27/8/2012: Second worst in GDP growth in Q1 2012?

When on July 12 the CSO published the latest Quarterly National Accounts, the Irish media and the Government were quick to focus on the positive side of the reported data - the revised figures for Q4 2011 that Irish GDP rose 1.4% in constant prices terms y/y in 2011 compared to 2010. Fr less attention was paid to a massive 2.5% y/y fall off in GNP and even less attention still was given to Q1 2012 preliminary estimates that showed q/q contractions in GDP of 1.1% and in GNP of 1.3%. All in, the headline figure referenced was almost always the up-beat "Irish economy grew at a euro area average rate in 2011".

Now, there are many caveats that should accompany q/q figures, including:

• Q/q changes can be volatile;
• Preliminary figures can be subject to significant revisions in the future; etc

Keeping all of this in mind, today's data release from the OECD is discomforting. Here's the chart:

As the chart above clearly shows, excluding Greece (missing data), we are the second worst performer (after Luxembourg) in terms of GDP growth in Q1 2012 in the entire OECD.

Let's hope those future revisions come in to the significant upside.

27/8/2012: Mid-Term Forecasts for Russian Ruble: Capital Economics

An interesting view on the Russian ruble medium term outlook was published in the ECR weekly monitor arguing that as USD/Euro moves to dollar strengthening, we can expect devaluation of the ruble vis dollar by ca 10% over the coming 18 months. Liza Ermolenko, economist with Capital Economics, provided three core reasons for devaluation:

1. Expected intensification of the euro area crisis will likely weigh on Russian exports just as the Central Bank of Russia (CBR) is reducing market interventions in support of ruble and is aiming to widen the currency band. Monetary conditions are expected to stay relatively stable, according to Ermolenko, as fiscal spending will also remain constrained.
2. Deterioration in Russia's balance of payments due to fast growth in imports, and possible fall in oil prices to USD85 pb by the end of 2012. Capital Economics projects Russia's current account surplus to fall to 3.5% of GDP in 2012 from 5.5% in 2011, with a possibility of posting a small deficit in 2014.
3. Long term competitiveness is deteriorating in Russia, as the economy gave up productivity and cost competitiveness gains of 2008-2009 crisis period to higher inflation. "Real exchange rate [linked to consumer prices] is now back to where it was in mid-2008", according to Ermolenko.

So Ermolenko forecasts 5% decline in the ruble against the euro/dollar basket by the end of 2012 and a similar decline in 2013, with most of the decline driven by devaluation against the USD. Target is Rb35.5/USD by end-2012 and Rb38.5/USD by end-2013 from current Rb31.9/USD. Euro forecasts are for slight devaluation to Rb39.0/Euro by end-2012 followed by appreciation to Rb38.5/Euro by end-2013, compared to Rb39.4/Euro current.

26/8/2012: An outlier

Check out this chart (courtesy of http://macromon.wordpress.com/2012/08/26/week-in-review-35/wir_equity_ytd-52/ ):

26/8/2012: The way of Berlin in Greek drama

"Those whom the gods wich to destroy, they first make mad" is a proverb that is commonly, but possibly mistakenly, attributed to Euripides, who was, by all official accounts, a Greek, to the bone. In modern parlance - a European, more than that, an ancestor to those we now call citizens of a member state of the euro area, and Schengen, the arrangements that distinguish them as being the members of the European Core. That, and, ... oh one of the three fathers of Greek - Athenian - tragedy.

But enough with history. Whether Euripides authored the above statement or not, it pretty certainly came from Greece. Sophocles uses a similar phrase in Antigone, which pre-dates Euripides' plays.

The latest revival of the rather dated by now idea of granting the European Court of Justice (ECJ) the powers to "monitor the budgets of the member states and punish those that run up a deficit" (reported here) is the case proving the above conjecture.

The extension of such powers would make the ECJ the only court system with the power to oversee and directly influence the fiscal policy of the sovereign states. It will also be the only power that will be allowed to impose sanctions on sovereign states. Even the IMF has no power of similar nature vis-a-vis the states.

But there is more to the above equation. The ECJ is a court, here to decide on the matters relating to the law. Giving it any power resting outside its remit both undermines the system of checks and balances that normally constitute the foundation of any state, and, as the result undermines the legitimacy of the court itself. Blending of the boundaries between the executive (fiscal authority), the legislature (power to budget), and the judiciary delegitimizes all three.

And exactly the same, in my view, applies to the fiscal supervision and oversight powers to be vested with the ECB per another recent plan. No Central Bank in the advanced world has such powers of control over the fiscal policies of the state. You can call it a 'Dictator Draghi' case, but humor aside, the remit creep infecting Europe today is worrisome.

