Tag Archives: Finance

Italy is big enough to matter (it is the eight largest economy on the planet), but so uneventful that most does not pay any attention to what is going on there. We contend that Italy will, during the next year or two, be on everyone’s radar screen as it has the potential to derail the European project for real. Greece, Portugal and Ireland were mere test subjects for what will come. Spain would have been a challenge, but were narrowly avoided. Italy will drag the whole structure down if...

We will not spend much time discussing what the FOMC did as tons of ink have been spilled on that already. We will rather spend more time on what the FOMC did not do. A short recap will suffice; the FOMC did raise the interest rate band by 25 basis points to 0.25 – 0.5 per cent from the seven yearlong band of 0 – 0.25 per cent. No surprise there as this move was well communicated weeks in advance. As discussed in Unintended Consequences of Liftoff the recent move to secure a floor in the...

Bar a disastrous NFP print this coming Friday the US Federal Reserve will change the target range for the Federal Reserve (Fed) Bank’s Funds rate from the current level of zero – 25bp to 25 – 50bp on December 16th.  The Fed will effectively raise the overnight interbank rate of interest to around 30bp from an average of only 12bp in 2015. Ironically, that will be seven years, to the day, when the Fed first lowered rates to the current band. During the period of ZIRP madness, the Fed’s...

In fiscal year 2014, which ended September 30 2014, the Federal government of the United States reported a cumulative deficit of US$484 billion, while the total debt outstanding increased by more than a trillion dollars. For fiscal year 2015, the difference was negligible because the US Treasury conducted so called emergency measures to adhere to the Congressional imposed debt ceiling. As soon as Congressional leaders agreed among themselves, the debt ceiling was raised and US debt...