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Are we liquidity trapped ?
A liquidity trap is a situation when people are hoarding cash, this out of various reasons. A standard definition would say because people are expecting an adverse event, such as deflation, insufficient aggregate demand or war. The classic debate between Keynesians and Austrians focus on the "why", not the fact that cash hoarding ...
Travel Log : Magyar Crossroads
I have just returned from a short stay in Budapest. A magnificent town, reflecting its majestic history in architecture, impressive museums, 19th century open air bathing houses (Széchenyi !!) and probably the world's most beautiful library reading room (4th floor of Ervin Szabo Library !!). So we start with the good news and some ...
The risk free carry, part II : Money for nothing and the bonds for free ?
Earlier this week, we mentioned the rally on high yield European short term government bonds in anticipation of Wednesday's ECB LTRO auctioning (Long Term Refinancing Operation). Markets had expected something in the range of 300-400 bio EUR. The final result was 489 bio EUR spread over 523 bidders, on average almost 1 bio EUR per ...
Solely I owe the Flemish taxpayer 100%
After issuing a public tender, the Flemish government has apparently made a decision on their new preferred home banker. ING came out as the winner. And already a lot of fuzz going on that it's a shame a non-Belgian, or non Flemish banker for that matter, has been elected. Dexia has announced it will take the decision into ...
Big, Big Lobbying
Today Pacal Paepen - director capital markets of London city based Daiwa and known from radio 1 coverage on financial markets - explained in a free tribune why David Cameron acted cavalier seul last Friday at the EU summit. And why there is still such a huge difference between Britannia on the one hand and "Europe" or "the old ...
EEE : Crisis update & Echoes from Brussels
At the Econopolis Economic Encounters on 28/11, we had the pleasure to have Nouriel Roubini - Dr Doom & Gloom - and Ivan Van De Cloot, Chief Economist of Thinktank Itinera. Both were asked to pinpoint the state of play of the current financial crisis, their short & long term expectations and recommendations on the way forward. Dr ...
So markets are burying JM Keynes....
...which is sad because we only have ourselves to blame ! And I honestly mean that in every sense of the word : sad and totally misplaced political self-pitty. Keynes is to Economics what Nietzsche has been to philosophy : basically a tragic personality and most of all wildly abused. And with an ironic side-kicker as the icing on ...
2011-2030: in a nutshell
Simon Hunt, a consultant on the global economy and specialist on China, revealed his outspoken view on the world economy between now and 2030. His distinguishes two periods: the crisis years 2011-2018 and the new real era starting in 2018. We give you a brief summary and his conclusions for the next years.
Guest Post : Bonussen, beter, best?
De laatste maanden betoogden misnoegden in Brussel, Antwerpen, Leuven en Oostende tegen de inhaligheid van de banken. Het “Occupy Wall Street” protest startte deze zomer in New York en vertakt zich nu wereldwijd. Bonussen, zoals de 600,000€ voor de Dexia- CEO Pierre Mariani in 2010, liggen zwaar onder vuur. Zijn bonussen altijd te ...
Ouverture 1812 without rour of guns - silent drums
It seems we have a week of urgent wake-up calls. Italy, the no3 of Europe, placed under supervision by the IMF. And Berlusconi forced to quit because Mr Market is losing its patience in view of 10 year yields now dangerously approaching the tipping point of 7%. He won't leave like that, opposition needs to vote "yes" on austerity, ...
"And the Final Jeopardy category is...Big Numbers"
480,000,000,000 or slightly more or less, doesn't make such a difference, does it. Ancient BEF that is. Or in today's lexicon AKA around EUR 12 billion (12,000,000,000). And that's a mighty big number, certainly in a Belgian framework. I even think that if you take the Global Plan of Dehaene-Van Rompuy I under consideration and ...
Guest Post : Black Box Revelations
Vliegtuigcrash versus beurscrashAls luchtvaart en financiën een zaak gemeen hebben dan is het dat ze niet houden van een crash. Maar terwijl de luchtvaart methodes heeft ontwikkeld om de veiligheid steeds te verhogen, lijkt de financiële wereld van de ene crash in de andere te sukkelen. Welke lessen kunnen we leren van de ...
"Soap ! Let's play the weakest link !"
"These are the Campbell's, and these are the Tate's. And this is SOAP". It seems that today we have a repetition of this hilarious 70ies sequel. But it doesn't feature young Billy Chrystal this time, no, we have Nicolas and the Italian gang as ersatz. And Stavros now putting the icing on the cake.Yesterday, Foreign Minister ...
Morton's Fork - Crisis intermezzo
I like bridge, the Rolls Royce of all card games, basta cosi ! I like it because of its honesty and with luck not really being a determinant factor involved. I like it because of the combination of skill & teamwork and the fact it hosts beautiful names in its conventions and play style-figures : Stayman, Niemeyer, precision clubs, ...
Entering the post 26/10 era
Yesterday's marathon meeting delivered some of the goodies, in some cases even surprisingly better than expected, in other respect still vague. And we have postponed once again some important decisions, both on the practical implementation of announcements (SPVs to fund the leveraged vehicle, quid), not a convincing attitude coming ...
House of cards
"We will deal with that problem once the problem comes to the fore". On the other hand, "gouverner, c'est prévoir". And apparently, this is where politics - be it domestically or on the exterior front - usually looses touch with reality. And unfortunately when it comes to big banks & big (tax payers) money, the collateral damage is ...
Frank Knight
If you don’t get pocket aces in your hand, the next best thing is pocket kings. After all, having the second best pair in the game before the flop is dealt almost guarantees you of having the best hand. Of course, there’s just one little problem…..pocket aces trump pocket kings over 80% of the ...
Solidarity & Radio Silence
Solidarity is a buzz word these days : solidarity of taxpayers with national or international problems, interbank solidarity (or more the lack of it) and international solidarity amongst central bankers in terms of exchange rate coordination and more recently bail-out initiatives. Last week we had another strong example with the ...
Geert Noels denkt niet dat het nog wordt zoals vroeger
Dit artikel is een gedeelte van het interview dat op zaterdag 3 september 2011 in DS Weekblad verscheen, het magazine dat elk weekeinde bij de krant De Standaard zit. Daarin gaat het falen van het traditionele bancaire systeem, de crisis van 2008 die zich vandaag herhaalt, de reden van de opstart van Econopolis, en de ...
August 2007, 4 years later on
On August 9 2007, the ECB pumped a record 95 bio eur of liquidity into the money market in an effort to unfreeze the desperate conditions of interbank lending. It was a first and serious sign that a crisis was looming. We are now 4 years later on, and the main question remains : could it happen again ?In view of all the focus ...
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