Discover and read the best of Twitter Threads about #eurozone

Most recents (21)

At an unprecedented time of crisis that one hopes will never recur, when all other taboos 1) state aid 2) open borders 3) GCC declaring ECB / ECJ decisions illegal 4) unprecedented domestic aid schemes etc have been broken, this was a time to break the real taboo on fiscal union
And that opportunity has now been missed. The taboo that has been broken is a small one that is at best incremental (aid to poorer MS already happens and so does EC/EU borrowing) when what was needed was the taboo of fiscal union to be broken, even if the magnitude were modest
I don’t think Euro 500 billion spread over 3-4 years is a “huge” sum given magnitude of what is happening. Given limits on asymmetry of capital key vs. grant key it’s unlikely to be more than 2% of gdp. Add constraints on asymmetry of QE imposed by @BVerfG Italy may be worse off
Read 5 tweets
Coming late to the story but I can’t be the ONLY one thinking the “Hamiltonian” “Game-Changing” [insert your superlative here] Franco-German #RecoveryFund proposal is in fact neither “a Hamilton moment” nor Game-Changing nor, in fact, even adequate ... “Much Ado About Not Much”
It only offers a modest (and temporary) increase in the spending ceiling of the European Commission budget 4 a limited period of time to borrow and and transfer an additional euro 500 billion over 3-4 years. As a % of EU GDP it’s less than 1% of GDP/ year so macro insignificant
There are limits to how asymmetric the grants can be with no country likely to get more than twice its share so 2% of GDP or so. Is that helpful to a country like Spain of Italy? Yes! Is that game changing? Not at all. In economies contracting by 10%-20% its a palliative at best
Read 15 tweets
A thread, why the breakup of the #Eurozone is a near certainty.

The unfortunate fact is that the EZ has been an ill-conceived political project from the beginning.

And that's why it will fail. 1/21
@CNBCJulianna @iainmartin1 @GnSEconomics
gnseconomics.com/2020/04/21/the…
The key questions, the EZ now faces, are:

1) Will the ECB be able to provide support for sovereign bond markets through QE?
2) Will national authorities accept the terms associated with possible bailout loans?
3) Will national political leaders continue to support the euro?
2/
The decision of Germany's Constitutional Court (CC) basically crushed all hopes of debt monetization and 'helicopter drops' of money in the EZ.

But, it did do more than that. In its statement, the CC ruled that: 3/
uk.reuters.com/article/uk-ecb…
Read 24 tweets
A short #thread on the #Karlsruhe decision on the legality of the @ecb's #QE #PSPP ... (NOT #PEPP or #Covid QE)

My overall assessment ...

It's not good ... 3 or 4 /10 where 10/10 would have been carte blanche for the #ECB and 0/0 "QE is verboten", a disaster for the #Eurozone
First the headline bombshell "ECB decisions on the Public Sector Purchase Programme exceed EU competences" is a BIG deal ... the @BVerfG has directly accused the @ecb of violating the #EU constitution and the @EUCourtPress and #German government of complicity in this violation!
More precisely, #BverfG says the #ECB violated Art 5(1) and 5(4) on "#proportionality" by failing to demonstrate that it considered the "economic effects" of #QE before launching it, and that #Germany and the #ECJ failed to hold the Governing Council of the #ECB to this standard!
Read 9 tweets
1/11: Before #Covid19 the #geopolitical system was shifting from globalism & multilateralism towards a big power stand-off between #US & #China. The pandemic is accelerating this trend, as all major players struggle to cope. A thread on this, with input from @AlexWhite1812..
2/11: #China, source of the outbreak, has taken a big hit. It suppressed information & numbers. The lockdown apparently worked but was harsh. China is now struggling to reverse a backlash in world opinion through propaganda, exploiting “first recoverer” status & US disarray..
3/11: The early #US federal response was incoherent & failed any test of international leadership. Trump has been awful. But the Fed moved far and fast & some states & cities have done well. Disproportionately high fatalities would damage American prestige...
Read 11 tweets
1/ Jahrhundert- Pandemie oder Jahrhundert-Evidenz-Fiasko?

