Tag Archives | PIIGS

JUUGS Jun12.png

Eurozone crisis gets worse, not better

Global bond investors have found a new worry. 10 year interest rates in Spain, the world’s 12th largest economy, have risen alarmingly in recent weeks. As the chart shows, they are now above 7% (blue column) compared to 4% when the blog first focused on the Eurozone crisis (red). 7% is a critical level, as […]

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Austerity levels jump

The blog’s Boom/Gloom Index (blue column) reaches its 3rd anniversary this month. It was introduced to help monitor sentiment in financial markets, on the basis that “many markets are clearly being ruled by sentiment”. It has since done a good job in identifying peaks and troughs: • Peaks have been focused on periods when central […]

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C is for Complexity

The blog’s series on the VUCA world today reaches C for Complexity. Interest rates are key to company profitability. They determine rates of return for new investments, and their affordability. They also have a major influence on consumer spending patterns. The debate over their future direction is just one example of current Complexity: • Financial […]

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EU banks cut lending to the PIIGS by 23% of GDP

On 7 September 2008, in its now famous warning that a financial crisis was imminent, the blog noted that “‘Deleveraging’ is an ugly word, and it has ugly implications“. The chart above shows just how ugly these implications are becoming for the PIIGS countries (Portugal, Italy, Ireland, Greece, Spain). It is based on data produced […]

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Spain’s economy in “extreme difficulty”

Some things are too ‘obvious’ for highly-paid professionals in the financial world to accept. If life was this simple, then clients might ask why their fees were so high. Therefore they maintain a fiction that what is obvious is not the full story. Interest rates are a classic example of a simple issue which is […]

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Germany in the firing line as Greek default nears

Interest rates are key to the direction of the global economy. But not in the way that was true during the 1982-2007 economic SuperCycle. Then, there was a global surplus of savings, due to the vast numbers of people in the Wealth Creating 25 – 54 age group. So interest rates reduced dramatically in most […]

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Investors prefer JUUGS to PIIGS

Financial markets have become increasingly nervous in recent weeks, since the blog last reviewed developments in global bond markets. Its conclusion then was that investors are worrying more about return of capital, than return on capital, as we transition to the New Normal. This is because 272 million westerners are now over 55 years old, […]

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More Greek debt passes to the European Central Bank

Stock markets soared after the eurozone meeting this week. But the head of the German central bank warned “The envisaged leverage instruments are similar to those which were among the origins of the crisis, because they temporarily masked the risks.” It is clearly far too early to assume that EU leaders have really decided to […]

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Investors rush to save with the JUUGS

Most of us have now heard of the PIIGS countries (Portugal, Ireland, Italy, Greece, Spain). They are the ones causing the Eurozone debt crisis. Today, the blog introduces the JUUGS (Japan, UK, USA, Germany, Switzerland). These are the major countries that investors now love. If you are worried about return of capital, rather than return […]

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