Just another case of the heebie-GGBies?

In this guest post, Gabriel Sterne, head of global macro research, Oxford Economics, looks at previous large drawdowns in Greek bond prices for clues about the future.

Greek Prime Minister George Papandreou “asked our partners to contribute decisively in order to give Greece a safe harbour” five years ago this week.

Since then, Greek government bond (GGB) prices have plunged by 37 per cent — or more! — four separate times, with one amazing long rally in between: Read more

Guest post: The Euro and the IMF Now

Here’s former IMF staffer Peter Doyle , with some bold advice from the wings of the IMF Spring meetings…

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Guest post: IMF Spring hubbub

Thousands of officials, journalists, academics and market professionals will soon be in Washington DC for the spring meetings of the International Monetary Fund and World Bank, from April 17 to 19. Former IMF staffer Peter Doyle advises attendees on what to really ask the IMF.


Another spring, another IMF Spring Meeting, another set of IMF platitudes—a two-, three- (or is it four?)-speed, variably geometric, or airline metaphoric world economy, making progress, more to do, notably for the poor, sundry complacencies and risks to beware. Even Occupy has been put to sleep by these rituals.

But much goes on behind this veil of blur. Here are five steps to get to what matters. Read more

IMF abdication on Greece

This guest post is from Peter Doyle, an economist and former IMF staffer


In an otherwise sound critique of Mr. Varoufakis’ list of proposals for Greek government policies last week, Mme. Lagarde’s letter to Mr. Dijsselbloem contains an additional, unremarked, but revealing element. After saying that, in the IMF’s view, the Greek list was sufficiently comprehensive to be a valid starting point for a successful conclusion of the review, she added:

… but a determination in this regard should of course rest primarily on an assessment by Member States themselves and by the relevant European institutions.

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Guest post: Inequality, confidence and perception

Peter Atwater, president of Financial Insyghts, sent FT Alphaville the following comments in response to our post on US inequality last week. We pass them along as a guest post.

As someone who spends his day studying decision making and how changes in our level of confidence alter our preferences, decisions and actions, I find the whole debate over the accuracy of the economic data related to income and wealth inequality very amusing. Once again, our economic brethren (and their related pundits) are missing the forest for the trees. Read more

The unwitting euro enforcer…

Peter Doyle, an economist and former IMF staffer, argues that for Greece continued emergency lending assistance is a necessity.

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Sovereign debt reprofiling: Ukraine’s lesson for the IMF

This week’s $40bn IMF programme announced for Ukraine will include some restructuring of its debt. Gabriel Sterne, head of global macro research at Oxford Economics, points out that it comes at an interesting time for the fund’s policy on restructuring.


The IMF’s proposals to change its policy on sovereign debt reprofiling have divided opinion, with FT Alphaville providing a debating platform between supporters (for example here and here) and sceptics including myself (for example here and here).

The proposals are motivated by the objective of providing a fund programme breathing space to work when it is unclear if debt is unsustainable. Read more

Michael Pettis and perverse monetary policy

A guest post by Simon Cox, Asia-Pacific Investment Strategist, BNY Mellon Investment Management

China’s weak inflation numbers, updated on February 10, underscore why the People’s Bank of China (PBOC) is now easing policy wholesale, after a long sequence of targeted tweaks. (It cut reserve requirements on February 5 less than three months after cutting benchmark interest rates in November.) But does monetary easing work in China the way it works elsewhere? Does it, indeed, work at all? Read more

Guest post: Deadly euro dances

A standoff continues between Greece and its creditors. Peter Doyle, an economist and former IMF staffer, argues that much more is at stake in the eurozone.

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Are we numb to silly valuations again?

This guest post is from Shane Leonard, CFA, CEO and co-founder of Stockflare, a financial data company. Previously he worked as a stockbroker at Citigroup and Credit Suisse.

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Eichengreen: Cassandras and currency wars

A guest post from Barry Eichengreen, a professor of economics and political science at the University of California, Berkeley and author, most recently, of Hall of Mirrors: The Great Depression, the Great Recession, and the Uses — and Misuses — of History.

Economic analysis, it seems, is the art of recycling old ideas under new names. So it is with the debate over currency wars, which parallels exactly the 1930s debate over competitive currency devaluation. David Woo, meet Ragnar Nurkse.