Wir erleben drakonische Maßnahmen die in ihrer Reichweite einzigartig in der Geschichte sind.

In diesem Thread fasse ich Meinungen und Studien zusammen, die ein differenziertes Bild zeichnen sollen

#COVID19 #COVID19de
2/ Disclaimer:
Ich bin weder Mediziner, Virologe noch Epidemiologe.
Ich übernehme keinerlei Garantie für die Richtigkeit der hier vorgestellten Meinungen und Einschätzungen.

Ich stelle lediglich Fragen, die zu selten gestellt werden.
3/ Die in diesem Thread zusammengefassten Meinungen stehen extrem konträr zu den Meinungen unserer Politiker.
Gegenstimme: @TiloJung Interview mit @Karl_Lauterbach

Beides anhören und eigene Meinung bilden! 😊

Read 80 tweets
@ecb Amount is very big. However the #ECB is very wishy-washy on what is currently crucial:
“For the purchases of public sector securities, the benchmark allocation across jurisdictions will continue to be the capital key of the national central banks” 1/
@ecb Meaning that they will continue to buy mainly German bonds, which is not needed, while not buying massively, over the 33% limit, Italian and Greek bonds, which are going astray since the misstep of #Lagarde last week
@ecb But at the same time:
“To the extent that some self-imposed limits might hamper action that the #ECB is required to take in order to fulfil its mandate, the Governing Council will consider revising them (etc)”
Meaning that they can change mind and focus on Italian & Greek bonds
Read 5 tweets
What does Lagarde’s comment that “We are not here to close spreads, there are other tools and other actors to deal with these issues” mean? Why are economists up in arms? A quick thread. #ECB #Eurozone #Covid_19 1/
These comments are seen to refer to the Outright Monetary Transactions Programme (OMT), which was part of former ECB President Mario Draghi’s pledge to do ‘whatever it takes’ to save the Eurozone. Under the #OMT, it was possible to purchase debt securities on the market. 2/
OMT would involve outright transactions in secondary sovereign bond markets aiming at “safeguarding an appropriate monetary policy transmission and the singleness of the monetary policy”. “Strict and effective conditionality” was required. 3/
Read 9 tweets
1/11 A thread on the #euro and why I think its existence is about to be tested.
2/11 #Europe is about to face a simultaneous endogenous & exogenous economic shock. The #COVID19 is creating multi-level disruptions, and the #EU will need to act swiftly to address them. However, history has shown that #EU's decision-making process is very rigid. #euro
3/11 Yesterday, the European Commission pledged 25bn to tackle the economic crisis caused by the #coronavirus outbreak. This amount is equal to ~0.15% of #EU's GDP. Hence, bolder moves will be needed to address the upcoming economic disruption. #euro

news.trust.org/item/202003101…
Read 11 tweets
It seems like a good time to remind everyone, why we are heading into an economic crisis.

A thread on the fragility of the global #economy.

There, naturally, is no other place to start than this.👇 1/
@CNBCJulianna @KellyCNBC @SaraEisen @GeoffCutmore
Yet, everything begins from the GFC.

Like we noted in a blog published on the 10th anniversary of the failure of Lehman Brothers, very little has actually been fixed in the global financial system.👇 2/
gnseconomics.com/2018/09/14/10-…
While the US banks are now bigger than before 2008 crisis, the biggest problems lay in Europe.

