So Germany – alone among the seven richest nations - may see a “double-dip” contraction? That at least is what the Organisation for Economic Cooperation and Development has suggested in its latest forecasts.
Really? The OECD’s forecast of a first quarter contraction seemed odd, especially as it coincided with more good news on German industrial orders. Dispelling fears of a fall, German orders held steady in February, after a whopping 5.1 per cent rise in January, the Berlin economics ministry reported. Business confidence indicators and purchasing managers’ indices have also been strong recently. Read more
The European Central Bank is being worryingly opaque – even by its own standards – about the enhanced role it is playing across Europe, including beyond the eurozone’s eastern border. It is now an open secret in financial markets that the ECB has established currency swap arrangements with the Polish and Hungarian central banks, making it easier for its counterparts in Warsaw and Budapest to provide euros locally. Yet, if you ask the ECB, it refuses to comment.
Such behaviour seems bizarre – and could be counter-productive. Read more
Today Alan Greenspan is speaking before the financial crisis inquiry commission about the Federal Reserve’s actions during the housing and mortgage boom which preceded the bust. Mr Greenspan has already spoken widely about his view of the Fed’s role in the crisis before Congress, in media interviews, in a recent academic analysis, and in his memoirs. But now it’s the FCIC’s turn to have a crack at him. They’ve got their work cut out for them if they want to get any fresh information from the former Fed chairman.
Update: They do a pretty good job. Note especially that Mr Greenspan says that Congress’s push toward homeownership affected the Federal Reserve’s decisions.
This is the second set of hearings, called “Subprime lending and securitisation and government-sponsored enterprises”. The hearing will last three days and cover 17 witnesses. Mr Greenspan is the first.
The hearing’s over. But here is the FT’s live blog, written as it happened, on the new (and old) Mr Greenspan had to say about the Fed and the crisis. Read more
The Greek central bank would pay a lower interest rate on 30-year debt than on 10-year debt, if issued today. Usually, longer-term debt commands higher interest rates, as investors want compensation for the additional risk of holding the debt for longer.
Demand for shorter-dated debt provides an explanation. The shorter-dated end of the curve (left hand side) has moved up far more than the longer-term end (right hand side).
Most outstanding Greek debt is due to expire (and need refinancing) within the next ten years (see left).
In 2009, this partly negative yield curve was rare. So far this year, it has been more common. The most inverted curve occurred around February 8, when an IMF bail-out was mooted. Yields since then have dropped for all terms, only to rise again – extremely sharply, and to record levels – since Easter. Although a bail-out plan has been agreed in principle between the EU and IMF, there is disagreement over how much Athens should pay for help. Most nations agree on a rate of 4-4.5 per cent for debt, but Germany says market rates are appropriate. Read more
Is there anything interesting to say about today’s predictable and expected Bank of Japan decision to do nothing?
Errr, I draw your attention to footnote two of the statement. Read more