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Wednesday
Sep172014

Where Are My Foreign Assets When I Need Them? 

How do you show the challenge of the eurozone periphery in one chart? Well, it is difficult but the representation below is a good pick in my view. A structurally negative net foreign asset position is a very tough hurdle to overcome when in a currency union, saddled with poor demographics and need net external demand to boost national income. Think of the periphery as Japan and Germany without(!) the strong net foreign asset position. 

These countries seem to have grown old before getting rich and without the ability to devalue in nominal terms, the outlook is not good. 

 

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Picture is courtesey of Pantheon Macroeconomics and has also been posted on Twitter. 

Monday
Sep152014

The Italian Economy Remains Stuck ...

Italy has the dubious honor of the being the first eurozone economy to re-enter recession after the decidedly tepid recovery since 2012. This is bad news for an economy struggling with steadily increasing government debt and no real solution on how to pay off its mounting liabilities. What is even worse is that it looks as if the economy is not about to exit its malaise anytime soon.

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Picture is courtesey of Pantheon Macroeconomics and has also been posted on Twitter. 

 

Thursday
Aug072014

Weak economic data would test bonds in the periphery

Volatility has engulfed the eurozone in the past few weeks, but bond markets remain a relative sea of calm. This could change quickly however, if the economic data in the periphery takes a serious turn for the worse. Given the absence of active balance sheet expansion at the ECB, Q3 PMIs have suddenly taken in critical importance

 

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Picture is courtesey of Pantheon Macroeconomics and has also been posted on Twitter.