international investment position

The Monetary Economics Of Sovereign Government Rating

4 May 2012

If a government (outside monetary unions) can make a draft at the central bank, why do rating agencies rate governments’ creditworthiness? In this post, I will attempt to describe the dynamics of defaults and restructurings by going through some monetary economics of open economies. Carmen Reinhart and Kenneth Rogoff wrote a book in 2009 titled This [...]

READ MORE »

Exorbitant Privilege

18 March 2012

My last post was on U.S. net income payments from abroad and how it continues to be in the favour of the United States. The late Wynne Godley had been analyzing this since 1994. In an article titled U.S. Trade Deficits: The Recovery’s Dark Side?, written with William Milberg, he had a section called “Foreign indebtedness and the [...]

READ MORE »

Balance Of Payments: Part 1

8 March 2012

This is the first part of a series of posts I intend to write on the “rest of the world” accounts in National Accounts. This blog is about looking at economies from the point of view of National Accounts, Cambridge Keynesianism and Horizontalism. While various descriptions of balance of payments exist, most of them simply [...]

READ MORE »

€2.2 Trillion

6 March 2012

Found this graph at this hilarious blog which quotes Diapason Research. The graph plotted by the researchers uses cumulative current account balances from IMF’s data. I instead directly used the Net International Investment Position at the end of Q3 2011 from Eurostat. The blue bars plot the net indebtedness of each EA17 nation (with signs reversed) and [...]

READ MORE »

Deutsche Bundesbank’s TARGET2 Claims

5 March 2012

Yesterday Wolfgang Münchau wrote an article in the Financial Times The Bundesbank has no right at all to be baffled in which he gave his opinion about Bundesbank President Jens Weidmann’s leaked letter to the European Central Bank President  Mario Draghi expressing concerns on the Bundesbank’s TARGET2 assets. According to the Bundesbank December 2011 Monthly Report, its claims on [...]

READ MORE »

Who Is Germany?

18 December 2011

In recent posts on the Eurosystem, I looked at how it operates and in The Eurosystem: Part 2 highlighted how capital flow across borders within the Euro Area has led to a large accumulation of TARGET2 balances by some NCBs such as the Deutsche Bundesbank. Bloomberg Businessweek had an article Germany’s Hidden Risk recently on this: [...]

READ MORE »

Z.1, Q3-2011

8 December 2011

The Federal Reserve released the Flow of Funds Accounts of the United States today. The Flow of Funds Accounts provides one of the best snapshot of an economy. In an article appropriately titled ‘No one saw this coming’ – or did they? (see the full paper here), Dirk Bezemer correctly recognizes that the Economics profession’s ignorance [...]

READ MORE »

S&P Again

6 December 2011

Yesterday S&P put 15 of the EA17 governments on CreditWatch negative (comments and links here). It later came out with Credit FAQ: Factors Behind Our Placement Of Eurozone Governments On CreditWatch which gives the rationale for the action. According to the S&P For countries in net external liability positions, including the eurozone’s peripheral economies, we see growing [...]

READ MORE »

Nice Charts From The Bank Of England

1 December 2011

The Bank of England released the semiannual Financial Stability Report, December 2011 today. Complete book here. These reports have a lot of information, in addition to being well-written, well-formatted and colourful. The following graph shows how international banks’ funding from US Money Market Mutual Funds changed during the year. It also plots the Net International Investment [...]

READ MORE »

The Eurosystem: Part 3

30 November 2011

In the previous post in this series The Eurosystem: Part 2, I discussed cross-border flows within the Euro Area. With exceptions, most of these flows are current balance of payments and balance of payments financing flows. Of course there are other flows with the world outside the EA17 and these flows flow via the correspondent banking [...]

READ MORE »

Older