Alpha Econ

Dubai, the Dollar and Equities

see trueeconomics.blogspot... for a link-up between carry trades and dubai

The King Canute Economy: Governments' Futile Attempt to Stem the Tide

You'd think that Governments' biggest problem is the lack of lightning bolts (i.e room for fiscal stimuli). See trueeconomics.blogspot... for evidence on why fiscal stimulus does not work for majority of world economies (small open economies with flexible exchange rates).

The New Normal

Makes sense to me. The only argument against this arbitrage is the risk of a downside to capital gains if you are forced to resell prior to maturity. But the same risk applies to equities. So even assuming risk premium on, say GE equity over bonds goes to zero (an extremely unlikely assumptions that disfavours bonds), you have equivalent capital losses/gains in two asset classes, while positive yield differential on bonds compared to shares. Unless, that is, there is some return to a strongly positive dividend yield curve in any time in the near future...

The Fed Struggles to Lower Mortgage Rates

yeps, pretty much true. Although the Fed is facing double jeopardy when it comes to mortgage rates - lowering the rates, and getting the punters to take up new mortgages (rather than simply refinance existent ones). See here: trueeconomics.blogspot......
Not forgetting that pesky problem of sub-prime lending (with lower rates being an artificial incentive for lending to lower quality households).

Looks Like Irish Banks Are Heading Towards Nationalization

Ireland is teetering on the brink of insolvency, while the government appears to be out to lunch. The idea that a state with astronomical (10-12%) deficit and with bond yields at the level of Greece can afford taking on its entire banking system is a delusion. See here: trueeconomics.blogspot... for what is happening in Ireland Inc's credit ratings backyard. And all along, Fitch and S&P continue to grade Ireland as AAA/A-1+, hat a farce!

We May See Mortgage Rates Fall to 3.5%

Refinancing activity pick might happen once again, but the real $1 trillion question is whether these, already, historically low rates are spurring new mortgages uptake or even refinancing with some equity withdrawals. So far (see: trueeconomics.blogspot...) this has not happened. De-leveraging process for HHs' balance sheets must move deeper and we are not out of the precautionary savings hoarding yet. My view - property will continue falling in value, sales will continue languishing and retail will continue deteriorating until the above two forces play out and consumers will feel that it is safe (not simply cheap) to borrow again.

Ireland vs. European Stability, Redux

Ah, an while we are on the issue of S&P ratings for Greece - if anyone missed last week's ratings update on Ireland, see here:
trueeconomics.blogspot...
same source, different issue, but again pointing to the fact that either ECB will chip in to 'save' Irish Exchequer from itself or it will be IMF's job.

Ireland vs. European Stability, Redux

The story itself might be true, but it is hard to avoid the reality that a likelihood of Ireland having to ask ECB/IMF for funds is rising by day. Here is a really good insight into what the Celtic 'Slump' Tiger might expect to hear from Strauss-Khan's team if Cowen calls for funds:
trueeconomics.blogspot...
In current conditions, there is simply no way of avoiding this outcome...