The European banks remained under-capitalized and filled with toxic assets, and the policies of the #ECB made everything worse. 👇 3/
gnseconomics.com/en_US/2019/10/…
Read 14 tweets
🇸🇬 🇨🇳 #SINGAPORE PLANS 2 PACKAGES, TOTALING S$5.6B, TO SUPPORT ECONOMY - BBG
*SINGAPORE PLANS S$800M FROM BUDGET TO COUNTER VIRUS EFFECTS
*SINGAPORE TO GRANT CORPORATE INCOME TAX REBATE OF 25% FOR 2020
🇰🇷 #SouthKorea's president calls for 'all possible measures' to help virus-hit economy - Reuters
reuters.com/article/us-chi…
🇪🇺 #Eurozone ministers discuss fiscal boost options as virus worries weigh - Reuters
reuters.com/article/us-eur…
Read 5 tweets
There are still stubborn misconceptions on the role of #China in the global #economy , especially what comes to 2019.

It should be acknowledged that China leveraging/deleveraging has been the single most important driver of the global business cycle. 👇

Thread. 1/
#economy
#China leveraging/deleveraging drives the #Eurozone and global economies with a lag of 3-4 mo.

In Q1 2019 China broke all previous records in the growth of debt, and the same occurred in Q3 (and likely also in Q4).

Thus, 2019 marked the end of the "China deleveraging". 👇
2/
It's noteworthy that, when Beijing tried to deleverage in Q2 and in October, the economy tanked. This was quickly countered with another round of record-breaking stimulus.

Yet, economic growth has been sub-par all through the 2019 regardless of the massive stimulus. 3/
Read 10 tweets
I don't get, why many analysts and economists seem to think that the worse (#recession) might have been avoided.

Their view seems to be based on handful of 'leading' and/or backward looking indicators that have "stabilized".

This angle misses the point completely. 1/
Many seem to forget that #China, not the #Fed or the #ECB, has driven this global expansion.

China has accounted around 60% of all new money (debt) created and majority of capital investments produced since 2009. 👇

What is China doing now? 2/
If there's just one article an investor can read this fall, it's definitely this. 👇

It explains, why there's not going to be a similar reflation trade, like in 2015/2016, this time around.

China simply does not have the room to stimulate as much. 3/
ft.com/content/8cb854…
Read 8 tweets
Is the World on the brink of a new #Recession? Apparently it is.

With today's #DowJones Industrial Average fall of 800+ points, the market flashed a warning sign about a possible recession for the first time since 2007. Follows @jchatterleyCNN assessment.
Banks are paying people to borrow money. That’s alarming news for the global #economy.

A must read @washingtonpost article that explains in plain english and in detail the storm/tsunami ahead. washingtonpost.com/business/econo… #recession2019
With Europe's main economic engine - #Germany, fully contracted, the #Eurozone industrial production continues to declined sharply raising tangible fears of a new #recession. #EuropeanUnion #recession2019 dw.com/en/is-germany-…
Read 5 tweets
By the end of 2019, the #Eurozone Benchmark interest rates, i.e. the overnight #EONIA rate and the #EURIBOR family (with maturities from 1 week up to 12 months), will either be replaced or their calculation methodology will be radically reformed.
The benchmark rates calculation methodology is not compliant with the #EU Benchmarks Regulation (BMR), applied from Jan. 1st, 2018, which emerged in the aftermath of the #LIBOR & #EURIBOR market manipulation scandals & the #2008_financial_crisis. bis.org/publ/qtrpdf/r_… @BIS_org
On September 14th, 2018, the working group on euro risk-free rates (#WG_EuroRFR), set up by the @ECB, the @FSMA_info , @ESMAComms & the @EU_Commission, proposed the ECB’s #€STR as the replacement of #EONIA
bit.ly/2UDzu4L
bit.ly/2OjrSNo
bit.ly/2YNPxeB
Read 12 tweets
For almost two years now, I've been randomly but constantly been drawn into discussions about the benefits of the euro.

The simple fact is that at the macro level, there are basically none. In the firm-level, especially in the SME -level, there are few. But, 1/
The question is, which should weigh more? The larger single-currency financial markets or a floating exchange rate that corresponds to the macroeconomic and political conditions of each country.

