<![CDATA[Hedgehogs.net: Ken Yeadon's connections' blogs]]> http://www.hedgehogs.net/pg/blog/keny/friends/?view=rss http://www.hedgehogs.net/pg/blog/asiablues/read/11520869/charting-greek-referendum-path Wed, 01 Jul 2015 17:03:22 +0100 http://www.hedgehogs.net/pg/blog/asiablues/read/11520869/charting-greek-referendum-path <![CDATA[Charting Greek Referendum Path]]> By EconMatters

Greece missed a payment to the The International Monetary Fund (IMF) of about 1.5 billion euros, or $1.7 billion, on Tuesday which officially put the country in the ranks of Sudan, Somalia and Zimbabwe. Although the IMF is not considered as a commercial lender, and the Fund does not use the term 'default', the inescapable conclusion is that Greece has indeed defaulted. This occurred in conjunction with Greece’s European creditors rejection of a request by Greece for a 3rd bailout at eleventh-hour.

The Biggest Deadbeat of IMF

As reported earlier today, the missed payment by Greece dwarfs every other deadbeat nations in the Fund’s history, and Greece will go down in history as the first developed country to miss an IMF payment.

Tsipras Cedes

Now that Greece has got a taste of financial chaos and social unrest, the latest Act from this Greek Drama is that Prime Minister Alexis Tsipras has signaled that the government is willing to accept many of the terms of a bailout package that it had earlier rejected (It is like why bother? Greece could have get this done months ago.)

Merkel Says NEIN!

But it seems too little and too late as German Chancellor Merkel, burned by months of brinkmanship, said “There can be no negotiations for a new credit program before the referendum.” Merkel's finance minister, Wolfgang Schaeuble, also told reporters that The country has provided “no basis for talking about any serious measures” to break the deadlock.

Path of The Greek Referendum

So for all likelihood, the referendum is still to take place on Sunday, July 5.  Below is a flowchart by Bloomberg showing possible outcomes of the Greek Referendum.  

If Greece votes “Yes,” it might be able to get a third bailout package in a few weeks....till the next missed debt payment, and Tsipras and his leftist Syriza party most likely would be ousted. 

If voters say “No,” Grexit could be in the cards, and also means Greek banks and the government would run out of cash very soon compounding the current chaos of capital controls and pension rationing.    

Nevertheless, a "No" vote does not necessarily rule out the possibility of another round of new negotiations and some kind of deal (although I personally doubt the German would go for that).      

Unlikely to Survive A Grexit 

In my opinion, Greece inevitably will need to go on some kind of austerity program to steer the country back to economic and financial health.  Judging from the anti-austerity movement in Greece, and everything else transpired in the past few years, it is highly unlikely that after exiting (and without the support of) the euro and EU bloc, Greece would be capable of a proper reform to land on its feet again.    

Many Greeks Still in Fantasy Land

Tsipras is calling for 'No' Vote in July 5 Referendum, and it seems he still has the support of many Greek citizens wanting to call the bluff of EU, IMF, and Merkel, etc.  Well, when you play with fire, be ready to accept the consequence of a totally burnt-down Greek house.       

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters. © EconMatters All Rights Reserved | Facebook | Twitter | Free Email | Kindle

http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11520862/georgia-raises-rate-50-bps-to-55-sees-65-endyear Wed, 01 Jul 2015 16:23:04 +0100 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11520862/georgia-raises-rate-50-bps-to-55-sees-65-endyear <![CDATA[Georgia raises rate 50 bps to 5.5%, sees 6.5% end-year]]>     Georgia's central bank raised its benchmark refinancing rate by a further 50 basis points to 5.5 percent and said it considers it necessary to raise the rate gradually to 6.5 percent by the end of the year, an increase from 5.5 percent that it forecast in May.
    The National Bank of Georgia (NBG), which has now raised its rate by 150 basis points this year, said it expects inflation to reach it's 5.0 percent target in the second half of this year.
    Georgia's inflation rate rose to 3.5 percent in May from 2.5 percent in April though the rise in inflation is being partly offset by lower fuel prices.
    But the lari's exchange rate depreciated from November last year until mid-May, putting pressure on long-term interest rates and driving up inflation expectations, the central bank said. Changes in the exchange rate have already affected demand for imports, which will help adjust the external balance.
    The lari started falling in November 2014 and hit a low of 2.36 to the U.S. dollar on May 16 before rebounding. Today the lari was trading at 2.24 to the dollar, for a 16 percent depreciation this year.
    "The domestic demand remains weak," the NBG said, with economic activity up by 2.1 percent in May.

