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’Beyond the QE2 adventure
While everything blows up… a blow-out speech by Adam Posen:
Make no mistake, the right thing to do right now is for the Bank of England and the other G7 central banks to engage in further monetary stimulus.
Sundry secret Greek liquidity [updated]
Update — See reader comment below. This may be a case of mistaken identity (or a Bank of Greece accounting change), not liquidity usage in July. We stand corrected if this is accounting changes. ELA’s not easy to spot!
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sun·dry
Adjective:
A mystery central bank in USTs?
FT Alphaville has already noted the extreme specialness of the current benchmark US Treasury 10-bond.
On Friday, however, that specialness reached new levels of extremity, with Bloomberg reporting repo rates of as low as minus 2.92 per cent.
The central bankers’ worry lists
Looks like there’ll be no sleep at Jackson Hole.
Courtesy of Morgan Stanley’s global economics team, two tables that list and rank each major central bank’s current “challenges”.
For the G10 (click to expand):
Inside Ireland’s secret liquidity
A tidy scoop from RTE, who’ve uncovered key Irish government documents setting up Emergency Liquidity Assistance to banks:
…Mostly.
But it’s largely all there, focused on the critical period leading up to and after Ireland’s bailout,
‘Collective amnesia’ on mortgage reform
German financial consultant Achim Dübel doesn’t mince his words.
Last week he spoke to a group of European politicians, including representatives from the UK, Spain and Germany, to talk mortgage reform.
Virtual money, from real central bank mistrust
What happens when you cross computer geeks with populist outrage at central banks?
Bitcoins happen.
New Scientist reports in its latest edition that a new virtual currency is harnessing peer-to-peer networking and high-tech computer-run algorithims to rival central-bank issued money.
Buiter bashes BoE accountability, and other central banks
Citigroup strategist and erstwhile FT blogger, Willem Buiter made headlines last week.
The former Monetary Policy Committee member, it was reported, took to the stand at a special hearing into ‘accountability at the Bank of England’ held by the UK Treasury Select Committee,
Bad juju in Irish bank buildings
We’re unsure if this is exorcism, omen, or what.
According to the Irish Times:
The central bank is considering moving from its iconic headquarters in Dame Street, Dublin, to a single large building in the Docklands area that would accommodate 1,500 staff…
The ‘Banks Under Restructuring’ programme
BURP, for short.
Oops. Excuse us. Manners.
Actually it looks like ‘Facility for Banks Under Restructuring’ is the working title for a European Central Bank plan to advance loans to Ireland’s banks — to replace their reliance on Emergency Liquidity Assistance from the national central bank.
This is not normal ECB tightening
In which ‘strong vigilance’ = ‘token gesture’.
Three charts on the European Central Bank and the euro periphery, from Credit Suisse’s global equities team on Monday:
Ireland’s secret liquidity is unbelievably cheap
This, from the Irish Independent, is very interesting:
IRISH banks are paying an interest rate of less than 3pc on the €51bn of ‘emergency liquidity assistance’ (ELA) that has been sanctioned for them by the Central Bank of Ireland.
No magic words at the ECB
Accordingly, the Governing Council will continue to monitor all developments over the period ahead very closely
– ECB President Jean-Claude Trichet, at Thursday’s press conference.
Code for: don’t wait up for an ECB rate hike in the near future,
Old Lady conspiracy theories
It’s sometimes said that conspiracy theories are really a back-handed compliment to belief in the power of government. Because they can’t possibly be that incompetent, can they?
And so we turn to the Bank of England’s 2 per cent inflation target.
Casualties of the currency war
This is ironic, Brazil.
That’s a Nomura chart showing the Brazilian government as the biggest ‘loser’ of the currency war. You know the war we’re talking about: Brazil was the first and loudest to declare it in 2010.
Basel liquidity rules, going neo-medieval
Can we talk a bit more about the scandal of Basel III allowing banks to give government bonds a zero risk weighting on their books? This time regarding Basel’s liquidity rules.
Actually, can we talk about the related global shortage of AAA-rated assets and what that means for sovereign debt as well?
Buried in recent regulations on Basel’s liquidity coverage ratio,
Mystery, chicken, and the ECB’s capital increase
The European Central Bank made headlines on Thursday, with its request for a €5bn capital increase. The stated reason was all about covering volatility in fx, interest rates and gold prices “as well as credit risk”
Central bank SOS
Or, the ECB provides another reason to steer clear of Hungary.
This legal opinion on proposed government changes to the Hungarian central bank (the Magyar Nemzeti Bank, or MNB) looks like a pretty big red alert to us:
Mechanics of a European capital flight
A big thank you to Deutsche Bank strategist Peter Garber for this.
It’s a nine-page note oozing with detail about how — precisely — capital flight amongst eurozone members impacts the eurosystem. And it’s timely stuff given that the Bank for International Settlements just reported a (very rough) $107bn outflow from Greece,
Central bank mash-up, carry bash-up
China started it.
Quantitative tightening has been bandied about recently as the way in which the People’s Bank of China is combating QE. At a time when rate hikes may not be enough, other tools have to be considered for dealing with surging capital inflows in search of Chinese yield.
An outlier in central bank strength
Spot the odd-one-out in this Bank for International Settlements chart:
It is the UK’s very own Bank of England.
A quick explainer here. What the author, Peter Stella, is trying to do is examine the point at which a central bank’s finances would come under pressure — that is,
The price of an Irish promise [updated]
Some fast-moving developments on the Irish bank funding front on Thursday, flashes via Reuters:
RTRS-IRISH FIN MIN SAYS WANTS TO REASSURE ALL DEPOSITERS THAT THEIR DEPOSITS ARE SAFE
RTRS-IRISH FIN
The unsinkable, unfalsifiable HMS QE2
Did you hear the one about the superliner that squeezed under a Danish bridge with just an inch and half to spare?
It’s getting that way with HMS QE2.
Exhibit A — More decent UK data in the shape of a manufacturing PMI,
QE-EM inflation risk, charted
Here’s one way to consider the damage inflation might wreak on emerging markets — something that might just be on investors’ minds now that the structural trend is to diversify into EM debt.
Via Fitch Ratings,
The ECB’s epic ode to monetary analysis
Life is surely too short for this.
Out on Thursday — Almost 500 pages (well, 480) of European Central Bank discourse on why monetary analysis should be included in monetary policy decisions.
Believe it or not,
You start a QE conversation, you can’t even finish it
The more central bankers comment ==> the more QE2 gets priced in, these days. Exhibit A: recent post-FOMC statement reaction.
No wonder that some central bankers want to rejig those comments to include more (how should we put it?) robust inflation targets,
Quote du jour, central bank uncertainty edition
Oh, there’s some sort of typo in this speech from Bank of England monetary policy committee member, David Miles. And right at the interesting — inflationary — bit.
The problems of a Basel-ed central bank
Lorenzo Bini Smaghi.
The European Central Bank executive board member may not be a friend of analysts who ponder a Greek default, but he had some wise old words this Wednesday on the problems banks face in Basel III ‘s liquidity rules.
25 interventions in a one week band
Ben Davies, CEO of gold hedge fund Hinde Capital, made an interesting point on the subject of currency intervention in a recent letter to investors, as picked up by the King World News blog.
He alludes to the writing of Henry Hazlitt,