Seeking Alpha

Asbytec

Asbytec
Send Message
View as an RSS Feed
View Asbytec's Comments BY TICKER:
Latest  |  Highest rated
  • Europe's Disastrous Summit [View article]
    Charlie, great string of comments in the last few days. Thanks.
    Dec 9, 2011. 08:32 AM | 2 Likes Like |Link to Comment
  • ECB Keeps Punters Guessing [View article]
    LOL, I love the scale of your first graph. For effect no doubt. :)

    "For sure, the ECB must realize that," Chuck Norris will punch you in the face if you do not step back over the line in the sand.

    "And the tragedy is, are profligate member countries really the whole, or even the most important reason for the eurozone mess?" About as much as mercantilist Germany did not reciprocate trade.
    Dec 9, 2011. 08:19 AM | Likes Like |Link to Comment
  • Competitive Currency Devaluation (Part 1): The Feeding Frenzy [View article]
    Yes, great article. Welcome to the period of "great moderation." Well, maybe the end of it, now. But this period not only saw growth in sovereign debt, but private debt as well as a huge build up in financial assets. The end of the great moderation is the huge deflationary threat. It can't end well.
    Dec 9, 2011. 08:11 AM | Likes Like |Link to Comment
  • EU Council Statement: No Bazooka [View article]
    I dunno, any ideas?
    Dec 9, 2011. 07:58 AM | Likes Like |Link to Comment
  • The ECB's Endgame Means A Weaker Euro [View article]
    It does sound like the same old rhetoric we've all been hearing for several years being discussed with renewed, do or die emphasis.

    The "punish the prolific" (misplaced blame on the euro problem) is a deal I'd walk out on, I suspect a few nations will. The UK, expressing it's desire for sovereignty, already has. A Spanish politician expressed the same view on the BBC.

    The euro traded lower at inception, but grew as confidence grew. It was a great investment as long as private and public debt was viable, as economies grew, and debt was made whole. This is no longer the case, the financial crisis brought about a very fundamental change in the EZ.

    The euro must adapt to survive, the ECB must begin backstopping debt...even in the secondary markets with insolvent banks, if necessary. I suspect the ECB will be forced to break out the Men in Black's "Noisy Cricket."
    Dec 9, 2011. 07:57 AM | Likes Like |Link to Comment
  • EU Council Statement: No Bazooka [View article]
    Why don't the EU members come up with a plan to force mercantilist Germany to reciprocate trade injecting trade revenue into the beleaguered, net importing periphery? Instead, signing onto Merkel's "punish the prolific" plan, really misplaced blame, you do have to wonder who would stick their nation's neck into the fiscal and sovereignty guillotine.

    Yes, Merkel will destroy trade and consumption and drag the world into recession, at least, and possibly the EU into depression. Many of the BRICs are already easing back on monetary policy and the UK just said no thanks.

    It does sound like the same old rhetoric we've all been hearing for several years being discussed with renewed, do or die emphasis.
    Dec 9, 2011. 07:38 AM | 1 Like Like |Link to Comment
  • Europe's Disastrous Summit [View article]
    "Angela Merkel is insisting on a fully-fledged treaty change..."

    My understanding is there will be no treaty change with regard to the EU, but rather a pact of 17 EZ members with voluntary buy-in from EU members. The pact will take the form of Merkel's "punish the prolific" policies. Again, with funding problems for EZ sovereign debt due to inadequate bazooka (200bn euros lent to the IMF, the woefully inadequate EFSF, and the not yet ready for prime time ESM) we're left with results no better than the end of the Brussels summit.

    Further, inflicting discipline is fine, but driving peripheral "prolific" spenders into depression exacerbates the debt problem. Depressed nations might find funding difficult to come by to expand exports or expand domestic consumption and imports. This is a drag on the entire EZ and the globe. I believe Merkel is driving the EU into the abyss and will drag the global economy with it. If there was ever a reason not to invest in the euro, this is it. There will be little revenue to repay debt.

    As for signing onto Merkel's "punish the prolific" plan, its really misplaced blame, you do have to wonder who would want to stick their nation's neck on the fiscal and sovereignty guillotine. Given the democratic option, that sounds like a deal to walk away from for the sake of a bank note. Instead, an additional nation, Croatia (I believe), is signing it's own death warrant? But indications seem to suggest the strong European will is succeeding.

    Why don't the EU members come up with a plan to force mercantilist Germany to reciprocate trade injecting trade revenue into the beleaguered, net importing periphery? Instead, they are "punished" for structural flaws and not entirely their "prolific" fault. It's a deal I would walk away from.
    Dec 9, 2011. 07:22 AM | Likes Like |Link to Comment
  • Eurozone Crisis: We Are Skeptical Against Simple Solutions [View article]
    Yes, Derryl's views are clear, I have a healthy respect for them.

    "...dealers who initially purchased those Treasuries were holding them for as little as 2 weeks before selling them..." I guess the point is, there was a viable auction, usually with a high bid to cover, to get those bonds into the secondary market. The end result is to increase reserves in the primary dealer's balance sheet, the Treasury loan is spent into the economy, and the government (Fed) buys back it's own Treasury debt.

