Forex News | Currency News by Forexlive

The Sunday Times economics column appeals to the “Old Lady of Threadneedle Street”, AKA the Bank of England, to cut rates by 100 bp on Thursday to try and stave off a deep recession. A more modest 50 bp cut is expected by the market.

That would be quite a feat if he can pull it off. It’ll drive Sarkozy mad if he’s eclipsed by Gordo once again…

Each spring and fall when we set the clocks back or forward we are reminded to change the batteries in our smoke detectors. That is more important than ever this year as portfolios have been bursting into flames around the globe in recent weeks. Those batteries have to be drained by now…

We’ve had asset-price deflation on a mass scale; now the fear is that price falls extend to labor markets and the price of goods. The Fed is certainly on the case, led by the right man at the right time, Helicopter Ben Bernanke. Thanks to Newsweek for the image.

Premiums on credit default swaps are rising for European countries that have big exposures resulting from the need for bank bailouts.

One advanatge of held by the United States is that regions that have unusually high numbers of foreclosures are buttressed by regions with less dramatic real estate problems. In the EU, with its compartmentalized structure, problems tend to hide behind national borders. This puts Ireland and Spain at particularl risk as they were the twin epicenters of the European housing bubble. The EU is less-able to deal with these issues than the US, one reason for the pronounced euro weakness of recent months.

Borrowing in a foreign currency to mortgage your home? What could go wrong? This…

The same reason I chose a 15-year fixed mortgage over a floater tied to 1-month Libor is the reason to stay away from exotic choices that come with a lit fuse… Borrowers in Swiss francs in Poland and Hungary probably never considered themselves speculators, but they’ve since found out the truth.

Six months ago, decoupling was all the rage. That was the idea that the US would fall into recession, Europe would slow, but the emerging markets would continue their stratospheric growth. iI was a very fashionable idea, but not everyone bought it, as readers from the old site will atest.

Here and here are two clear signs that decoupling was an elegant but flawed theory and a reminder that producers need consumers to prosper.

Take money from the government and have bureaucrats decide your bonus or raise money privately and have shareholders scream about the unfavorable terms relative to the government bailout? That’s the dilemma faced by bank managements at the moment as they try and figure the best way to address their capital needs.  Just goes to prove the old adage “damned if ya do; damned if ya don’t”.

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