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  • The Euro Fiasco Suicide Formula (EFSF)

    Alexander Gloy

    There is one simple rule for investors: avoid all things beginning with “Euro-“. Eurotunnel ended in bankruptcy. Eurodisney was a disaster for public shareholders. And so the Euro itself is following the same path. “Euro” birds European politicians are faced with one problem: none of their plans to end Europe’s debt crisis has worked. Absolutely…

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  • Mystery solved: ECB can’t afford the Greek barber shop

    Alexander Gloy

    Whenever you come across a mystery in finance there always is an explanation. Like the question why the ECB would so ferociously resist any “haircuts” on Greek debt. Despite all the evidence that current debt, now expected to peak at levels exceeding most calculators’ capacity, is unsustainable. Why would the ECB, the largest single holder…

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  • Portugal: fiddler paid, music stops

    Alexander Gloy

    While Greece is pretty forthcoming with its apocalyptic fiscal data, the same cannot be said of Portugal. When it comes to inquiring about monthly fiscal deficits you bite on granite. Banco de Portugal has limited quarterly figures. The “Instituto Nacional de Estatistica” has conducted a study about population growth in Angola. It supplies data series…

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  • The Greek (Ministry) Mystery of Finance

    Alexander Gloy

    The Greek January – September budget deficit was EUR 19.16bn versus 16.65bn same period last year (+15%). This only includes the central government. The initial deficit target for 2011 was EUR 17bn. We blew past that after only 8 months. The revised target (July) is now 22bn (9.5% of GDP). Latest estimate from the Greek…

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  • The Fed, ZIRP and the French boomerang

    Alexander Gloy

    Ben Bernanke promised to sit, like an elephant, on short-term interest rates for another two years  – at least. What were US Money Market Funds (MMF) going to do? US Treasury yields are 0.09% for 12 months, 0.02% for 6 and negative 0.01% for 3 months:   Source: Bloomberg 9/23/2011 You can’t deliver negative yields…

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  • Bundesbank ready to pull the Euro’s ripcord

    Alexander Gloy

    Something odd is happening. Germans are leaving the ECB. First Weber, then Stark. Why would senior German officials withdraw from the ECB just at a time when they should seek greater influence? One explanation: to avoid having a conflict of interest once Germany re-instates the Bundesbank as the leading central bank of Europe. Currently, Germany…

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  • How Dr. Ben Copperfield makes trillions disappear – twice

    Alexander Gloy

    Fed Chairman Ben Bernanke is a magician. He can make trillions of debt disappear. Impossible? Let me show you how: Please take a look at the following table[1]. We are only going to look at the total marketable public debt[2]. Broken down into categories by instrument I compared the latest data (July 2011) with the…

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  • What a week

    Alexander Gloy

    Looking at asset class performance during the week August 1-5, 2011: Horrible week for the Dax index, US REITs (Real Estate Investment Trusts) and Emerging Markets. I had wondered why the Dax managed to perform so well despite Euro zone troubles. It is a pretty cyclical index, and usually outperforms the US indices – in…

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  • Road Map to Ruin

    Alexander Gloy

      Budget deficits in “good” times, build-up of government debt Few countries’ (GER, NED) exports lead to trade deficits for others (GR, ESP, POR) Costly bank bail-outs and fiscal “stimulus” Monetary stimulus (0% interest rates); useless Rating agencies finally wake up (downgrades) PIIGS unable to sell more debt as yields rise IMF/EU (read: taxpayers) step…

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  • Greece: Two Bail-outs and a Funeral

    Alexander Gloy

    Here we go again. Another bail-out. [Sigh.] I’ll try to make this as entertaining and easily readable as possible – but first the details of the bail-out agreed on July 21st: Fresh EUR 109bn EFSF/IMF loans until mid-2014 Private sector (read: banks) participation of EUR 37bn EUR 12.6bn from bond repurchases at below par (100%)…

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