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Posts Tagged ‘Borrowing Costs’

10 Things Every Economist Should Know About The Gold Standard

If there’s one monetary history topic that tends to get handled especially sloppily by monetary economists, this is it. Sure, the gold standard was hardly perfect & gold bugs themselves sometimes make silly claims about their favorite former monetary standard. But these things don’t excuse the errors many economists commit in their eagerness to find fault with that “barbarous relic.”

Default Wave Looms As Energy Sector Credit Risk Surges To Record High

At 1076bps, credit risk for the energy sector has never been higher. As UBS recently warned, more defaults are looming and private equity is waiting to pick up the heavily discounted pieces. However, what is potentially more worrying is a broader-based default cycle… driven by credit contagion, as UBS explains why commodity defaults could spread.

ECB Will Cut Rates To Minus 3%: JP Morgan

ECB is now close to running out of ammunition. Contrary to its initial design, the OMT programme could no longer be seen as unlimited. Draghi is already playing down Q€’s potential, noting that QE alone will not be sufficient to reignite eurozone growth. It seems the only option for the ECB would be to plunge further into NIRP-dom.

Are Central Banks Creating Deflation?

The unintended consequences of continuing to delve deeper into the new paranormal are making the game ever more dangerous as we now have central banks accidentally creating deflation while simultaneously embedding enormous amounts of risk in fixed income markets by sapping every last vestige of liquidity.

Currency Wars Reignite As Yuan Tumbles Most In 2 Months

Did China just re-enter the currency wars? The Chinese Yuan dropped 0.29% overnight – its biggest drop since September and 2nd biggest devaluation since March – as the currency tumbles back in line with the PBOC’s fixing for the first time in over 3 months. China’s huge corporate debt market also appears to be freezing.

Combination Of Record Debt And Slowing Growth Makes New Global Crisis Imminent

One of the Geneva Report’s main contributions is to document the continued rise of debt at a time when most talk is about how the global economy is deleveraging, reducing the burden of debts. The report documents the continued rapid rise of public sector debt in rich countries and private debt in emerging markets, especially China.

China Launches CNY500 Billion In "Stealth QE"

Will the PBOC’s Short-term Lending Facility (SLF) evolve into China’s version of QE? While investor attention has been fixated on China’s deteriorating PMI reports and fears of a widening credit crisis, China’s central bank is operating behind the scenes to prevent a wide-scale financial panic.

Additional Chinese Stimulus Risks Global Financial Stability: Goldman

The soft July data have once again generated expectations of monetary easing from China. Goldman believes that a combination of sectoral policies aimed at easing financial stress and structural adjustment would be a better policy option. They do not expect broad macro easing or an interest rate cut in what remains of this year.

Why Did China Order Its Smaller Banks To Load Up On Cash?

Smaller banks are the weakest link of China’s financial system because their lack of a stable deposit base would force them to seek more expensive funding and offer more risky loans. They will be hardest hit when borrowing costs are elevated and the economy slows.

Central Banks Will Print Money Until You Go Blind …

The problems that were caused by central bank money creation, low interest rates and too much credit are supposed to be cured by not merely more of the same, but by veritable wagon-loads of more of the same, for as far as the eye can see – This will do a lot except “Work”.

Euro Tumbles After ECB - European Central Bank Hints At QE

The European experiment will require every weapon in the ECB’s arsenal, and sooner or later the ECB, too, will succumb to the same monetary lunacy (QE) that has gripped the rest of the developed world in the ongoing “All In” bet to reflate or bust.

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