The elections in Greece and France have brought yet another bout of euro crisis. It had been so far a game played between policy makers (EU, ECB, IMF) and markets (especially bond markets), in which policy reacted with bailouts and political agreements to every bout of market pressure. There is a new player now, which read more

Today’s coordinated central banks action is a very positive step to stabilize markets, as it amounts to the shock to expectations needed to break the crisis dynamics that had intensified in the last 2-3 weeks. However, it is the most prominent proof that European crisis management had failed, which fed speculation of a euro break read more

European policy makers seem to be headed in the right direction. Magnitude and timing remain uncertain. Today’s talk of a package in the 2 trillion euro area was not confirmed, but it is roughly what the market is expecting. Since before August the key driver in markets has been the euro crisis. Less than a read more

If it wasn’t so painful to watch and live through, the European movements towards a hopefully final rescue of the euro could be a modern opera[1]. Last weekend in Washington (annual IMF meetings), we could hear from senior EU and ECB officials about an idea to leverage the EFSF to bring ‘shock and awe’ with read more

Over the last four weeks of market turmoil we have communicated with clients mostly via email and the monthly letter. Here is a brief summary of those communications (click on each for the full communication, though it is only in Spanish, emails from Aug 5th and Aug 9th, letter from Sept. 1st), with only a read more

Reality bites. Europe recently admitted a eurozone member could restructure debt. The US government would soon be downgraded. These are realities that took time to sink in. Markets are taking these gradually, though some asset classes react more than others. The key issue here is that so much policy uncertainty in G7 for so long read more

European leaders meet tomorrow, and I am not the only one that believes it is maybe the most important meeting yet. When the crisis was at the periphery, it was easy to postpone, buy time, not a humongous issue, it was just a fiscal problem of small countries. Now that Italy is at risk, the read more

The selloff this week is due to the quick and simultaneous effects of concerns on the 3 main risks on the global economy. For some time now we had identified 3 key risks, and after a quick recovery from May-June’s volatility, those 3 risks came to center stage at once: 1-    Euro crisis, due to read more

After weeks of disorderly discussions among EU members on what to do with Greece, Germany appears to have made its position clear in a letter from its Finance Minister to other EU members. About ten days ago it appeared as if the ECB and other EU members had convinced Germany to back off from its read more

The US government could be shut down this week, if Democrats and Republicans do not agree on a budget for the ongoing fiscal year. This is just the first and simplest political decision on fiscal matters in a series of decisions coming up. Extending the debt ceiling comes next. The real thing is a medium-term read more