The Economic Fujiwara
November 22, 2010The dollar is up against the euro. No, the dollar is down against the euro. Now it’s up again. Until it goes down. Meteorologists have a term, the “Fujiwara effect,” to describe the interaction of two storms in close proximity. In the Northern hemisphere, wind blows counterclockwise around centers of low pressure. When two lows “dance the Fujiwara,” as some scientists put it, the winds of each storm influence the …
Restoring Confidence In Europe’s Banks
June 25, 2010The financial crisis that gripped the world in late 2008 was, most of all, a crisis of confidence. What we knew about the condition of America’s biggest financial institutions was bad enough, but what we didn’t know was terrifying. This is why the “stress tests” that financial regulators publicly performed on 19 of the country’s largest financial firms last year were so helpful. In some cases the news was good, …
How Low Interest Rates Sap Economic Growth
June 14, 2010Conventional wisdom tells us we need record-low interest rates to help the global economy recover from the Great Recession and bring about a more prosperous future. Let me respectfully point out that, in this country, we have had low interest rates — ranging from pretty low to astonishingly, jaw-droppingly low — for the past 15 years, and we have arrived at a future that is not what we were aiming …
The Dog That Did Not Bark
May 20, 2010Something pretty significant did not happen yesterday, and because it did not happen, not many people paid attention to it. But it is pretty significant nonetheless. Greece did not default on a public debt of €8 billion that came due yesterday. It had the cash to pay its creditors on time, courtesy of the massive rescue package that its fellow members of the euro zone made available earlier this month. …
Sensible Measures In Europe
May 10, 2010European leaders, with some outside help, have finally moved decisively to deal with the debt crisis that was rapidly spreading from Greece to the rest of the world. The measures announced last night make sense and should restore calm to global financial markets — for now, at least. The extraordinary steps agreed to by the 16 nations that use the euro are reminiscent of the emergency measures that the U.S. …
Kicking The Umpire Out Of The Game
March 15, 2010When Greece raised 5 billion euros (nearly $7 billion) in the bond market earlier this month, it had to offer investors an interest rate of 6.25 percent — nearly double what fellow European Union member Germany pays to borrow money. The difference is that the Greek government’s finances are, as we noted here months ago, a train wreck, while Germany is still a good credit risk. The perilous state of …
Finance Oracles See Trouble Ahead For Greece
December 23, 2009
(Photo ©iStockphoto.com/mbbirdy) When most people think of Greece, they imagine warm ocean breezes and tranquil seaside fishing towns. But these days, when European leaders talk about Greece, the mood is anything but calm. After years of imbalanced budgets, government corruption and widespread tax evasion, Greece is now on the brink of a full-on financial crisis. The country’s debt totals 110 percent of gross domestic product. This year’s deficit is expected …
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