The euro area lead states - Germany in particular - are now locked in a frantic drive to build up institutional solutions to the problem created by the poor design of the common currency union over fifteen years ago. These solutions are not only unlikely to work, but the method of arriving at them is now risking to undermine the still-functional institutions of the European Union as a whole.

Irony has it, we have to turn to Greeks to spot the trend in gods work.

26/8/2012: Holding Pussy Riot mirror up to European demagogues

One of the absolute best analytical pieces written on the Pussy Riot is this post by Mary Ellen Synon. Mary Ellen superbly connects the narrow context of the Pussy Riot immediate case and verdict to the much broader geopolitical reality that shaped the 'Western' or the 'European' quasi-hysterical response to it.

A mirror put in front of our own faces this is - a question that we must ask ourselves - is it the real pursuit of liberty that drives our occasionally misguided and often counter-productive mainstream analysis that see only evil in Russian State attempts to reconstruct itself and the national identity? Or is it driven by our biases that perfectly allow adoration of totalitarian Cuba, admiration for the Chinese 'economic miracle' built on the foundations of denying property and basic human rights to millions of Chinese citizens, unquestioning support for the cult of victimhood for often internecine and quasi-nazi 'liberation' movements around the world, our 'European' sympathies awarded to those who advocate, in fact, the destruction of democratic states, and the denigration and debasement of the very values of inclusiveness and tolerance we hold so dear in Europe itself?

Whether you agree with the facts stated in the article or not, it is never a bad thing to look at ourselves in a mirror to check for signs of ethical duplicity.

PS: To put it on the record, my view has been publicly expressed on the topic of the Pussy Riot conviction and sentencing. Here are sm snapshots from the record:

26/8/2012: ECB letter - what Minister Noonan's latest conversion tells us about the State

There is anew circus in downtown Dublin and this time around it is the courtesy of the old culprit the infamous ECB letter from Trichet to the late Minister for Finance, Brian Lenihan.

The letter was (again, for the n-th time) brought to our attention by Professor Karl Whelan in his forbes.com post (here) and the issue championed by Gavin Sheridan of gavinsblog and http://www.thestory.ie. This time around the mention raised some noises from the Minister for Finance Michael Noonan (here).

We can only speculate as to Minister Noonan's motives for promising, at last, to publish this letter. My suspicion is two-fold:

1. Nothing penetrates the skulls of Irish establishment other than bad publicity in international press. Frankly put, years of criticising Governments policies have taught me several lessons. One of them is that an article in the Irish Times causes an 'outrage' and 'indignant' denials. An article in the likes of Forbes or Wall Street Journal or FT causes real 'concerns'. Ireland's elites are incapable of reassessing their adopted positions (on policy or transparency or anything else) unless their silence can damage their standing with the MNCs and within international community.
2. We might be getting a pre-management of what is likely to be a fizzling-out of the Government efforts to deliver on the 'seismic' June 29 EU summit commitment 'to re-examine' Irish banks bailouts.

The above are speculative arguments, solely to raise some questions, but the change in Minister Noonan's rhetoric is indeed rather dramatic. 

Italy received a similar letter and it was leaked to the press back in August 2011 (see here). The world didn't end and Italian economy did not collapse. ATMs still function. The ECB sent a similar (in nature) letter to Spain, and that letter remains undisclosed to the public. Minister Noonan could, in my view, make the letter fully public at any moment in time by simply ordering it to be published. All that stands between Minister Noonan's stated intention of publishing the letter and the actual publication of the letter is... err... Minister Noonan's will.

Of course, for historical reasons and for the sake of transparency, the ECB letter is important. As an aid to securing Ireland's future, it is relevant only in so far as it raises real questions relating to the competence of our permanent 'elite' - the Government advisers and the senior civil servants. 

What concerns me most is the mythology of the nation that will have to be destroyed if the letter really does contain a threat from the ECB of the withdrawal of ELA or funding for Irish banks in response to any unilateral action taken against the banks bondholders. The mythology at risk here is that the then Minister for Finance, and his advisers and the Department, plus the Central Bank and other authorities of the Irish State actually acted within the full extent of their capabilities in protecting the interest of the taxpayers and the State.

Think about it: can such a threat from the ECB be credible? 

The alleged threat contained in the ECB letter is that the ECB were to turn off the liquidity taps to Irish banking system because imposing haircuts on banks bondholders would have risked a full contagion from Irish banks to the Euro system or its financial system at large. Suppose this is so. Surely, turning off the liquidity tap in such a case would have risked a full-blown and immediate collapse of the entire Irish banking system (as opposed to the partial insolvency triggered in some banks by bondholders actions) - the very same system that is, allegedly, so vital to the European banking system that even a handful of disgruntled bondholders relating to Irish banks could trigger a run on the European banking. 

