTH, by François Leclerc

    Guest post. Translated from the French by Tim Gupwell

    A brand new development in the history of the ECB has occurred: leaks yesterday revealed the broad outlines of its new sovereign debt securities’ purchase programme. One cannot help thinking that it was necessary to prepare the ground in advance, with the ECB decisions falling well short of some of the mounting speculation.

    According to Mario Draghi, there will be no limit to the amount of bond purchases on the secondary market – but the scope of the announcement needs to be put into perspective. They will in fact be decided … Read the rest

  • BEHIND THE SCENES, by François Leclerc

    Guest post. Translated from the French by Tim Gupwell

    There are some sinister goings-on behind the scenes of the European financial system, which are hardly being proclaimed from the rooftops! Even Mario Draghi himself is preoccupied by it, drawing attention to vague manifestations of “fragmentation” which are developing at the heart of the Eurozone. What was he alluding to?

    It is occurring in three stages: an ongoing capital flight from countries on the verge of the abyss, leading to their banks becoming increasingly dependent on ECB loans, with the liquidities then supplied by the latter being used to buy state-issued … Read the rest

  • THE ONLY REMAINING MEANS OF SAVING THE EURO

    Translated from the French by Tim Gupwell

    In my articles here, I generally address myself to anyone who wants to read me, but just this once, I would like to direct my address to my fellow financial engineers, and moreover in a tone – also just this once – of provocation which is blatant but, let us hope, efficient as well.

    Here we go: a monetary zone has to be able to default in its entirety and restructure its debt (namely, to be able to say, “I can only pay back X centimes for every Euro I have borrowed”) and … Read the rest

  • FIRST IT WAS THE AGENCIES, NOW ITS THE FORECASTERS’ FAULT, by François Leclerc

    Guest post. Translated from the French by Tim Gupwell

    “I can’t see any time soon when…the pressure will be off” replied David Cameron, the British Prime-Minister, in an interview with The Daily Telegraph. He continued, “this is a period for all countries, not just in Europe but I think you will see it in America too, where we have to deal with our deficits and we have to have sustainable debts”. In conclusion, his austerity policies are likely to continue beyond 2020, as the situation is “a lot tougher than the forecasters were expecting”. Georges Osborne, the Chancellor of … Read the rest

  • GUILTY PARTIES WANTED !, by François Leclerc

    Guest post. Translated from the French by Tim Gupwell

    In accordance with the predictable script, the bond market is under pressure again. The cost of servicing Spanish and Italian debt has continued to increase as their financing plans move forward in little measured steps. The effect of all this is to place an additional burden on the budgets, undermining those measures which are intended to reduce the deficits.

    The statistical institutes INSEE (France), IFO (Germany) and ISTAT (Italy) all agree: Europe is sinking into a recession which they describe as ‘technical” in an attempt to make it sound innocuous, but … Read the rest

  • THE WINDOWS MUST REMAIN CLOSED, by François Leclerc

    Guest post. Translated from the French by Tim Gupwell

    By rejecting the quartet’s plan, (which has, moreover, already been watered-down) before the summit has even been held, the German deputy foreign affairs minister, Michael Link has placed himself in the avant-garde of all those opposing any attempt at a compromise. The “iron chancellor’s” hard-line approach has not changed: political union first, but not yet, and possibly the rest after that. There is a risk that the only thing left of the elaborate construction, already proposed only in its broadest outlines (even for that of the banking union component) is the … Read the rest

  • DO YOU KNOW WHAT SCHMILBLICK IS ?, by François Leclerc

    Guest post. Translated from the French by Tim Gupwell

    We recently touched on the quartet engaged in drawing up a composite motion, in order to faire avancer le schmilblick (= to move the schmilblick forward, or in other words to make a limited contribution to solve a complex problem). Before describing their efforts it may be helpful to recall the definition (*) given to it by its creator, Pierre Dac.

    Mario Draghi, Jean-Claude Juncker, Herman Van Rompuy and José Manuel Barroso (in no particular order) may not be aware of the schmilblick. Nonetheless, this has not stopped them from searching … Read the rest

  • AFTER THE WORDS, THE MAGIC FORMULA…, by François Leclerc

    Guest post. Translated from the French by Tim Gupwell

    What can you say when you are in total disagreement? You can always assert, with one voice, the need for a union! This is this perspective that the quartet composed of José Manuel Barroso, Mario Draghi, Jean-Claude Juncker and Herman Van Rompuy (in alphabetical order) continues to work on.

    A new magic word has been discovered and is going to be proclaimed with all its variations, to push for the implementation of four unions: banking, fiscal, economic and political. With the fiscal union already in the pipeline, the next stage which … Read the rest

  • A BIG BANG, OR NOTHING , by François Leclerc

    Guest post. Translated from the French by Tim Gupwell

    With the G20 meeting being held in Mexico at the start of the week, our perspective will find itself altered, falsely accustomed as we are to only seeing the debt crisis from a European angle. On the 18th and 19th June, the greats of this world are going to gather in Los Cabos, a tourist resort in Southern Lower California, under the double auspices of debt and global recovery.

    To avoid standing idly by whilst confronted by a disaster of its own making, the British Government has just announced a plan … Read the rest

  • THE RAMIFICATIONS OF THE SPANISH BANKING BAIL-OUT, by François Leclerc

    Guest post. Translated from the French by Tim Gupwell.

    Some important details are still lacking with regard to the Spanish banking bailout plan: its final amount, which is going to depend on the results of the audit commissioned by the government; its rate, which we will be coming back to; and the stabilizing measures for the banks which will be associated with it. These will include massive lay-offs in the banking sector and will further worsen the unemployment situation.

    One other aspect has, however, not been highlighted enough. The funds will have to be paid out – at least initially … Read the rest

  • DIFFERING DELUSIONS, by François Leclerc

    Guest post. Translated from the French by Tim Gupwell.

    Worried by the sight of the Europeans entrenched in their respective positions, Barack Obama reached for his telephone. The day after the G7 videoconference between the Finance ministers and the central bankers, of which nothing came, he successively called David Cameron, Angela Merkel and Mario Monti. With this latter, the strengthening of the discussions centered on the Euro zone and growth. With David Cameron, who is going to meet Angela Merkel in Berlin, it was about the need for an “immediate plan”. Of the conversation with Angela Merkel no details have … Read the rest

  • THE TOWERING MOUNTAIN, SWAYING FROM SIDE TO SIDE, by François Leclerc

    Guest post. Translated from the French by Tim Gupwell.

    “There is a first assessment, then a second, a third, a fourth…..It’s the worst possible way of doing things because everybody ends up doing the right thing but at the highest possible cost and price”. Who was it speaking so harshly yesterday of banking losses and of the policies of the European leaders? Answer: The ECB president, Mario Draghi, in the course of a hearing before the European parliament.

    With his colleagues from the governing council, he drove home this same point, supporting the creation of the “European banking union” proposed … Read the rest