Claus Vistesen

The Global Debt Hangover

Hi Guys,

Thanks for the comments.

@Thomas;

Right, but then again this is not all about "Say's Law" I think since government bonds seem to be supported not only from QE but also from "mandated" deleveraging and de-risking of financials' balance sheets. At least, this is the "word on the street" and it will be an important factor. Also regulatory changes may mean that financials need to stoke up on government debt (of which there is plenty) in order to bolster their capital base with "non-risk".

Now, I still among the deflationists so I don't think yields will go up on an overall basis to reflect inflation expectations (or an even stronger expectation of a recovery). However, we may see some quite interesting discrimination between sovereigns and in fact; given the turmoil in Greece, Spain etc the next big jolt to the financial system may exactly be driven by a sharp rise in yields on some of the more risky sovereigns. I mean, a lot of people think that the Bund yield will come down to reflect the ongoing mess in the Eurozone. Fine with me, but what about intra-Eurozone divergence?

Claus

Is Germany Dependent on Exports to Grow?

Here is the link to Edward's analysis;

globaleconomydoesmatte...

Japanese Housewives: Back in the Game?

Hi Dybydx,

Definitely ... this gambling not investing, but I still think there is an undercurrent here since in an environment where investors expect volatility to be low and risky assets to fly, the carry trade is almost a no brainer. Of course, at this particular point in time, Miss Watanabe may have stepped up just as the green shoots are ebbing out.

Claus

Communication at the ECB: Lost at Sea?

"tell me more of the "principle of falsification." this interests me"

Well, this is how it goes ... (in my opinion). I am arguing that some economies will be perpetually stuck in deflation on the back of this which means that global monetary policy won't go back to "normal". These economies would be (in the first instance);

Japan
Spain
Key economies in Eastern Europe
(possibly) Germany

Basically, I think that we may be fighting (the prospect of) deflation for much longer than we are currently willing to admit and that more countries will now be dependent on exports to achieve growth. This can easily be falsified I think since if we get domestically induced inflation in the economies above (i.e. demand pull inflation) and strong domestic demand growth I will be wrong. Of course, headline inflation will live a life of its own and stagflation is not off the table yet.

Claus

Japan: Recession All but Certain

oops ...

copy/edit; "will not BE punished (...)"

Japan: Recession All but Certain

I sure hope so Kunst ... of course, if my readers are not willing to reciprocate I can only hope that my crime will not punished too severly.

Claus

Yen Cross Basics

Nice bout of currency wonkery here, Joseph. I will need more than a few minutes to digest what the points might mean for my funny money p/l :).

Just a minor copy/edit note ... the ECB is running 4.25% and not 5.25%. I know; we are in the region of pedantry here but I still thought that I would point it out. I guess it would also affect the 4.75 yield advantage the Euro has over the Yen (i.e. it is 3.75% no?).

In any case ... a neat piece about the inner workings of the FX trading universe.

Can one of the nice SA editors please edit these small numbers?

Claus