Some interesting currency moves today

[x9200]

Perhaps the more recent mobility came together with the opening of the economy (post Iron-curtain)? I.e. it forced this change, a need for mobility.
[..]
NT: 'I say get on your bike, and go and find one'*. I.e. Don't assume you'll find one on your doorstep, go and find one where ever it might be available.

I think it is a complex combination of a number of factors. During the Iron-curtain era getting your “own” flat was something pretty much a life-time endeavor. At the same time there was no really any unemployment so one could get easily the job in practically any place. These two may be interconnected as of the said habits development.

The new era sees younger/mid aged generations earning better money with a reasonable chance to get their flats/houses (of course still mortgage based) within few years after they entered the job market. Still I believe the job mobility is mostly within the first job (if good and lasting long enough). As soon as they have some basic social stability achieved, own place to live included, they tend to settle down (job, geographically) and if they sell the property is to buy a bigger one, likely a house, not flat, but typically within the same city.

Globalization is a factor for a small fraction only. What you see in the UK, the (mostly low end) jobs market flooding by the citizens of the post-communistic countries is mostly opportunistic I think. Earn some (comparatively) good money in few years and come back to the country and city of origin. Then buy a house or flat and find a job somewhere near.

[JR8]

'So has the government had any role? Why yes
The government is working hard to take pressure off interest rates by keeping inflation low. That’s what we’ve been focused on. Fixing up the challenges of the budget and reducing the upward pressure on inflation and that’s come to bear with lower interest rates.”'

I haven't read that through so haven't figured what they're aiming at, competitive devaluation maybe?

The above quoted confused me though. They're lowering interest rates to 'reduce the upward pressure on inflation'? A misquote perhaps, as lowering interest rates is often done precisely to stoke inflation/demand/spending...

[I'll shut up now, until I've read the whole feed ]

[JR8]

The drama flows thick and fast it seems.
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'Germany's bond yields have fallen below Japan's for the first time in history, as deflation and a flight to safety sent 10-year returns down to 0.306pc.'
[www.telegraph.co.uk]
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And the JPnese economy is or was until recently moribund (stagnant) for the best part of a generation. Keep the printing presses rolling Germany, just like you did in the 1930s when you were printing 5,10, 50, 100 million Reichmark banknotes.

What design for the future million euro banknote, an image of Angela Merkel's stunned/angry looking face?




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Edit to add:
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Another article from a writer who I regard as an unusually well informed economic commentator. That below is the opening... the article can be found here... http://www.telegraph.co.uk/finance/econ ... aign=DM672" onclick="window.open(this.href);return false;


'George Osborne has warned that the escalating showdown between Greece and the eurozone has become the “greatest risk to the global economy”.

In this the Chancellor is right. North European politicians assert with remarkable insouciance that EMU is now strong enough to withstand the effects of contagion if Greece is forced out of the euro, and some say it may even emerge stronger. This is courting fate.

It is true that QE by the European Central Bank has anaesthetised the bond markets. Yet Grexit would convert the eurozone into a fixed exchange rate system overnight, a sort of 'ERM3' in the words of Morgan Stanley. Portugal would be a sitting duck. Whether Europe’s leaders could stop the EU itself from disintegrating after such a breach of political solidarity is an open question.

Mr Osborne pointedly refused to take sides, and came very close to rebuking the EMU authorities for carelessness after his meeting with the Greek finance minister Yanis Varoufakis.

“I urge the Greek finance minister to act responsibly but it’s also important that the eurozone has a better plan for jobs and growth. We have got to make sure that in Europe, as in Britain, we choose competence over chaos.”

In Washington, President Barack Obama tilted even further towards the Greeks. “You cannot keep on squeezing countries that are in the midst of depression. When you have an economy that is in freefall there has to be a growth strategy and not simply an effort to squeeze more and more out of a population that is hurting worse and worse.”

This should be a cautionary warning to Brussels, Frankfurt and Berlin that they do not have a green light from the rest of the world to do as they like with Greece – however irritated they may feel by the provocations of Alexis Tsipras. There are larger diplomatic and strategic matters at stake. ...

[JR8]

Interesting article there from the SMH. Seems like the fall-out from the economic pygmies running the euro is descending upon the world furthest outposts; a financial Chernobyl of sorts.
What I hadn't considered is that Denmark (a non-euro country) is also pegged to the euro. And it's central bank is now having to drop rates to defend it. I suppose being within close proximity of the euro-zone, whereby 'Herr Schmidt and Monsieur Durbac' [i.e. stereotypical Germans and French] can stagger over the border carrying bin-bags of ever depreciating euro currency has it's drawbacks.
This had me wondering who if anyone might have pegs to the euro, where might the toxic cloud descend next?

