RSS feedDeficits
’Unfunded entitlements loom again
Ignore, for a second, Standard & Poor’s warning of political impasse on the US budget, or its talk of contingent liabilities like student loans and the financial system. That’s all short- to medium-term.
From Fed run-offs to super-sized Treasury auctions
From RBC Capital Market’s Michael Cloherty:
As we discussed last week, the Fed is likely to start shrinking its balance sheet by allowing maturing Treasuries to run off as early as the fourth quarter.
David Rosenberg’s cartoon-ish 2011
David Rosenberg’s gone all cartoony.
The Gluskin Sheff analyst seems to have given up on on words and is instead using charts — and Loony Tunes — to illustrate his (very salient) points.
The introductory text:
New Congress, old deficit
Like its predecessor, the 112th Congress has proven it’s possible to shoot oneself in the foot while putting it in one’s mouth.
House Republicans said in their Pledge to America that:
With common-sense exceptions for seniors,
European fiscal forecast fail
Surprise! EU members aren’t that good at economic forecasting.
And they’ve only gotten worse in the recent debt crisis.
That’s the take from Fitch Ratings who reckon that between 2000 and 2010 European governments have on average underestimated their three-year fiscal deficits and their public debt by 1.8 per cent and 3.4 per cent of GDP,
Dousing ‘UK optimism’
Whatever happened to UK doom and gloom eh?
Monument Securities’ Marc Ostwald is here to serve on Friday morning — with a hefty dose of good ol’ fashioned British grumpiness — and bond vigilantism.
Votes for notes
Here’s a novel solution to the problem of excessive public debt: democracy.
Presenting the idea of vote-sharing bonds, via Hans Gerbach of the ETH in Zurich.
And here’s how it might work.
A government wants to increase expenditure to fund new measures.
Dick Bove on QE2 as a bank-less “financial war with China”
We all know Dick Bove ♥ banks — sometimes to a fault.
But the Rochdale Securities analyst brings up an interesting QE2-related point in his latest note. The Federal Reserve’s first round of quantitative easing,
Eek, Ireland!
This probably wasn’t what Ireland’s prime minister was going for when he took to the stage to defend the country’s deficit-decimating budget cuts on Wednesday:
China’s little problem with unspent cash
There’s a bit of an interesting situation developing in Chinese public finance.
According to analysts at Standard Chartered, based on current trends, the government’s revenues could fall short of expenditures by only CNY300-500bn,
Fitch on how sovereign CDS helps fund deficits
Memo to financial regulators who want to ban or limit CDS:
Fitch Solutions finds that the liquidity of a sovereign’s credit default swap (CDS) is highly correlated with the level of the underlying bond yield.
Dispatches from Euroland
Forget central government debt, what about local?
Out today — a note by Morgan Stanley’s European economics team, led by Daniele Antonucci, discussing ‘non-central government liabilities and budgets.’
Here’s what they say:
Ireland fights pessimism. Leaves budget in peace.
Wandering around Dublin this Friday? Got a spare few hours and €55? Tired of all the doom and gloom surrounding Ireland’s economy, and proffered on sites such as this one?
Then you might be interested in the below:
The world is enough for US Treasuries (maybe)
Is there enough money in the world to finance US debt?
It’s not an FT Alphaville rhetorical, but a question asked by economist Allan Meltzer last year. We bring it up because it’s also the basis of a new working paper out from the La Follette School of Public Affairs.
Credit Suisse’s Garthwaite does QEII
Credit Suisse equity strategist Andrew Garthwaite is on hand to answer all your questions about a possible second round of unconventional measures in the US — the possibility of which has provoked a fire-storm of speculation ahead of the Federal Open Market Committee meeting later this Tuesday.
The VAT, the RPI, and the index-linked gilt
The ConDem government’s emergency UK budget will be unveiled next Tuesday.
There seems to be a growing consensus among analysts that we are in for an increase in Value-Added Tax (VAT). A jump in the tax from its current 17.5 per cent to 20 per cent would raise around £12bn,
Not for the forint-hearted…
What happens when government spokespeople start saying things like this:
June 4 (Bloomberg) — Hungary’s economy is in a “grave situation” because the previous government “manipulated” figures and “lied” about the state of the economy,
Coins of the UK (public spending) realm
Got a spare 10 minutes? Some technical expertise? Experience in handling large volumes of data?
Then you might be able to get some use from the just-released UK Coins data. That’s the Combined On-line Information System,
Prepare for 10 years of FX ‘super-volatility,’ says UBS
Were you battered by currency volatility last week?
You’d better get used to it.
UBS currency analyst Mansoor Mohi-uddin is predicting a decade of ‘super volatility’ amongst global currencies, in the Swiss bank’s new FX mega-trends 2010-2020 note.
Quick, to the VATmobile
Chris Giles, the FT’s economics editor, is not impressed with the ConDem coalition agreement:
“Deficit reduction and continuing to ensure economic recovery is the most urgent issue facing Britain,” states the coalition agreement between the Conservative party and the Liberal Democrats.
A British bond market all-nighter
Pity those UK bond traders.
Instead of playing general election drinking games on Thursday night, when Britain goes to the polls, they’ll be busy trading gilt futures.
The London International Financial
When what Mervyn King says in private goes public
Or, how one paraphrased quote is making lots of trouble.
Here’s the offending remark:
“I saw the governor of the Bank of England [Mervyn King] last week when I was in London and he told me whoever wins this election will be out of power for a whole generation because of how tough the fiscal austerity will have to be.”
From the annals of international Greek debt management…
. . . Foreign creditors demanded the presence of foreign experts for the monitoring of the economic policy pursued and, especially, of the tax collection and management systems. This demand was seen as a pre-condition for the government to pursue a monetary and fiscal policy,
[Darling: Budget Highlights 2010] Goldman says buy the Budget (a bit)
Worried about UK equities in the face of looming fiscal consolidation?
Don’t be, says Goldman Sachs — purveyors of sterling-slump strategies and sterling-strength research.
On the morning of Alistair Darling’s Budget report,