Nurkse, in his 1944 classic, International Currency Experience, argued that reflationary policies following the collapse of the 1920s-era gold standard operated by depreciating the exchange rate. Countries that pushed down their exchange rates had the greatest success at preventing further falls in prices and output, insofar as they substituted external demand, in the form of additional net exports, for deficient demand at home.

But the policy was beggar thy neighbour. Read more

Are Emerging Markets Ready for the Housing Earthquake?

FT Alphaville presents this guest post by Alessandro Rebucci of Johns Hopkins University Carey Business School, based on a BoE working paper that he recently co-authored.

In some parts of the emerging world, housing markets have grown well ahead of income in recent years. US interest rates are about to rise, and international capital will revert to the center, seeking higher and safer yields. This will bring about an earthquake in housing markets at the periphery of the global financial system. Read more

Bank of Canada rate cut necessary as pre-emptive strike

In this guest post, Alex Bellefleur, global macro strategist at Pavilion Global Markets, writes that the Bank of Canada was prudent to loosen monetary policy in response to the decline in oil prices.

Last week the Bank of Canada (BOC) surprised markets by cutting interest rates 25 basis points, leaving them at 0.75%. While some argue this move was unnecessary, we are of the view that the cut is needed as a pre-emptive manoeuvre to counter private sector deleveraging. Read more

The Bank of Canada’s Rate Cutting Folly

The Canadian central bank surprised markets this week by cutting its base rate by 25 basis points. Jon Hartley, co-founder of Real Time Macroeconomics, argues that the Canadian central bank’s decision to cut interest rates will exacerbate the Canadian housing bubble and wasn’t needed to offset the fall in the oil price.

Early this week, the Bank of Canada unexpectedly announced a change in its key benchmark interest rate for the first time in four years. However, rather than raising its benchmark interest rate as Fed has said it intends to do later this year, Canada’s central bank has lowered its overnight interest rate by 25 basis points to 0.75%. Read more

US shale revolution must force Davos energy rethink

This guest post is from the co-authors of UBS’s white paper for the WEF meeting 2015 in Davos, which started on Wednesday.

Note that one of the co-authors, UBS Investment Bank’s chief economist Larry Hatheway, will be fielding questions on the energy chapter on Friday at 11:30am during Markets Live. Read more

Davos must face up to life after ZIRP

This guest post is from the co-authors of UBS’s white paper for the WEF meeting in Davos, which started on Wednesday.

Note that one of the co-authors, UBS Global Asset Management’s head of asset allocation & currency Andreas Koester, will be fielding questions on the financial policy chapter on Thursday at 11am during Markets Live. Read more

Guest post: Was the Swiss National Bank nuts?

Debate still rages about the merits of last week’s Swiss National Bank move. Peter Doyle, economist and former IMF staffer, argues that the SNB in fact kept its exchange-rate cap for too long — and was wrong to have targeted the euro alone.

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Twin sources of tech-related instability

This guest post is from the co-authors of UBS’s white paper for the WEF meeting in Davos, which gets underway today.

Note that one of the co-authors, UBS Wealth Management’s global chief investment officer Mark Haefele, will be fielding questions on the technology chapter during Wednesday’s Markets Live session at 11am. Read more

Guest post: The euro question

Despite many recent reforms, standstill in euro area output and prices–alongside renewed debates on Grexit–have put fundamental questions about the euro back on the map. Perhaps, argues Peter Doyle, economist and former IMF staffer, that is because the key question about the euro has yet to be posed.

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How cheaper oil changes the calculus for Keystone XL

By James Benton

With oil hovering around $57/barrel (for WTI) as of late Monday afternoon, now might be a good time for a quick look at the state of Canada’s enormous and expensive tar sands projects, and at the Keystone XL pipeline intended to help move what they produce. Read more

Guest post: Silicon Valley might kill banks but not banking

This is a guest post by Jonathan McMillan, a pseudonym behind which two authors stand: One is an investment banker based in New York. The other author is an economics editor, who has previously worked in academia. Together they have written “The End of Banking: Money, Credit, and the Digital Revolution.”

Will we soon be witnessing the death of banks? As a matter of fact, Silicon Valley has launched a multi-pronged invasion to take over Wall Street. Cryptocurrency startups are developing new payment services, and marketplace lenders compete for a share in credit markets. Moreover, credit-rating startups reinvent algorithm-based and data-intensive methods to monitor borrowers. All these companies compete directly against the banks from Wall Street.

