2 Feb 2015
Elements of a EZ crisis - BBH
FXStreet (Guatemala) - Analysts at Brown Brothers Harriman highlighted areas around the EZ crisis.
Key Quotes:
"Part of the crisis in the euro zone is shaped by the abandonment of this principle that was enshrined in the ERM of reciprocal action by the strong and weak countries."
"Both had a shared responsibility, agreed to by treaty, to participate in the adjustment process. EMU freed Germany from such obligations while preventing its neighbors from devaluing, as they previously periodically did."
"The key take away is that policy makers and investors still do not know the practical limit of a central bank's balance sheet. We have walked through Alice in Wonderland's looking glass."
"A world of negative interest rates seemed incomprehensible a few short months ago. Now estimates suggest that between Europe and Japan there are more than $3 trillion of debt securities with negative yields."
"For so long, interest rates were thought to be bounded by zero. Policy makers and investors are still fishing for the new limit."
Key Quotes:
"Part of the crisis in the euro zone is shaped by the abandonment of this principle that was enshrined in the ERM of reciprocal action by the strong and weak countries."
"Both had a shared responsibility, agreed to by treaty, to participate in the adjustment process. EMU freed Germany from such obligations while preventing its neighbors from devaluing, as they previously periodically did."
"The key take away is that policy makers and investors still do not know the practical limit of a central bank's balance sheet. We have walked through Alice in Wonderland's looking glass."
"A world of negative interest rates seemed incomprehensible a few short months ago. Now estimates suggest that between Europe and Japan there are more than $3 trillion of debt securities with negative yields."
"For so long, interest rates were thought to be bounded by zero. Policy makers and investors are still fishing for the new limit."