   The National Bank of Georgia issued the following statement:

"The Monetary Policy Committee (MPC) of the National Bank of Georgia (NBG) met on July 1, 2015 and decided to increase the refinancing rate by 50 basis points to 5.5 percent. 

The monetary policy decision is based on the macroeconomic forecast, which shows increase in the inflation expectations as well as in the domestic and external risks affecting the forecast inflation. In line with the existing forecast the Monetary Policy Committee considers necessary to increase the monetary policy rate gradually to 6.5 percent by the end of the year. 

The domestic demand remains weak. According to preliminary information in May the economic activity grew by 2.1%. The recovery of the demand is furthermore hindered by the decline in the loan growth in the recent months. The significant decrease in import also indicates the weakened demand. 

The inflation rate has been increasing during the recent months with the annual decrease in fuel prices partially offsetting the inflation rise. The deterioration in economic trends in our main trade partners continues to affect negatively Georgian economy. Goods export, and remittances have decreased, while the growth rate in tourism inflows is low. At the same time the pressure on the policy of the National Bank pushes up the long-term interest rates, reduces the efficiency of the monetary policy transmission and drives up the inflation expectations. The changes in the exchange rate have already affected the import demand, which in turn ensures the adjustment of external imbalance. According to current forecast the inflation will reach its target value in the second half of 2015. 

The NBG will continue to monitor the developments in the economy and financial markets and will use all means and instruments at its disposal to ensure price stability. The dynamics of further changes in monetary policy will depend on the dynamics of expected inflation, tendencies in economic growth, global and regional economic environment.

The next meeting of the Monetary Policy Committee will be held on August 12, 2015."


http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11520856/central-bank-news-link-list-july-1-2015-greece-poses-risk-to-uk-financial-system-says-bank-of-england Wed, 01 Jul 2015 15:43:01 +0100 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11520856/central-bank-news-link-list-july-1-2015-greece-poses-risk-to-uk-financial-system-says-bank-of-england <![CDATA[Central Bank News Link List - July 1, 2015: Greece poses risk to UK financial system, says Bank of England]]>
Here's today's Central Bank News' link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don't miss any important news.

http://www.hedgehogs.net/pg/blog/mikeohara/read/11520852/the-rise-of-the-nonbank-fcm Wed, 01 Jul 2015 14:23:21 +0100 http://www.hedgehogs.net/pg/blog/mikeohara/read/11520852/the-rise-of-the-nonbank-fcm <![CDATA[The Rise of the Non-Bank FCM]]>

This article was originally published at the Object Trading blog, and is reproduced here with permission.
By Steve Woodyatt


http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11520847/romania-holds-rate-on-greek-uncertainty-low-inflation Wed, 01 Jul 2015 14:03:01 +0100 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11520847/romania-holds-rate-on-greek-uncertainty-low-inflation <![CDATA[Romania holds rate on Greek uncertainty, low inflation]]>     Romania's central bank held its monetary policy rate steady at 1.75 percent, as expected, citing the uncertainty surrounding the situation in Greece, the country's agreements with international institutions, the divergence in monetary policy among major central banks worldwide and the expectation that inflation will be negative in the short term.
    The National Bank of Romania (NBR), which cut its rate by 350 basis points from July 2013 through May this year, added that the exchange rate of the leu had "posted relatively larger fluctuations, on the back of tensions relative to the situation in Greece and international financial market volatility."
    The leu started depreciating against the U.S. dollar in July 2014 before falling to a low of 4.23 in mid-March. Since then it has been largely stable though its exchange rate has been fluctuating. Today the leu was trading at 4.03 to the dollar, down 8 percent this year.
    Romania's inflation rate rose to 1.16 percent in May from 0.65 percent in April but the central bank said it still expects inflation to enter and remain in negative territory in the short term as the scope of a reduced VAT rate hits all food items and public food services along with a narrowing of the negative output gap and a rise in unit labour costs.
   Last month the NBR forecast inflation of around nil between June and May 2016, before returning to the bank's tolerance rate in the fourth quarter of 2016, as the VAT rate on June 1 was cut to 9 percent from 24 percent on all food items, non-alcoholic beverages and public food services.