And lo, not a week later, it is fully coming to pass....

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'Denmark's central bank has slashed interest rates for the fourth time in three weeks, in an attempt to defend the krone's currency ceiling against the struggling euro.
Danmarks Nationalbank lowered its deposit rate by 25 basis points (bp) to -0.75%, a more aggressive cut than the three previous 15bp reductions.
"Following the decision by the Swiss National Bank to discontinue the minimum exchange rate and the decision by the European Central Bank to launch an expanded asset-purchase programme, there has been a considerable inflow of foreign currency," the central bank said.
-----
http://www.digitallook.com/news/interna ... 48831.html" onclick="window.open(this.href);return false;

The EU's greatest historical success to date seems to be in destroying EU countries that are not even in the Godforsaken euro currency zone.

Next up, Sweden or the UK?

[Wd40]

Interesting article there from the SMH. Seems like the fall-out from the economic pygmies running the euro is descending upon the world furthest outposts; a financial Chernobyl of sorts.
What I hadn't considered is that Denmark (a non-euro country) is also pegged to the euro. And it's central bank is now having to drop rates to defend it. I suppose being within close proximity of the euro-zone, whereby 'Herr Schmidt and Monsieur Durbac' [i.e. stereotypical Germans and French] can stagger over the border carrying bin-bags of ever depreciating euro currency has it's drawbacks.
This had me wondering who if anyone might have pegs to the euro, where might the toxic cloud descend next?

And lo, not a week later, it is fully coming to pass....

-----
'Denmark's central bank has slashed interest rates for the fourth time in three weeks, in an attempt to defend the krone's currency ceiling against the struggling euro.
Danmarks Nationalbank lowered its deposit rate by 25 basis points (bp) to -0.75%, a more aggressive cut than the three previous 15bp reductions.
"Following the decision by the Swiss National Bank to discontinue the minimum exchange rate and the decision by the European Central Bank to launch an expanded asset-purchase programme, there has been a considerable inflow of foreign currency," the central bank said.
-----
http://www.digitallook.com/news/interna ... 48831.html" onclick="window.open(this.href);return false;

The EU's greatest historical success to date seems to be in destroying EU countries that are not even in the Godforsaken euro currency zone.

Next up, Sweden or the UK?

Interesting times

A related article:
http://www.vox.com/2015/2/5/7981461/neg ... tes-europe" onclick="window.open(this.href);return false;

[JR8]

Thanks, a useful read.... these are interesting times.

Right, so now all the blue-chip alternatives are lined up ready, it seems like it's time for the second-stringers to come into the cross-hairs. Slovakia, come on down, your time to be destroyed has come! Who'd have thought money would flee the 'sophistications' of Northern Europe for that ex Commie-bloc state...

Quite amazing to behold.

[Wd40]

I just finished reading the article and the last part:

What are the implications going forward?

The big one is that central banks, including the United States', may want to consider being bolder with their interest rate moves. For years now, the Federal Reserve's position has been that it "can't" cut interest rates any lower because of the zero bound. Instead, it's tried various things around communications and quantitative easing. But maybe interest rates could go lower? Unlike the European Central Bank, the Federal Reserve pays a small positive interest rate on excess reserves. Fed officials normally say this doesn't make a difference in practice, but it looks like negative rates on excess reserves may be the key to negative bond rates.

At the moment, the Fed is debating how quickly to raise interest rates, but with inflation still running well below 2 percent maybe it should try cutting them — paired with a change in reserve policy, if necessary.

So may be Strong Eagle will be proved right after all, Fed might actually cut rates further to zero and into the -ve, instead of increasing, if the the USD gets too strong, after all if the EU countries can do it why cant the FED?

[JR8]

Nah, the Fed are the 'Beacon to the world'. Expect no surprises of any kind from them.

Otherwise lets all just pack up and go home... all bets would be off.

[Primrose Hill]

I just finished reading the article and the last part:

What are the implications going forward?

The big one is that central banks, including the United States', may want to consider being bolder with their interest rate moves. For years now, the Federal Reserve's position has been that it "can't" cut interest rates any lower because of the zero bound. Instead, it's tried various things around communications and quantitative easing. But maybe interest rates could go lower? Unlike the European Central Bank, the Federal Reserve pays a small positive interest rate on excess reserves. Fed officials normally say this doesn't make a difference in practice, but it looks like negative rates on excess reserves may be the key to negative bond rates.

At the moment, the Fed is debating how quickly to raise interest rates, but with inflation still running well below 2 percent maybe it should try cutting them — paired with a change in reserve policy, if necessary.

So may be Strong Eagle will be proved right after all, Fed might actually cut rates further to zero and into the -ve, instead of increasing, if the the USD gets too strong, after all if the EU countries can do it why cant the FED?

