European Central Bank

Relative Central Bank Balance Sheets And Currency Races To The Bottom

Zero Hedge posts a weekly update of the Federal Reserve's bloated balance sheet as we believe it is critical to visualize the spiraling debt burden at our "central bank" especially since any day now the Fed will begin purchasing treasury securities outright in defiance of Geithner's lies to the contrary (China can't sell its planned Bills: at 0.925 Bid-To-Cover does anyone honestly think they will instead prefer to buy dollar denominated toiler paper and not roll out their own QE version momentarily?). As Cornelius pointed out earlier the dollar can't find a floor these days: rerisking is rampant the argument goes and that kills the greenback. However, the circular logic also holds: create dollar pain (by whatever means possible) and thus stimulate the market, Larry Summer's all time wet dream (would anyone like to wager that when hedge fund positional disclosure become mandatory DE Shaw will fight until the bitter end). And in this simplistic trilateral world (have fun gaming the yuan), the strength of any one of the trio in the dollar-yen-euro triangle results in implicit weakness of the other two. And vice versa. Yet aside from major broker-dealers who are axed in a given equity direction and thus have all the incentive to impact underlying currencies, is it possible that specific governments may manipulate currency strength via central bank positioning? Why yes.

Daily Highlights: 6.22.09

  • Asian stocks rose, led by automakers and financial companies,
  • European Central Bank’s Ewald Nowotny said the bank is likely to keep interest rates steady.
  • European stocks fell as the World Bank said the global recession will be deeper than it predicted in March
  • Federal Reserve is considering creating a utility to replace the Wall Street banks that handle US repo market transactions.
  • German business confidence increases in June, signaling an end in recession.
  • Unemployment and consumer debt are reducing home ownership by would-be buyers.
  • US airlines get thumbs down from frequent travelers.
  • World Bank predicted that the global economy will shrink 2.9% this year.
  • Carlsberg A/S is close to selling its brewery in Braunschweig, Germany.