Ali nas umiritev trga obveznic v EU res lahko pomiri?

Yanis Varoufakis se sprašuje ali nas umiritev trga državnih obveznic v EU po septembru 2012 res lahko pomiri. Varoufakis pravi, da ne, pač pa da velik pritok tujega (finančnega) kapitala po tej umiritvi prinaša še večja tveganja kot pred tem. Problem je, da lahko najmanjši preplah – zaradi nerazrešene sistemske narave evro območja – kadarkoli spet povzroči beg kapitala in destabilizira posamezne države.

Peripheral bond debt-toGDP ratios are, today, much higher than they were in June 2012 while nominal national income is, more or less, the same and lacks any genuine growth potential. So, why have the bond yields of the Periphery’s member-states fallen so much since then?

My answer, in brief, was: They declined because of: (i) the ECB’s OMT announcement, (ii) the rise of deflationary expectations due to the austerity-induced recession, (iii) the cancellation of further austerity post-2012, (iii) the decision to keep Greece in the Eurozone, and (iv) a large inflow of capital into the bond markets that has taken a form which makes a large, sudden outflow very likely. Taken together, these six causes point to a disturbing prediction: Europe has not stabilised. While its bond markets have calmed down, the Euro Crisis is taking a breather before it returns with a vengeance.

A recent research paper from the Chicago Booth Business School asks poignant questions about this footloose $3.2 trillion that is slushing around the US and European bond markets. Its conclusion is that we should expect a great deal more volatility and herd behaviour of these bond funds than before. “Investing agents are averse to being the last one into a trade [that] can potentially set off a race among investors to join a sell-off in a race to avoid being left behind,” the paper suggests. Is this not a problem with all fund managers? No, according to the Chicago Business School researchers who argue that bond fund managers have become more fickle than equity dealers. “Delegated investors such as fund managers are concerned with relative performance compared to their peers because it affects their asset-gathering capabilities…”

Analysing how bond funds reacted to the news that the Fed was about to ‘taper’, the Chicago paper surmises that bond fund managers are faster to hit the ‘sell’ button than banks (that used to hold a larger portion of bonds) ever were. One reason for their jerkiness is that hedge funds have been upset, of recent, by the failure of strategies that used to re-pay them handsomely. Funds used to take it for granted that interest rates and exchange rates followed some predictable patterns depending on the trends of global capitalism. Since 2011 these patterns have shattered and the hedge funds have suffered. Their reaction to the collapse of their modelling ‘certainties’ was that they fell back on simple strategies, such as heading, herd-like, toward high yielding (in real terms) Spanish, Italian, even Portuguese and Irish debt – ready to assume that, while these Eurozone countries are to all intents and purposes insolvent, their bonds are the best of a bad bunch of investment choices.

Michael Hintze, chief executive and founder of European hedge funds CQS, was reported by the Financial Times to have argued that desperate central bank policies (such as the ECB’s) have actually increased market risk. They did this by causing too much money to flow into the same assets, essentially ‘rigging the market’. When this happens, a small flight from a certain asset class can lead to catastrophic declines. In the Eurozone’s case, where the ‘asset class’, and ‘rigged market’, in question concerns none other than the bonds of fiscally stressed sovereigns, the abrupt declines will take Europe back to its pre-June 2012 situation. Only that, when this happens, Europe’s real economies will be even more fragile and the ECB decisively neutered (especially after the recent decision by the German Constitutional Court to admonish OMT and refer it to the European Court of Justice).

Vir: Yanis Varoufakis

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