Europe on sale

The economic news out of Greece is dreadful, with another quarter of collapse documented that calls into question future bailouts. Frustrated by what is perceived as Greek obstinance, Merkel has threatened to cut off the next tranche of funding leading to renewed fears of a currency collapse. As the chart above shows, the Euro [...]

Europe is broke and so is the ESM

Lots of folks are aware The European Stability Mechanism (ESM) is a bailout mechanism, intended to be funded by the 17 members of the Eurozone. The ESM is being touted as the means to rescue Spain and other heavily indebted European nations. The ESM will initially be funded at 500 B Euro, and from [...]

Where will your money be safe?

Comparison of various safe haven assets, YTD, May 24th 2012

As Europe continues to mire about in crisis, China slows, Japan gets downgraded and the Swiss maintain their controversial Euro / Swiss Franc peg a curious thing is happening; money is flowing into America and the US Dollar and only America and the US [...]

Investing in Germany

YTD 2012 performance of The DAX compared to The S&P 500

I’ve posted about my unease with the recent US equity market advances, so this raises an obvious question – where to invest your money? How about Germany? The chart above shows the 2012 year to date performance of the the DAX compared [...]

A sluggish and indebted economy?

Gross government debt to GDP ratio, US and Eurozone, 2010 to 2016

It is commonly held by economists that high levels of government debt results in sluggish economic growth. The reason why is simple: as overall debt increases so does debt service, money that’s diverted from creating or maintaining a productive infrastructure.

The [...]

About The VIX

VIX and widening divergence between Dow Industrials and Dow Transports

I’ve previously posted about The VIX so won’t go into details here, but we’re starting to see it bounce off lows which is somewhat concerning.

The top chart shows The VIX since 2008, and the index has clearly retreated from it’s 2008 record [...]

Exposure to Greece by non Greek institutions – what’s wrong?

Exposure to Greece by non Greek Banks, top five insitutions, both EBA and banks own regulatory filings

I’ve constructed an interesting dataset, looking at European Banking Authority (EBA) data and comparing it to the bank’s own regulatory filings. Curious, there are substantial differences between the view of regulators when compared to the banks themselves. [...]

Who cares anymore about ratings agencies?

S&P 500 August 2011 to February 2012

On August 5th after the US market closed, ratings agency Standard & Poors downgraded sovereign debt issued by The United States. The next trading day (Monday, August 8th) the S&P 500 stock market index dropped over 6% in response, fair enough. But as illustrated in the chart [...]

2012 – Year of the Dollar?

Dollar Index, 1992 to 2012, weekly

The chart above shows the value of the US Dollar when considered against a basket of America’s six most important trading partners. Clearly, as US debt levels have increased the relative value of the Dollar has retreated from highs last seen in 2001 / 2002.

But given [...]

Sovereign defaults are NOT rare events

200 Year History of Greek Defaults – 1948 to 2008

For the all the angst a possible Greek default raises, I feel obliged to point out that sovereign defaults are NOT rare. The chart above, sourced from This time is different chartbook: Country Histories on Debt, Default and Financial Crises (Reinhart, 2010) shows the [...]