May well be right

[JR8]

As the F-18's roar overhead now, as they do all day long these days, and the children nearby concurrently sing patriotic songs ('We are Singapore', etc).... one's mind begins to question what kind of advanced society 'we' have arrived at in this world ...


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'For the third time in a century, America will have to ride to Europe's rescue
From the sidelines, the US is watching the unfolding Greek tragedy with growing horror. It must stand ready to assist as the euro breaks apart
It would be the third time in a century. Will America once more end up having to save the fratricidal Europeans from themselves? In Washington, there is a sense of events spiralling out of control, and of again getting drawn into Europe’s centuries old propensity to self destructive madness.

The EU’s evident inability to contain the geo-political ambitions of Vladimir Putin may be the most visible of America’s latest concerns, but the more immediate danger centres on the stand-off with Greece, which grows uglier by the day. Greece’s latest overtures to the Russians make the situation seem more alarming still.

Tuesday's apparent olive branch from Greece’s celebrity finance minister, Yanis Varoufakis, is in truth no compromise at all, despite the evident relief it brought to financial markets; it was merely the same demands dressed up in more acceptable language. Speculation of a six month programme extension was also fast slapped down by the German finance ministry.

To my mind, this is not a game Greece can win, if only because it is also not a confrontation which politically Berlin can afford to lose. [continues]
---
http://www.telegraph.co.uk/finance/comm ... ign=DM1090" onclick="window.open(this.href);return false;

[JR8]

Now later, continuing to read the rest of the article....

---
'Yet the bigger worry revolves around the supposed geo-political consequences of Greek expulsion from the euro. Looking back at the history of Greece’s “fast track” entry into the European Union, without pre-conditions - and then later the euro, when the entry rules were similarly waived or manipulated - it was all about political enlargement, European security, cementing democracy in this Balkan outpost, and establishing a bulkhead against Russia and other potentially hostile forces to the East. It was “manifest destiny” that drove the process, not economic compatibility.'
---


So really Germany should be pointing any fingers towards themselves.... but naturally that's not likely to happen any time soon.

[JR8]

The article ends...

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'Greece then needs to be supported with a realistically constituted programme of international support, including American and British bilateral loans, in place of the nonsense imposed on it by the Troika. Without the adjustment mechanism of devaluation, this was always doomed to fail.

After the Second World War, America helped rebuild Europe with Marshall Plan aid. Ironically, a condition of such aid was the reduction of interstate barriers; in a sense, it provided the foundation of the European Union, and for the unprecedented period of European stability and prosperity that followed. How could Europeans have again been so careless with their inheritance?'
---


'Take that, (Pow!)' - well, quite.

[JR8]

'Meanwhile, a preliminary reading of German consumer prices showed the country fell into deflation in January. Data from the Statistiches Bundesamt Deutschland showed consumer prices declined by 0.4% in January, more than the expected fall of 0.3%, and the 0.2% rise in December.'

http://www.morningstar.co.uk/uk/news/AN ... 8h8wN.dpuf" onclick="window.open(this.href);return false;


Good grief, who does Germany think it is demanding to give economic lessons to others, when it's own economy is so stuffed-up itself?

Edit to add:

'Spreadex analyst Connor Campbell said: "The Eurozone has moved at a glacial pace of late in regards to its key decisions, and the constant stagnation in the region is draining the markets."
...
IG analyst Chris Beauchamp said: “The euro has been able to hold its ground for the time being, but this sanguine approach to the Eurogroup meeting will not last should the finance ministers depart without an agreement that will tide Greece over for the time being.'
http://www.digitallook.com/news/fx/fx-r ... 50805.html" onclick="window.open(this.href);return false;

What's that expression again .... '[Emperor] Nero fiddled while Rome burned'.

Now 'Empress Merkel' is doing similar for Athens...

[JR8]

The EU's greatest historical success to date seems to be in destroying EU countries that are not even in the Godforsaken euro currency zone.
Next up, Sweden or the UK?

And one week later... 'Come on down Sweden, your turn has come!'

'SWEDEN JOINS THE CURRENCY WARS
The Scandinavian state's central bank has become the latest to cut interest rates below zero and launch quantitative easing as attempts to devalue currencies spread across Europe.
The Riksbank has joined Denmark in attempting to compete with the euro's decline. Morgan Stanley says the move revisits the "ghost of the 1930s".' '
http://www.telegraph.co.uk" onclick="window.open(this.href);return false;

[Strong Eagle]

All of this interest rate cutting means there is no way the USA is going to raise rates. There is no need to. There is so much money chasing investments and such turmoil in the currency markets that the US dollar is a safe haven even if it is paying nothing. Why would the US increase its debt service costs when it doesn't have to?