Will 2015 Be A Year Of Economic Disaster? 11 Perspectives
http://www.zerohedge.com/news/2015-01-06/will-2015-be-year-economic-disaster-11-perspectives
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http://www.zerohedge.com/news/2015-01-06/will-2015-be-year-economic-disaster-11-perspectives
Continue ReadingDer Spiegel magazine reported on Saturday that Berlin considers a Greek exit almost unavoidable if Syriza wins, but believes the euro zone would be able to cope.Vice Chancellor Sigmar Gabriel said on Sunday that Germany wants Greece to stay and there are no contingency plans to the contrary, while noting the euro zone has become far more stable in recent years.As the euro zone’s paymaster, Germany is insisting that Greece stick to austerity and not backtrack on its bailout commitments, especially as it does not want to open the door for other struggling members to relax reform efforts.
Germany is making contingency plans for the possible departure of Greece from the euro zone, including the impact of any run on a bank, tabloid newspaper Bild reported, citing unnamed government sources.The newspaper said the government was running scenarios for the Jan. 25 Greek election in case of a victory by the leftwing Syriza party, which wants to cancel austerity measures and a part of the Greek debt.In a report in the Wednesday issue of the paper, Bild said government experts were concerned about a possible bank collapse if customers storm Greek institutions to secure euro deposits in the event that Greece leaves the zone.The European Union banking union would then have to intervene with a bailout worth billions, the paper said.
We have always argued that a Grexit would be painful for both the Eurozone and Greece, but relatively more painful for the latter. As such, it has always seemed unlikely that Greece would unilaterally seek to exit the euro. This still seems to be the case, though there have been internal shifts. As we noted in Part 1, the economic and financial contagion from a Grexit could likely now be more easily contained. This allows the Eurozone to take a harder line with Greece, not least since giving into SYRIZA, will send the message to Podemos and others that fiscal discipline etc is fair game.So the Eurozone may be less nervous about Grexit and feel it has more reason to stick to the rules as it has laid them out, which may harden its negotiating stance. Equally though, Greece may have more reason to think a Grexit could be economically manageable, which could encourage a SYRIZA-led government to stick to its guns more firmly. This to us suggests the clash could be bigger and the negotiations more difficult this time around. Ultimately, though – with hundreds of billions of euros and the political project of the euro at stake – it still seems likely someone will blink and a fudge will be on hand as is usually the way in Europe. Allowing Greece to remain inside the euro for now.
For all the endless media buzz pitching the bullish spin of plunging gas prices, namely that while crude capex spending and energy company earnings are both crashing, high-paying shale jobs are about to suffer pervasive layoffs and energy HY bonds are …
Continue ReadingEarlier today, when we were conducting a routine check with the Office of the Currency Comptroller’s on the total notional amount of derivatives held at the Big 4 banks in the context of the “JPMorgan break up” story, we found something stunning: using…
Continue ReadingHaving closed the Friday session less than 1 pip above the hugely important 1.2000 level below which there lay many stops, following this weekend’s news onslaught which seemed like a deja vu of the newsflow from the fall of 2011, wh…
Continue ReadingLowered prices in the international energy markets have positive aspects for the Italian consumers, who pay less for the fuel, but the effect will be only short-term. In the long-term however the weaker economic situation in countries producing energy resources, caused by lower oil and gas prices, mostly in Russia, is extremely unprofitable for Italy, he said.“The lowering of the oil and gas prices in combination with the sanctions, pushed by the Ukrainian crisis, will drop the Russian GPD by five percent per annum, and thus it will cause cutting of the Italian export by about 50%,” Prodi said.“Setting aside the uselessness or imminence of the sanctions, one should highlight a clear skew: regardless of the rouble rate against dollar, which is lower by almost a half, the American export to Russia is growing, while the export from Europe is shrinking.”
Russia has presented a startling proposal to overcome the tensions with the EU: The EU should renounce the free trade agreement with the United States TTIP and enter into a partnership with the newly established Eurasian Economic Union instead. A free trade zone with the neighbors would make more sense than a deal with the US.
Vladimir Chizhov told EUobserver: “Our idea is to start official contacts between the EU and the EAEU as soon as possible. [German] chancellor Angela Merkel talked about this not long ago. The EU sanctions [on Russia] are not a hindrance”.“I think that common sense advises us to explore the possibility of establishing a common economic space in the Eurasian region, including the focus countries of the Eastern Partnership [an EU policy on closer ties with Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine]”.“We might think of a free trade zone encompassing all of the interested parties in Eurasia”.He described the new Russia-led bloc as a better partner for the EU than the US, with a dig at health standards in the US food industry.“Do you believe it is wise to spend so much political energy on a free trade zone with the USA while you have more natural partners at your side, closer to home? We don’t even chlorinate our chickens”, the ambassador said.The treaty establishing the Eurasian Union entered into life on Thursday (1 January).It includes Armenia, Belarus, Kazakhstan, and Russia, with Kyrgyzstan to join in May.Modelled on the EU, it has a Moscow-based executive body, the Eurasian Economic Commission, and a political body, the Supreme Eurasian Economic Council, where member states’ leaders take decisions by unanimity.It has free movement of workers and a single market for construction, retail, and tourism. Over the next 10 years, it aims to create a court in Minsk, a financial regulator in Astana and, possibly, to open Eurasian Economic Commission offices in Astana, Bishkek, Minsk, and Yerevan.It also aims to launch free movement of capital, goods, and services, and to extend its single market to 40 other sectors, with pharmaceuticals next in line in 2016.
China will allow trading in forwards and swaps between the yuan and three more currencies in a bid to reduce foreign-exchange risks amid increased volatility in emerging markets.The China Foreign Exchange Trade System will begin such contracts with Malaysia’s ringgit, Russia’s ruble, and the New Zealand dollar from Dec. 29, it said in a statement on its website today. That will extend the yuan’s swaps trading to 11 currencies on the interbank foreign-exchange market.A plunge in Russia’s ruble this month to a record low sparked a selloff in developing nations’ assets, leading to a surge in currency volatility. The new contracts come amid efforts by China to increase the international use of the yuan, as the world’s second-largest economy promotes it as an alternative to the U.S. dollar for global trade and finance. Malaysia and Russia are China’s eighth and ninth biggest trading partners, according to data compiled by Bloomberg.“This will provide companies with better hedging tools, and at the same time, make currency trading more efficient,” said Ju Wang, a senior currency strategist at HSBC Holdings Plc in Hong Kong. “China won’t stop yuan globalization or capital-account opening because of the volatility in emerging market currencies.”The CFETS is an agency under the People’s Bank of China.
http://www.zerohedge.com/news/2014-12-26/china-launch-yuan-swap-trading-russian-rubles-monday
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