Saturday, December 27, 2014

The 'subprime governments crisis'

Compared to Europe's central bankers, the U.S. financial system is run by heroes, says economist Ed Yardeni

The 'subprime governments crisis'

Economist Ed Yardeni, a former investment strategist at Deutsche Bank and Prudential, is no fan of the Obama administration. And yet, compared to Europe, Washington has its act together, Yardeni says in today's "Dr. Ed's Morning Briefing" newsletter:  "Europe desperately needs a leader with the stature of Tim Geithner. Seriously. He is Churchillian compared to the policy elite running around Europe." 

Like who? Like Axel Weber, head of Germany's Bundesbank, who said re the attempted financial rescue of Greece and other profligate countries: “It is important not to underestimate the dangers to financial stability that still exist... The focus of markets has shifted in recent months towards concerns about the situation of public finances in a number of countries across the globe.”

"That’s true," Yardeni concludes, "but do we need this key member of the ECB to tell us that the subprime mortgage crisis may be morphing into a subprime governments problem?"

Yardeni is worried money markets are starting to stress out again, the way U.S. markets did in the subprime loan crisis that started in 2009. Though he also seems undecided between his stockbroker half, which wants happy talk, and his economist half, which wants straight talk, from the people who are supposed to be in charge.

ALSO:  David Kotok of Cumberland Advisors calls all this growing pains: "The euro will emerge as a battle-tested currency.  This is its first crisis of any proportion and comes on the heels of a Maastricht Treaty passed in 1992, a virtual-euro currency launched in 1999, and a paper currency successfully introduced in 2002... Now that the worst news of the crisis is public and on the front page of every magazine, we think it presents opportunity for investors.  As with every crisis, investor opportunity is best when things look their worst and when uncertainty is high.  We are here, and the time is now."

BUT MEANWHILE: Europe's troubles are pushing farm prices down, writes Janney Capital Markets analyst and inflation-watcher Jonathan Feeney. "Even after the EU passed a €750M bailout package, the markets continue to worry about the strength and solvency of the euro, which pushed the US dollar up 2% last week," Feeney told clients in a report. "Concerns that Europe’s crisis could drag the global economy into another recession battered most commodities, namely proteins, grains, and crude oil."

 

Joseph N. DiStefano
About this blog

PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at JoeD@phillynews.com or 215 854 5194.

Joseph N. DiStefano
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