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Currency War

Europe is an economic basket case while the US is kind-of sort-of recovering. Why? Several reasons, but the only one that really matters these days is that in 2012 and 2013 the eurozone operated with tight monetary policy and an appreciating currency while the US created new money with abandon and let the dollar fall. […]

Europe Is Tanking, QE Is Coming

by John Rubino on August 17, 2014 · 30 comments

Last year the world kind of forgot about Europe. After ECB head Mario Draghi vowed to “do whatever it takes” to get the Continent growing, the markets calmed down, money got cheap and plentiful and functionally-bankrupt countries like Greece, Italy and Spain stopped making scary headlines. To the casual observer it began to look like […]

This morning the European Central Bank tried something different. As Bloomberg reported: Draghi Takes ECB Deposit Rate Negative in Historic MoveThe European Central Bank cut its deposit rate below zero and said it would announce further measures later today as policy makers try to counter the prospect of deflation in the world’s second-largest economy. ECB […]

For the past couple of years the European Central Bank has been the only sane inmate in the asylum. Unfortunately, in a crazy world being sane just gets you into trouble. Sound monetary policy leads to a strong currency, which in a currency war is tantamount to unilateral disarmament. Unable to export sufficiently to a […]

As it tries to punish Russia for the latter’s dismemberment of Ukraine, the West is discovering that the balance of power isn’t what it used to be. Russia is a huge supplier of oil and gas — traded in US dollars — which gives it both leverage over near-term energy flows and, far more ominous […]

It’s amazing how quickly China went from being the world’s savior to its biggest danger. To recap: When the developed world stepped off a cliff in 2008, China responded by borrowing about $15 trillion and spending most of it on infrastructure. Roads, bridges, skyscrapers, power plants, whole cities went up around the country. The resulting […]

Not so long ago — say when the Soviet Union was crushing rebellions in Czechoslovakia and Hungary in the 1960s or the US was invading half the Middle East in the 2000s — a big country picking on a small one was mostly a physical activity. Tanks would roll in, buildings and people would be […]

Only in a world totally corrupted by easy money could the following two things be announced on the same day. First: European Bonds Surge as ECB Stimulus Confines Crisis to MemoryYields on the euro area’s government bonds have never been lower as the potential for extended European Central Bank stimulus helps exorcise memories of the […]

The Eurozone’s Really Bad 2014, In Two Charts

by John Rubino on January 14, 2014 · 33 comments

Headline writers have found some brutal things to say about the eurozone lately. To take just a few of the dozens of possible examples: France Collective Depression 48.6% of Spaniards Aged 18-24 Would Take Any Job, Anywhere, for Low Wages Greek industrial slump persists, jobless rate at record high Opposition Dissent Tempers Greek Attempts at […]

For a while there it looked like Europe was beginning to dig itself out of the pit into which it had fallen after the 2008 banking crisis: Europe’s Recovery Gaining Momentum (August 22, 2013) Europe’s recovery looks to be gaining traction thanks to a revival in activity in Germany, the region’s biggest economy. The 17-nation […]

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