Monthly Archives: July 2015

Bond Liquidity Crisis Update, An Unexpected Regulatory Outcome

24/7 Wall St.

US Treasury buildingCurrencies may be considered the most liquid of all quoted markets, but the most liquid market that most investors think about day in and day out is the U.S. Treasury capital market for bonds. This market governs the direction of U.S. interest rates, and international interest rates in many cases, each day of the week. So what happens under new regulations when there is now a liquidity gap in the US Treasury market among the regulated primary dealers?

This issue has been brought up by Jamie Dimon of J.P. Morgan, and was later said to be an issue by former Treasury Secretary Larry Summers. The point made was that regulators should make a priority of addressing the problems of bond market liquidity. It was the regulation around “trading activities” which created what is perhaps unintended consequences.

24/7 Wall St. has spoken with an executive of another top firm, which is…

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How the RECOVERY will look like when Greece leaves the euro

The Market Monetarist

Most indications are that Greece this weekend effectively has been pushed over edge by the collective failures of Greek and European policy makers. The combined forces of an European monetary straitjacket, the lack of a coherent European sovereign debt crisis resolution mechanism and weak Greek institutional structures and a lot of badwill on both sides of the issue in the end did it.

And we are now facing bank run, possible banking sector collapse, the likely introduction of capital controls, a Greek sovereign default and potentially also a Greek exit from the euro area.

So there is no doubt that the future looks very bleak for the Greek economy, but there are also good arguments that all this actually might mark the beginning of a Greek economic recovery in the same way the Argentine default and devaluation in January 2002 was the beginning of a sharp recovery in Argentine growth in…

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