This is (a) highly alogical, and (b) unlikely to have passed the ECB council vote.

Worse than that: such a threat would have forced Ireland to exit the Euro system and monetize the banking system with own currency - an event that would have threatened much more than just the stability of the Euro area banking system, but the existence of the Euro as a currency.

Thus, if the threat contained in the letter is that of the liquidity starvation, such a threat could not have been credible when it was made. Which implies that either the letter contains some other threat, or that the Government at the time was simply out of its depth in dealing with the crisis.Setting aside, for now, the possibility of the former, the latter, if true raises another set of questions: Where were the Government advisers (especially the ones who are today still in the position of considerable power and authority)? Where were the senior civil servants (pretty much all of whom are still in the positions of considerable power and authority)? 

You see, incompetence of the Government ends with the Government replacement by the voters. Politicians, in the end are accountable. 

Incompetence of the permanent elite (senior civil servants and advisers in charge of steering the Minister response) continues as long as they remain in the positions of authority and then, beyond, into their handsomely rewarded retirement. The former aspect of the letter is stuff for historians, the latter is for us.

25/8/2012: August 2012 MOU - a base PR touch with little substance

The new installment of the Comics, known as Ireland's MOU (Memorandum of Understanding) with Troika was quietly released yesterday, without so much as giving the media an embargoed copy or a prior notice of forthcoming release (see The Irish Times article on this).

The document was (once again) released in a pdf format that is unmanageable in the Professional version of the software, cannot be searched, cannot be easily scrolled through and loads partially possibly due to non-optimized version saved by the Department of Finance. In simple terms - the release was antediluvian in presentation - a veritable embarrassment to the Government that keeps talking about modernization in the Civil Service etc.

In terms of content, there are some comical moments of  a truly priceless nature. In the week that saw publication of the Central Bank report on Irish banks lending to the SMEs, identifying Ireland as the second worst performer in this area after Greece, the MOU opens up with the following statement, concerning targets delivery by the end of Q3 2012 [emphasis mine, throughout]:
"The authorities... will assess banks' deleveraging ... in line with 2011 Financial Measures Programme. Fire sales of assets will be avoided, as will any excessive deleveraging of core portfolios, so as not to impair the flow of credit to the domestic economy."

Furthermore, in light of the abysmal Q2 2012 data for mortgages arrears and defaults, also released this week, the MOU states: "The authorities will provide staff of the EU Commission, the IMF, and the ECB with their assessment of banks' performance with the work-out of their non-performing mortgage portfolios in accordance with the agreed key performance indicators." One wonders if the 'assessment' of performance will reference the fact that more than 1/2 of all restructured mortgages are now back in arrears (see details here).


As far as a pertinent or substantive part of the 'Financial Sector Reforms', the MOU lists (should we be surprised) only one real tangible measure to be delivered on: "The authorities will also adopt regulations underpinning the Resolution Fund Levy to recoup Exchequer resources provided for the resolution of troubled credit unions." Congratulations to the Government on consistent continuation of the core 'reforms' policy in all spheres of the Irish economy - identification of new taxes/levies/charges to milk the taxpayers. Incidentally, the Levy was not mentioned under the respective heading in MOU from May 2012.


Structural reforms section of the MOU is worth some attention, as always, if only for the complete waffle it contains. Promises to monitor, to report are thick on the paper, but details of any actual reforms are thin. As always, the MOU is really about managing PR for Ireland-Troika relations, not for actual reporting (which takes place much more via ongoing monitoring and Troika reviews).


On personal debt issues, "the authorities will ensure that a programme to facilitate access by distressed borrowers to professional advisory services, funded by banks, will be operational". Of course, not a word on such services needing to be independent of banks in the front section of the MOU, although the said reference is contained in the latter sections. In addition, one has to wonder - the scheme is not operational now and how it can be made operational between last Friday and next Thursday is anybody's guess.


On social 'support' scheme efficiencies (aka social welfare): the set of reporting targets is identical to that provided in May 2012 and majority of these targets remain unaddressed, judging by the CSO data. For example, the MOU promises progress on "Reducing the average duration of staying on the live register." The said duration is continuing to increase. MOU claims to report progress on "Increasing the fraction of vacancies filled off the live register", but there is still no actual data on this reported by the CSO - the official source for Live Register stats. "Increasing the number of unemployed referred to training courses and employment supports" in reality, per latest CSO data, is met with decreasing numbers of those in state training schemes. As per "Providing data on live register broken down by continuous duration, and probability of exit by various durations"... well, the former is normally supplied by the CSO (so no need for MOU-linked reporting) and the latter... oh, may be the Department of Finance can point me to where that has been supplied. Data 'per exit destination' from the unemployment supports - promised by the MOU - is still nowhere to be seen, as far as I know.

