FX comment: The drums of doom
“And it’s a hard, it’s a hard, it’s a hard, and it’s a hard It's a hard rain’s a-gonna fall” - Bob Dylan
Apocalyptic commentators have always struck me as trying to have a free option – when they’re wrong you forget it and when they’re right, we call them sages. Speaking of which, both George Soros and Warren Buffet (“We’ve just entered act two” and “We could be standing on the brink of the next financial crisis”, respectively) are banging the drum of doom. I don’t know what data they’re looking at but I can see a few things that could cause big problems if they all happen together.
Club Med sovereign debt yields are moving north again, Greek CDS are at all-time highs, Spain is still denying it needs an aid package – and maybe it doesn’t – but continental newspapers are predicting that an application is imminent.
Banks in those Club Med nations are the biggest borrowers of funds from the ECB.