The euro zone infernal machinery: a story of collective suicide

Posted on 29. nov, 2011 by Riskelia in Weekly Focus

In the unfolding euro zone tragedy, all protagonists involuntarily feed an infernal machinery as the inefficient euro zone institutions are driving it to a certain death. Here are the players of the tragedy with their motives:

The ECB is ‘independent’. It fights against inflation and it has extended its mandate, providing liquidity to the financial system. [...]

Inflation or deflation?

Posted on 05. avr, 2010 by Steve Ohana in Weekly Focus

We have already emphasized that the weak link of the financial system is the G10 solvency issue. Despite the continuous rise in financial assets which may last farther out, particularly in the commodity complex, the solvency problem is still present at the heart of the financial system as reflected by a snapshot of Riskelia’s Radar [...]

What will the next crisis look like?

Posted on 29. mar, 2010 by Jean Jacques Ohana in Weekly Focus

The « Black Swan » theory, introduced by Nassim Taleb, contends that market disruptions arise in a totally unpredictable manner, independently of the players’ behaviour. Yet, most market disruptions are endogenous to the financial system, the final dislocation representing a phase transition of an unstable system from a state of expansion to a state of implosion.
The financial [...]

Deciphering the G10 sovereign debt crisis: a macroeconomic perspective

Posted on 14. mar, 2010 by Jean Jacques Ohana in Weekly Focus

When a country runs a current account deficit, the private sector and the public sector cannot deleverage at the same time. Let us explain this simple fact.
There is an economic equilibrium relating current account balance, budget balance and private sector balance:
Private Balance + Budget Balance = Current Account Balance
where we denote Private Balance = Private [...]

How did Greece manipulate its debt accounts?

Posted on 22. fév, 2010 by Jean Jacques Ohana in Weekly Focus

It has recently been revealed that Greece gamed the European Commission rule by maintaining artificially its Debt to GDP ratio below 60% for several years. In 2001, when Greece joined the single currency zone, it issued more than 10 Billions USD debt denominated in dollar and yen. It contracted a cross currency swap with Goldman [...]

Banks seism and financial crisis

Posted on 05. fév, 2010 by Jean Jacques Ohana in Weekly Focus

Is the financial crisis over? This question has been raised many times, but this is an issue which cannot be solved objectively since we can make as good a case arguing that that the crisis is behind us or on the contrary highlighting the new sources of concern in the financial system.
Riskelia proposes an objective [...]

Sovereign solvency risk and financial stability

Posted on 31. jan, 2010 by Jean Jacques Ohana in Weekly Focus

Since the banking system collapsed in September 2008, private and corporate debts have been replaced by public debt. Since then, sovereign solvency risk has become investors’ major concern, provoking successive dramatic surges in government interest rates: Greece, Portugal and Spain… After the latter countries, which country will be next to be downgraded? The risk concerns [...]