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Posts Tagged ‘Interest rates’

Greek Euro exit unlikely

May 12, 2011 1 comment

Greece cannot exit the Euro. Greece does not want to exit the Euro. Greece will not exit the Euro. Just think about what would happen if Greece did.

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Crisis will happen again, it’s human nature

September 9, 2009 Leave a comment

It is human nature that will make sure another crisis will happen again, according to Mr Alan Greenspan, the former head of Federal Reserve, in a recent interview with BBC. I couldn’t agree more. However, I think we differ on what part of human nature will be more responsible for the crisis.
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The case against Bernanke

Reappointing Mr Ben Bernanke as head of the Fed is a mistake, as Stephen Roach correctly concludes in today’s FT. It seems though that Mr Roach is missing the point on Bernanke’s current action.

Mr Bernanke has been no better than Mr Alan Greenspan in understanding the driving forces for this, or any previous recessions and bubbles, and Bernanke is a student of the Great Depression, so he should know. A big driver has always been central bank actions, mostly the creation of cheap money – through low interest rates or as now through what they call quantitative easing. Printing money to you and me!
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It’s the debt – stupid!

Some stats from the Swedish experience in early 90s. Bad loans 12% of GDP. Total loan losses 10%. GDP contraction 6% over 3 years. House prise fall 20%. Depreciation of SEK 30%. Unemployment in double digits. Stocksmarket halved. Consumer debt to GDP 40%.
Looks roughly like what we’re experiencing right now, with a couple of very important differences. 1) The crisis now is global, back then it was regional. Sweden could devalue and export itself out of a recession. 2) Consumer debt to GDP is now well above 100% in for example US & UK. Read more…

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