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Germany wouldn't be my first choice, to be totally honest... Would have to be the Baltics and/or Southeast Asia (and I'm not talking Thai ladyboys either)...

All this is sorta old news... The LT2/UT2 mkt has been dead for a while now, driven by all sorts of nastiness that the banks have been doing... To me, the big question is now the political interactions between the govts and ISDA which will determine whether this is going to trigger a...

They have done this before on their LT2 notes... This isn't the first time, but it ain't nice, that's for sure. The interesting question is whether, this time around, they're gonna be able to do it without defaulting. Last time they found a loophole, but ISDA has been trying to tighten the...

No maybe's... It is a race to the bottom and USD seems like a natural favorite.

On a similar note... May 27 (Bloomberg) -- Schroder Investment Management Ltd., the second-largest holder of U.K. government bonds among companies that make regulatory filings, cut the gilts in its global fund to “near zero” as Britain’s finances deteriorate. “The U.K. clearly...

This is a valid explanation of the skew, i.e. the asymmetric nature of the smile, rather than the smile itself... In general, the presence of a smile is sometimes explained by people having an inordinate love for lottery tickets.

In general, this is true for a large number of assets due to the presence of a volatility smile... You can read about the smile in a whole variety of places. I might add that, strictly speaking, your statement doesn't necessarily hold in situations where the OTM strike is close to a bound...

It's not just the BoE... SNB's Jordan says "A severe recession is likely inevitable"

There's some stuff to do, but, as mentioned, it's not massively juicy at the moment... The most interesting to me is actually the bond, rather than the 10y and the 5y.

Hahaha, this is so like the Europeans... "Hear no evil, speak no evil,..."

Sounds like an urban legend to me... Broadly, though, it sums up the incentive issues inherent in socialism, if it were offered to humankind today. However, I would also suggest that the credit crunch demonstrated how capitalism itself has some very fundamental incentive flaws. So, in...

"Look into my eyes, look into my eyes, the eyes, the eyes, not around the eyes, don't look around my eyes, look into my eyes, you're under, there's no credit crunch in Europe, no credit crunch". He sort of even looks like the hypnotist guy... <object width="425" height="344"><param...

You don't want to know the gory details of how the money mkts operate, trust me... Suffice it to say that the above means that the Fed has a particular way of pumping cash into the system. A stable relationship doesn't really exist. Liquidity generation is neither here nor there. That...

1. Strictly speaking, yes... Govt selling bonds implies that the mkt ends up with less cash and more bonds (collateral). However, that doesn't imply lower liquidity. In fact, it's the opposite, if anything, as auction provides a very viable price discovery mechanism. 2. This is not an...

Then we agree... I am just skeptical that any improvement to the monetary policy process can be made due to it being so political. Therefore, to me, inflation targeting is a somewhat lesser of the available evils.

I disagree... Inflation targeting is a good idea, in theory, and, in my view, is superior to anything else that has been realistically proposed so far. However, its fundamental limitation is that it relies on flawed and manipulable inputs. In the latest cycle, the problem turned out to be...

I've been meaning to ask this, 'cause I am hearing it a lot... Isn't "L-shaped recovery" an oxymoron?

Trend real GDP growth of arnd 1%; natural unemployment rate of arnd 7%.

I actually sort of agree with him... At any rate, he makes some valid points.

Huh? Get the implied vol and it's trivial from there...