The ever cautious ECB cut rates by 25 basis points. This is a clear signal that Trichet and other Eurozone central bankers are fearful of the bond beast. As I have said many times before, the ECB has less room to maneuver w/quantitative easing than other nations such as the USA, Japan, or even the UK. These 3 nations are giant vacuum cleaners that threaten to suck out all the demand from the sovereign savers (the Debts of the Lenders which I call here).
Sovereign savers such as China, Japan, and S. Korea are more economically wed to America and the dollar than they are to the Euro. Why? For one thing, their economic co-dependency has been over 50 years in the making - an outgrowth of Pacific trade policy. The same cannot be said of the Socialist Europeans which don't produce anything signficant except overpriced luxury exports - which are hardly in demand at this economic juncture - and a bloated public sector.
As for the UK, their quantitative easing support derives strongly from the Middle East oil exporters which maintain significant financial outlets in the City of London (not to mention in psuedo-tax shelters such as the Isle of Man). Gulf Arabs have a love/hate cultural co-dependency w/the UK that extends beyond the financial realm to cultural and social affairs. This is a colonial era legacy that continues to cloud the minds of the ruling elite of Saudi Arabia, Kuwait, etc. w/delusions of British grandeur.
While the sun may have already set for the British Empire in terms of real politik, the same cannot be said of the colonial mentality that continues to instill a subdued environment of cultural inferiority among the Arab elite. If you think I am joking then take the expat culture for example - Western (e.g. Caucasian) managers remain preferred hires in many business circles as they are perceived to add a veil of "legitimacy" to business dealings. To be fair the same thing can be said of Asian businesses.
But I digress. Trichet issued vague assurances that the ECB would issue more substantive details in the future about quantitative easing. What he really meant is that the Eurozone has yet to get its financial house in order. In fact, some savvy traders have already capitalized on the structural imbalances of the Maastricht Treaty to short the sovereign bonds of peripheral member EU states (e.g. in anticipation of higher yields) b/c there is no such thing as a "Eurobond".
Thursday, April 2, 2009
Subscribe to:
Post Comments (Atom)
Blog Archive
-
▼
2009
(472)
-
▼
April
(55)
- The Debts of the Spenders: Agriculture Retains Str...
- The Debts of the Spenders: SEC Investigating 50 Cr...
- The Debts of the World: This Week's Bonds and Yen ...
- The Debts of the Spenders: Not Enough Bankruptcy F...
- The Debts of the Spenders: CDS Legal Consideration...
- The Debts of the Spenders: Mortgage Modification M...
- The Debts of the Spenders: Swine Flu Overrated Fac...
- The Debts of the Lenders: Dubai Developments
- The Debts of the Spenders: COT Correction
- The Debts of the Spenders: Swine Flu and Agricultu...
- The Debts of the Spenders: 3x Levered Housing ETFs...
- The Debts of the Spenders: Bear Market Rally a Res...
- The Debts of the Spenders: Upcoming Legal Complian...
- The Debts of the Lenders: Most of the World on Vac...
- The Debts of the Spenders: The US Govt's Plan to C...
- The Debts of the Spenders: Mafia Experiences Growt...
- The Debts of the Lenders: China Nearly Doubles Gol...
- The Debts of the Spenders: FNM Postpones the Inevi...
- The Debts of the Spenders: British Vermin Populati...
- The Debts of the Lenders: Yen and Emerging Markets...
- The Debts of the Spenders: Insider Selling Increas...
- The Debts of the Spenders: Too Much Rain Over Para...
- The Debts of the Spenders: UK Govt Disappoints REI...
- The Debts of the Spenders: IASB Update - Meetings ...
- The Debts of the Lenders: Maintaining ZIRP Through...
- The Debts of the Spenders: LQD and HYG - Another L...
- The Debts of the Spenders: CRE Correction
- The Debts of the Spenders: Late April Update Narro...
- The Debts of the Spenders: Lower Market Liquidity,...
- The Debts of the Spenders: QGRI Update (Nasdaq Gov...
- The Debts of the Spenders:401(k)s and the ERISA T...
- The Debts of the Spenders: Emerging Market Flows P...
- The Debts of the Spenders: Another Look at TIC Dat...
- The Debts of the Lenders: TIC Data Confirms Yen We...
- The Debts of the Lenders: Foreigners Sell $5 Billi...
- The Debts of the Spenders: US Tea Parties Rally Na...
- The Debts of the Lenders: Asia Re-Affirms Commitme...
- The Debts of the Spenders: The Mathematical Decay ...
- The Debts of the Spenders: US Grain Futures
- The Debts of the Spenders: Inflationary Impact on ...
- The Debts of the Spenders: Pension Tension and Der...
- The Debts of the Spenders: The Job Search Bubble
- The Debts of the Spenders: Summary of Rail Freight...
- The Debts of the Spenders: European Leaders Pressu...
- The Debts of the Spenders: Peter Schiff on M2M Cha...
- The Debts of the Spenders: Bill Moyers - US Financ...
- The Debts of the Spenders: Quantitative Easing Mig...
- The Debts of the Spenders: US Office Rents Drop th...
- The Debts of the Lenders: The Return of the Carry ...
- The Debts of the Spenders: CDX Spreads Narrow
- The Debts of the Spenders: Charles Weil of the FHL...
- The Debts of the Spenders: IASB Refuses to Follow ...
- Profile Update
- The Debts of the Spenders: Trichet Confirms Eurozo...
- The Debts of the Lenders: Another Look at China's ...
-
▼
April
(55)
0 comments:
Post a Comment