    The National Bank of Romania issued the following statement:

"In its meeting of July 1 2015, the Board of the National Bank of Romania decided the following:
  • to keep unchanged the monetary policy rate at 1.75 percent per annum;
  • to pursue an adequate liquidity management in the banking system;
  • to maintain the present levels of the minimum reserve requirements ratios on both leu-denominated and foreign-exchange denominated liabilities of credit institutions.
The NBR is closely monitoring the domestic and international developments in order to ensure an adequate use and dosage of its instruments in a bid to achieve the price stability objective in the medium term and maintain financial stability.
The latest macroeconomic data point to the annual inflation rate remaining below the lower bound of the variation band of the flat target, along with the pick-up in economic growth in 2015 Q1, driven by stronger final consumption and investment.
In May 2015, the annual inflation rate climbed to a higher-than-expected 1.2 percent, as volatile prices saw a relative step-up in their annual increase, while the average annual inflation rate was stuck at 0.9 percent for the third month in a row. The average annual inflation rate based on the Harmonised Index of Consumer Prices, which is relevant for assessing convergence with the European Union, stayed put at 1.1 percent.
The assessment of monetary indicators reveals faster growth of leu-denominated loans, amid the successive policy rate cuts, the gradual reduction in minimum reserve requirements ratio on credit institutions’ leu-denominated liabilities and adequate liquidity management in the banking system. Forex loans (stocks) contracted further, their share in total credit to the private sector reaching 53.7 percent, a record low since December 2007, from a peak of 64.4 percent in May 2012, which helps mitigate the risks to financial stability. This development is beneficial for consolidating monetary policy transmission and for strengthening the resilience of the Romanian financial system.
At the same time, the exchange rate of the leu posted relatively larger fluctuations, on the back of tensions relative to the situation in Greece and international financial market volatility.
The most recent assessments reconfirm the outlook for the annual inflation rate to enter and remain in negative territory over the short term, as a result of broadening the scope of the reduced VAT rate to all food items and public food services as of 1 June 2015, but also amid the narrowing of the negative output gap at a quicker pace and the rise in unit labour costs.
All these, combined with the current state of affairs, i.e. the situation in Greece, uncertainty surrounding Romania’s agreements with international institutions and the divergence between the monetary policy stances of major central banks worldwide, call for a prudent reconsideration of the monetary policy cycle.
In light of the above and based on currently available data, the Board of the National Bank of Romania has decided to keep the monetary policy rate unchanged at 1.75 percent per annum, to continue to pursue an adequate liquidity management in the banking system and to maintain the present levels of the minimum reserve requirements ratios on both leu- and foreign currency-denominated liabilities of credit institutions.
The NBR Board reiterates that its decisions aim to ensure price stability over the medium term in a manner supportive of sustainable economic growth, also via the rebound in lending, while safeguarding financial stability.
The prudent monetary policy stance and the preventive measures taken in the area of prudential supervision of the banking sector are meant to reinforce the Romanian economy’s capacity to withstand external shocks.
The NBR is closely monitoring the domestic and international economic developments in order to ensure an adequate use and dosage of its available instruments so as to achieve the price stability objective in the medium term and maintain financial stability.
According to the approved calendar, the next NBR Board meeting dedicated to monetary policy issues is scheduled for 4 August 2015."

http://www.hedgehogs.net/pg/blog/skinnercm/read/11520819/things-worth-reading-1st-july-2015 Wed, 01 Jul 2015 08:59:31 +0100 http://www.hedgehogs.net/pg/blog/skinnercm/read/11520819/things-worth-reading-1st-july-2015 <![CDATA[Things worth reading: 1st July 2015]]>

Things we're reading today include ...


]]> 11520819 http://www.hedgehogs.net/pg/blog/skinnercm/read/11520816/watch-out-fintech-the-banks-are-coming Wed, 01 Jul 2015 08:59:24 +0100 http://www.hedgehogs.net/pg/blog/skinnercm/read/11520816/watch-out-fintech-the-banks-are-coming <![CDATA[Watch out Fintech, the Banks are Coming!]]>

I was upset to be unable to join the recent debate in New York on digital banking.  It ended up that I was conflicted and had to defer to a far mightier second man, Ron Shevlin. 


