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  • Analyze this: The Fed is not printing enough money!

    Alexander Gloy

    Before you trash me in the comments, hear me out. It started off with Ray Dalio’s “beautiful deleveraging”, which inspired this post. Since the financial crisis, the Fed has increased its balance sheet from $900 billion to $2.9 trillion (red line in below chart). The difference is $2 trillion (or 13% of GDP). When the…

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  • The “beautiful” deleveraging

    Alexander Gloy

    Some of my clients like to challenge my (admittedly gloomy) views, forcing me to think – which isn’t such a bad thing to do. It started off with Cam Hui’s “A Dalio explanation of Evans-Pritchard’s dilemma“. After laying down his strategy on winning the game of Monopoly, Dalio goes on to model the economy onto…

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  • You got Bernanked: Three years gone in three weeks

    Alexander Gloy

    US Bond market: Over the last three weeks, 10-year US government bond yields increased from 1.4% to 1.81% (green line below) while 30-year went up from 2.46% to 2.93% (red line in second chart): To put things into perspective: Here are those movements on a longer time scale (together with 5-year yields, blue, and the…

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  • Market risk factors

    Alexander Gloy

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  • All roads lead to a disintegration of the Euro

    Alexander Gloy

    Our investment thesis can be summarized as follows: Equities are worthless when associated debt becomes encumbered (risk capital takes the  first loss). Equity is not an asset; it is merely the remainder that is left over once debt is subtracted from assets. Recent GDP growth was possible only thanks to massive deficit spending and monetary…

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  • David versus Goliath – the SNB against everybody else

    Alexander Gloy

    A picture says more than a hundred words, so I wanted to present in graphical terms what happened at the Swiss National Bank over the last few quarters. Unfortunately, the SNB does not provide foreign currency positions including derivatives on an absolute basis, but here are the unhedged figures:   The SNB increased FX positions…

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  • Mental contortions of a printing machine operator

    Alexander Gloy

    “We never pre-commit” is the standard answer the ECB (European Central Bank) has for anyone asking about future interest rates (journalists regularly waste one of their two permitted questions at ECB press conferences). Why should central bankers not indicate future interest rates decisions? Because market participants will price that information accordingly, so the announcement would…

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  • “Nobody understands debt (but me)”

    Alexander Gloy

    Luckily they are easy to spot: the demagogues, the manipulators and the hired claqueurs. Unfortunately, there is no lack of media willing to provide a platform to perform their insidious game. Take Nobel-prize wielding economist Paul Krugman. In an article for the New York Times (“Nobody understands debt”) from January 1, 2012, he writes: “Through…

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  • The ghost of the Bundesbank haunting the halls of Brussels

    Alexander Gloy

    In his book “More money than God”, Sebastian Mallaby describes how George Soros received a signal from Helmut Schlesinger (president of Bundesbank at that time), to go ahead and speculate on a devaluation of the Italian Lira and the British Pound. Germany had enjoyed a boost from the integration of Eastern Germany, which, partially due…

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  • The (Euro) answer, my friend, is showing in the bond market

    Alexander Gloy

    Politicians and non-elected maquinistas are still trying to figure out how to make the still-borne EFSF (European Financial Stability Facility) walk, or better, fly. A month after the “miracle of Cannes”, the trumpets of victory over the debt crisis have fallen silent. Instead, the first EFSF bond issue after the G20 summit ended up in…

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