Some entrepreneurs like Marc Andreessen are convinced that Silicon Valley can reinvent the whole thing. He and others consider themselves the force that will kill banks in a Schumpeterian fashion, through creative destruction. Read more

O’Sullivan: US wage income is accelerating

FT Alphaville presents a guest post by Jim O’Sullivan, chief US economist at High Frequency Economics.

The last US employment report featured the usual pattern recently: another decline in the unemployment rate and another month without any acceleration in wages. The bond market rallied. After all, inflation is unlikely to pick up and the Fed is unlikely to start the tightening process if wages are stagnant. If wages are stagnant, there must still be lots of slack. Read more

Guest post: The case for sovereign reprofiling the IMF way, part two

‘Reprofiling’ is a controversial word in the world of sovereign debt at the moment. The IMF is gathering responses on a proposal to extend bond maturities when a country’s debt looks like it might be unsustainable going into a programme.

In this post, having reviewed criticisms of the proposal, Lee Buchheit, Mitu Gulati and Ignacio Tirado discuss how reprofiling can be designed to avoid hostility from creditors. Read more

Guest post: The case for sovereign reprofiling the IMF way, part one

‘Reprofiling’ is a controversial word in the world of sovereign debt at the moment. The IMF is gathering responses on a proposal to extend bond maturities when a country’s debt looks like it might be unsustainable going into a programme.

In this post, Lee Buchheit, Mitu Gulati and Ignacio Tirado review criticisms of the proposal — and suggest some responses. Read more

Guest post: The Riksbank at zero — lessons for others

Sweden’s Riksbank cut its key interest rate to zero last week because inflation was too low. The Riksbank has been noted – and criticised – for raising rates in 2011 to tackle a credit and housing bubble. Peter Doyle, an economist and former mission chief for Sweden for the IMF, argues that the recent experience of the world’s oldest central bank has more to teach policymakers.


One view of the Swedish Riksbank’s cutting its repo rate to zero is that this is a defeat for the use of monetary instruments to lean against financial fragilities. That conclusion is premature. It misses three more important implications for other monetary policymakers. Read more

The case for quotas in the British judiciary

This guest post is from Jessica Learmond-Criqui, a founder and partner in specialist employment law boutique Learmond Criqui Sokel.

There are three kinds of lies: lies, damned lies, and statistics. While the origination of this phrase is unclear and ranges from Benjamin Disraeli to Arthur James Balfour, 1st Earl of Balfour, there is nothing false about the Council of Europe’s recent figures which demonstrate that the UK courts have fewer female judges than almost anywhere in Europe. Read more

Guest post: One virtual account number to rule them all

By David Birch, a director of the secure electronic transactions consultancy, Consult Hyperion. He is an internationally-recognised expert in digital identity and digital money.

The Financial Conduct Authority (FCA) has just launched an investigation into the Current Account Switching System (CASS) that the UK banks were forced to implement a year ago. Interestingly, though, they are also reviving an idea that the Independent Commission on Banking (ICB) put forward three years ago, that of porting bank account numbers across institutions.

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Alibaba shareholder disenfranchisement: worse than you think

FT Alphaville presents this guest post by Donald Clarke, professor at George Washington University Law School.

Alibaba shareholders are aware that they can’t elect a board majority even if they hold a majority of shares. But they might be surprised to learn that they can’t even nominate directors—any directors—let alone elect a few to a board minority, no matter how many shares they own. Read more

Guest post: IMF policies in the next crisis – unsuitable with a high probability

It’s that time of year again for the IMF-World Bank annual meetings in Washington – which means time for reflection on the fund’s attitude to changes in sovereign debt restructuring. Gabriel Sterne, Head of Global Macro Investor Relations at Oxford Economics, argues why it might be time for less procrastination, and more ‘forward guidance’…

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Guest post: Time to call in the UK War Loan

This is a guest post Toby Nangle, head of multi asset allocation and co-head of global asset allocation at Threadneedle Investments, a UK-based fund manager.

The UK Government could reduce its debt and save the taxpayer £300m by exercising its right to call the ‘War Loan’ and refinance it with new perpetuals with the same coupon but a thirty-year non-call period or new long-dated bonds.

The War Loan is one of the oldest bonds in the market issued by HM Treasury back in 1932. Read more