I think that answer, undeniably, is that the latter is more important. 2/
This is because global financial markets are very open and developed nowadays. Funding and hedging is widely available.

However, cutting wages and prices in a #recession has proven very difficult as it has been since the end of the 'liberal era' in early 1900's. 3/
Read 6 tweets
Today, @CDU and @CSU - still the most important veto player on #Eurozone reform - published their election manifesto for the EP elections. On EMU, no surprises:
cdu.de/europaprogramm
1/ Lots of nos: No EZ finance minister. No unemployment insurance. No mutualization of debt nor, interestingly, of risks. No more bank bailouts. No tempering with @ecb independence. Interestingly, one explicit no is missing: Deposit insurance is not mentioned.
2/ On reform needs, it's rather slim: ESM should become an EMF, but unclear what that means in practice. Fiscal rules should become less discretionary and there should be a sovereign insolvency mechanism. Sovereign debt should get the same regulatory treatment as other assets.
Read 5 tweets
Today we release our annual @wiiw_news Autumn #Forecast Report, with macroeconomic projections for #CESEE out to 2020. Below, a thread on the highlights 1/13
#Growth still looks quite good for most, notable upgrades this time for #Poland, #Serbia, #Hungary. But downgrades for several #EU members, plus #Turkey, #Macedonia and #Belarus. 2/13
Over the #forecast period we expect best growth performance in #EUCEE and #WesternBalkans, although both will slow by 2020. Outlook for #CIS & #Ukraine weaker. 3/13
Read 14 tweets
🇨🇳 #CHINA Q3 GDP Y/Y: 6.5% V 6.6%E (slowest growth since Q1 2009)
*NBS spokesman Mao Shengyong said that the international situation was bringing “downward pressure” on China.
*Link: bloom.bg/2RVX1ZA
🇫🇷 🇪🇺 🇨🇳 French tire maker Michelin warned of declining sales in Europe and #China in the second half of the year, dragging down shares of its competitors in the U.S. and Europe - Bloomberg
*Statement: bit.ly/2EujhqH
🇺🇸🇨🇳🇪🇺 In a volley of filings, the EU, #China and the U.S. this week escalated disputes over new U.S. metals tariffs, the European response to those levies, and Chinese intellectual property practices - Bloomberg
bloomberg.com/news/articles/…
Read 634 tweets
#demographics #militaries #economies #currencies
#USA
- Best demographics
- Largest military
- Largest economy
- Most used currency
- Liquid financial markets
- Open capital account
- Rule of law
- Best geography
- Can be self sufficient if required
- Not trade dependent
#USA
Top trade partners as of 30 June 2018:
- China: 15.2% (strategic competitor)
- Canada: 15.1%
- Mexico: 14.6%
- Japan: 5.1%
- Germany: 4.4%

The next 10 years could result in the below:
- Mexico (25%)
- Canada (20%
- Japan (7%)
- South Korea (5%)
- Great Britain (4%)
#USA
Bring the manufacturing (jobs) home while negatively impacting China's economy.
forbes.com/sites/kenrapoz…
cebglobal.com/talentdaily/au…
irishtimes.com/business/econo…
Read 338 tweets
Given the political dynamics in #Italy, it is time to dust off my analysis from 2016 - 'Eurosceptics in Power' - on how Eurosceptic parties have influenced EU policy making both in the EP and when in nat. government

swp-berlin.org/en/publication…

Four points stand out in particular:
First, Italy is not the first instance of eurosceptic and/or populist parties entering national government.

Elite consensus on EU integration has been waning for a long time - reflecting the more sceptical attitude in many member states.
Second, in decision-making at the EU level they acted (largely) constructive. Voting data from the Council revealed no strong increase in vetos or 'no' votes after Eurosceptic parties entered nat. governments.

Exceptions to this are migration and institutional questions
Read 7 tweets

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