New FT economics blog: “The Money Supply”

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The FT website now carries a new group blog on economics: the link is here.

7 Responses to “New FT economics blog: “The Money Supply””

  1. Derek Brawn Says:

    Moody’s are forecasting Ireland Debt/GDP of 115% by 2011 with servicing costs of 18% of general government revenue.

    Their point about no imminent further downgrades of AAA-rated sovereigns is a moot one – from a credit rating perspective, investors who purchase a bond with a split-rating cannot cherry-pick the higher rating. So as long as S&P downgrades further, plan fund sponsors usually lay down rating criteria for instititutonal investors, therefore debt rated Aa1/A+ is no longer double-A, but single-A.

    S&P has downgraded Rep. of Ireland twice and Fitch downgraded too long-before Moody’s did. S&P are heavily ratio-driven i.e. Debt/GDP > 100% => prompt downgrade (as they did before with both Italy & Japan).

  2. Derek Brawn Says:

    Moody’s are forecasting Ireland Debt/GDP of 115% by 2011 with servicing costs of 18% of general government revenue.

    Their point about no imminent further downgrades of AAA-rated sovereigns is a moot one – from a credit rating perspective, investors who purchase a bond with a split-rating cannot cherry-pick the higher rating. So as long as S&P downgrades further, plan fund sponsors usually lay down rating criteria for instititutonal investors, therefore debt rated Aa1/A+ is no longer double-A, but single-A.

    S&P has downgraded Rep. of Ireland twice and Fitch downgraded too long-before Moody’s did. S&P are heavily ratio-driven i.e. Debt/GDP > 100% => prompt downgrade (as they did before with both Italy & Japan).
    P.S. – Sorry, forgot to tell you great post!

  3. Michael Hennigan - Finfacts Says:

    Just a reminder, of the Wall Street Journal’s existing economics blogs, which does not requie a sub.

    http://blogs.wsj.com/economics/

  4. Pat Donnelly Says:

    http://www.telegraph.co.uk/finance/currency/6152204/UN-wants-new-global-currency-to-replace-dollar.html#comments

    Only 260 comments ….. not controversial at all. This has been simmering for a while and while the USA has the largest arms industry and greatest armed forces by an order or two of magnitude over the main proponents of this, it can be pooh-poohed. Or can it? If the $ were no longer the reserve currency, the USA would suffer enormously. By their deliberate and conscious financial engineering, they have forfeited the moral claim to the role. They are financially weak but so are most economies that might want to be part of a reserve currency. As international agreement is essential to become the reserve currency and the backing of it must be productive wealth of some sort, it might be the Petro-commodity producers who form a reserve, allowing the $ to stay but diluting it considerably. The effect on Ireland is likely to be negative? But it is unlikely, for now.

  5. Michael Harvey Says:

    @Pat Donnelly

    I am not so sure it will be that far off. Last week China officially put their money where their mouth is.

    The Chinese have been calling for a reserve alternative for over a year. Last week saw the Chinese government agree to a $50 billion currency-diverse deal with the IMF.

    It is the first of its kind for any nation. China bought $50 billion worth of bonds denominated in Special Drawing Rights, that represent a basket of global currencies

    As I understand it the basket is split between the dollar, euro, pound and yen.

    Not a great choice. But understandable in political terms.

    Brazil and Russia have apparently pledged to buy $10 billion worth of bonds as well.

    Last weekend Heiner Flassbeck, director of the United Nations Conference on Trade and Development had this to say….

    “An initiative equivalent to Bretton Woods or the European Monetary System is needed,”

    “An economy whose currency is used as a reserve currency is not under the same obligation as others to make the necessary macroeconomic or exchange-rate adjustments for avoiding continuing current account deficits.

    Thus, the dominance of the dollar as the main means of international payments also played an important role in the build-up of the global imbalances in the run-up to the financial crisis.”

    Would a double dip hasten the demise?

  6. Michael Harvey Says:

    @all

    More Dutch Courage…

    The BBC is reporting a new code of conduct has been appoved for Dutch bankers bonuses.

    http://news.bbc.co.uk/2/hi/business/8246651.stm

  7. Mark Dowling Says:

    You see – the FT/WSJ bloggers and Krugman get/will get media cred because they are sucking at the MSM teat, whereas you guys and the Gang of 46 generally are all indie and thus embittered/crazy/putting your nose in where it’s not wanted

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