]]> 11520816 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11519942/dominican-republic-maintains-rate-sees-inflation-rising Wed, 01 Jul 2015 03:53:03 +0100 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11519942/dominican-republic-maintains-rate-sees-inflation-rising <![CDATA[Dominican Republic maintains rate, sees inflation rising]]>    The central bank of the Dominican Republic held its monetary policy interest rate steady at 5.00 percent, saying inflation is expected to remain below the lower limit of the target range in 2015 but then converge to the center of the range during the policy horizon.
   The Central Bank of the Dominican Republic (CRBBB) has cut its rate by 125 basis points this year and most recently in May.
    Consumer price inflation in the Dominican Republic rose slightly to 0.23 percent in May from minus 0.04 percent in April.
    The central bank targets inflation of 4.0 percent, plus/minus 1 percentage point.
    The economy of the Dominican Republic is developing in line with forecasts and the monthly indicator of economic activity (IMAE) expanded by 6.1 percent at the end of April while the annual growth of credit to the private sector expanded by around 12 percent in the June.
    Last month the central bank's governor raised his forecast for economic growth this year to around 6 percent, up from the previous forecast of 5.0-5.5 percent.

    The Central Bank of the Dominican Republic issued the following statement:

"At its monetary policy meeting in June 2015, the Central Bank decided to keep its interest rate monetary policy at 5.00% annually.
The decision on the benchmark rate was adopted after analyzing the national macroeconomic outlook, especially the balance of risks around inflation projections and expectations of the private sector and relevant international environment for the Dominican economy. Indeed, the annual rate of inflation in May amounted to 0.23%, while in cumulative terms inflation stood at 0.19% at the end of that month.
 Likewise, core inflation, monetary conditions related to the economy, stood at 2.33% in May yoy. The projections continue to indicate that inflation would remain below the lower limit of the target set in the monetary program for 2015, converging to the center of the target level of 4.0% ± 1.0% in the monetary policy horizon.
Internationally, the growth of United States of America (USA) in the first quarter was revised from a preliminary estimate of 2.4% to 2.9% in June. However, recent growth has led to a downward revision of forecasts of  Consensus Forecast . In that sense, the US growth forecast was revised from 2.5% to 2.2% for 2015, while recovery is expected around 2.8% for 2016.
According to this source, the growth projections for the euro area are around 1.5%. However, there is uncertainty as to the outcome of the crisis in Greece, which could adversely affect the European economy. Projections for Latin America were revised downwards from 0.4% to 0.3%, while Asia is expected to grow around 4.7% this year. In the last month, international financial conditions have been restricted, while the dollar has tended to appreciate. Oil prices remain below the levels of recent years, at least until 2016.   
Domestically, the economy develops in line with projections. The trend cycle monthly indicator of economic activity (IMAE) has a growth rate of 6.1% at the end of April. Similarly, the annual growth rate of credit to the private sector in national currency expands around 12.0% in June year on year.
It is expected to continue to strengthen the dynamism of credit to the extent that the transmission mechanism of the recent decision to reduce the interest rate monetary policy (TPM) to the lending rate is completed. It notes that the impact of reductions in the MPR in the lending rate would be even higher taking into account the recent resolution of the Monetary Board to allow the use of resources in reserve requirements for low-cost housing solutions. It is important to note that since the TPM fell for the first time, the weighted average lending rate has fallen more than 175 basis points in the financial system.   
On the side of fiscal policy, the rate of revenue growth has exceeded the growth rate of government spending so far this year, obtaining a primary surplus above the provisions of the National Budget 2015 of 0.4% of GDP. Also, the external accounts evolve successfully, projecting a deficit of current account of the balance of payments at around 2.0% of GDP by year-end.This trend in external accounts will help maintain the relative stability of the exchange rate, while the CRBBB continues its process of accumulation of international reserves.     
The CRBBB confirms its commitment to implement monetary policy aimed at achieving its inflation target, while also continue to monitor the evolution of the world economy and the domestic situation, to take the necessary measures to risks to price stability and the proper functioning of the financial and payment systems."

http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11519718/central-bank-news-link-list-june-30-2015-ecb-ready-to-test-freedom-to-act-with-new-tools-for-greek-crises Tue, 30 Jun 2015 18:52:57 +0100 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11519718/central-bank-news-link-list-june-30-2015-ecb-ready-to-test-freedom-to-act-with-new-tools-for-greek-crises <![CDATA[Central Bank News Link List - June 30, 2015: ECB ready to test freedom to act with new tools for Greek crises]]>
Here's today's Central Bank News' link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don't miss any important news.

http://www.hedgehogs.net/pg/blog/mikeohara/read/11519715/adventures-in-the-cloud-from-capex-to-opex-amp-beyond Tue, 30 Jun 2015 18:13:17 +0100 http://www.hedgehogs.net/pg/blog/mikeohara/read/11519715/adventures-in-the-cloud-from-capex-to-opex-amp-beyond <![CDATA[Adventures in the Cloud: From Capex to Opex &amp; Beyond]]>