    The PD can write a check on itself when they are sure the Fed will buy the bond which is offering a meager (negative) yield in exchange for reserves (a one day t-bill, in effect) also offering a meager yield. QE is still an asset swap, a longer term asset for a shorter term asset and a level of indifference is achieved in terms of risk premium and inflation expectations.

    One can imagine European banks doing much the same if they were sure the ECB would take those bonds off their hands. Trouble is, one cannot be sure the SMP will "monetize" sovereign debt putting banks and investors at risk of default. Of course, the euro is designed to be funded in and offer returns to the private sector.

    So, there is a funding problem in the EU without ECB intervention. Therefore, it is not always clear a sovereign auction will succeed. The EZ governments can run out of money.
    Dec 9, 2011. 06:49 AM | Likes Like |Link to Comment
  • Just One Day Left To Save The Euro [View article]
    I wonder how many will bail on the sovereignty issue and the punishment inflicted on the remaining democracies. Sarkozi's arm look a bit disjointed, probably from all the twisting. Spain my just walk away from the whole deal if the sentiment of one politician on BBC is prevalent. Of course, Finland and the UK have their demands. Then the plethora of ideas put out before the summit seems to indicate many have a separate agenda than the mainstream "punish the prolific" policy. The ECB might grow a pair and save the currency. Who knows. I'm tired of pacing the halls.
    Dec 8, 2011. 01:36 PM | 1 Like Like |Link to Comment
  • Eurozone Crisis: We Are Skeptical Against Simple Solutions [View article]
    SU, whatever the case, your flurry of threads (fired from a bazooka, apparently) are very consistent with MMT. This is one reason they appeal to me, they make sense.
    Dec 8, 2011. 01:28 PM | Likes Like |Link to Comment
  • IMF Rumors Will Prove To Be True, But The Euro Will Still Be History [View article]
    Mr Crouch, it appears you called the sell event with expected ECB easing and other measures to lend to banks more freely. My guess is, after listening to Merkel speak the the EU members about the course of the problem, she is trying to get everyone to come together (on her terms, of course) to inflict more punishment. Her forceful demeanor might win over a few, but it's just gonna get ugly.
    Dec 8, 2011. 01:22 PM | Likes Like |Link to Comment
  • Europe Has Reached The Point Of No Return [View article]
    Dave, "It is fiscal policy and the Euro, not profligacy, at the heart of the problem" I could not agree more. That's why this whole policy of "punish the prolific" grates me in a big way. It's structural and "fixing" the problem through depression and punishment is not the answer.

    Dominic, "...but my heart goes out to millions of citizens who have lost or will lose so much." As does mine, especially after watching a Spanish politician and the Italian woman nearly break out into tears saying as much. Those images bring home the reality of Merkel's policy of "punishment." Caught a quote from an EC member berating her for her treatment of fellow Europeans.

    The euro was a great currency when public and private debt supported it. After the financial crash, that debt cycle has come to a screeching halt. This is why not many are rushing to lend to Europe and why the ECB must come to the rescue.
    Dec 8, 2011. 01:18 PM | Likes Like |Link to Comment
  • Europe Has Reached The Point Of No Return [View article]
    I envisioned a political cartoon with Merkel slipping into an abyss with a distressed look and outstretched arms. Draghi is standing on the edge pulling a cord trying to crank up his rusty, sputtering printing press as Merkel screams, "Print! For God's sake, Priiiiiinnnnntt!"
    Dec 8, 2011. 10:21 AM | 6 Likes Like |Link to Comment
  • Eurozone Crisis: We Are Skeptical Against Simple Solutions [View article]
    Many, exactly. Further, following the money is a bit complicated, but even though bond funds are transferred into the Treasury's checking account the bond (nor the debt) does not disappear. It can be paid at any time without increasing the deficit. Payment is a simple matter of transferring reserves in the central bank, much like any bank will redeem a certificate of deposit at interest..

    Similarly, as tax money makes it's way into tax and loan accounts to the federal reserve, tax revenue exits the money supply and is destroyed in the process. The "digits" are accounted for by reducing the deficit and reside in the Treasury's account outside the money supply. They become new money the second the central bank credits a bank account.

    It's all smoke and mirrors, an accounting entry, designed to conform to the government budget constraints. After all, Nixon removed the peg to gold, but no one changed the laws governing spending. But, it certainly looks like debt spending.
    Dec 8, 2011. 09:16 AM | Likes Like |Link to Comment
  • Eurozone Crisis: We Are Skeptical Against Simple Solutions [View article]
    SU, it's my understanding Treasury debt has no offsetting liability, it's spending, of course, is approved by congress. This is what a net financial asset that does not net to zero means. The Fed has offsetting liabilities and cannot create anything new.
    Dec 8, 2011. 09:00 AM | Likes Like |Link to Comment
COMMENTS STATS
6,081 Comments
4,218 Likes