Since May 2012, the state was tasked to provide simple stats on evaluation of activation and training policies. As far as I know, this still has not been fully complied with.


When it comes to fiscal 'reforms' there are no new targets for either numerical tax increases (still set at "at least €1.25bn") nor for voted expenditure "consolidation measures" (still at €2.25 bn). Some folks have suggested that the numbers represent scaremongering by the Government in advance of the Budget 2013, but I must disagree - the targets were set ages ago and so far these have not changed.

There is an interesting change of course on the state asset disposals procedures for Q4 2012 MOU compliance plan, which now reads "Government will complete, if necessary, relevant regulatory, legislative, corporate governance and financial reforms required to bring to the point of sale the assets it has identified for disposal". The new bit here is the insertion of "if necessary" clause in place of March 2012 version which read "...will complete the identified regulatory..." In other words, the Government is seemingly lowering the bar for compliance with normal disposal practices.


Despite having more staff per supervised institution than any other Central Bank in the developed world, the Irish Central Bank gets 5 days extension on regular submissions of two core datasets: set C3 and C7 relating to detailed financial and regulatory information on domestic individual Irish banks etc, and deleveraging reports. Surely, not a good sign for the CBofI productivity...


Some of the best examples of the Government spin and distortion of reality are, as always, found in the Attachment 1. Memorandum of economic and Financial Policies.

Take these for examples:

• The Government reports the return of economy to growth in 2011, but, given this is now August, mentions nothing about the economic decline in Q1 2012 or about the economic conditions since.
• The Government reports a current account surplus in reference to GNP, but does not reference growth rates in GNP terms.
• The Government states that "domestic demand continues to decline - albeit at a slowing pace - owing to continuing household balance sheet repair and the still weak labour market." It fails to include in the causes of the domestic demand decline Government-own taxation policies and inflationary pressures from state-controlled sectors. That said, the Government does admit that 'administered price increases' have lifted HICP to 1.8% in H1 2012.
• The MOU states that "weak trading partner growth dampening export demand eve as further competitiveness improvements cushion this effect". This statement is pure spin, as the declines in our exports are registered in the pharma and related organic chemicals sectors where not the demand weakness, but patents expiry is the core driver. Our competitiveness gains have been flattening out or declining on productivity side, but are improving on forex side.

The MOU now explicitly references only two targets for 'addressing banks-related debts' legacy - Anglo promo notes and PTSB, which has been flagged as a scaling back of Government expectations post June 29 summit announcement already, so no surprise there.

Aside from the above, I can spot no significant changes in the current MOU compared to May 2012 MOU. The same applies to small / marginal changes in the technical MOU. Here is an example where the larger scale changes can be found (although even these are very insignificant):

24/8/2012: Perverse logic of Berlin?

An interesting article in the Irish Times today (link) quoting Germany's Fin Min on Irish debt-relief proposals, saying that Ireland's "massive" reform progress should not be compromised by the country efforts to gain relief on banks-related sovereign debts. From the Irish Times: "We cannot do anything that generates new uncertainty on the financial markets and lose trust, which Ireland is just at the point of winning back."

While we should be careful not to read too deeply into Mr Schauble's comments - which can be interpreted in a number of ways - the logic of the German Fin Min is worrisome.

Ireland has raised exceedingly expensive funds in recent bonds and T-bills auctions with explicit desire to test the markets appetite for Irish paper. In many ways, the relative success of these auctions was underwritten by external dynamics in debt markets, but also by the markets perception of Irish progress on reforms and by the markets expectation of the decline in future debt liabilities related to the banks debt deal. In other words, Ireland has paid a hefty price so far for starting the process of recovering some market access for the Sovereign. This is a net positive, albeit severely limited by the cost of funding raised.

Hence, we have a bizarre situation:

1. a member state in the Euro zone is undertaking all the right (from the markets & policymakers point of view) steps, achieving measurable progress, and generally behaving like the best pupil in the class, yet 
2. German leadership - the proxy for the Euro zone leadership - is unwilling to help that state in its efforts.

Surely, if Germany really wants stabilization and recovery in Europe's periphery, writing down €30 billion of promissory notes would be the cheapest approach to take toward reinforcing Irish efforts to deliver on the programme. Since the funds are fully linked to the ELA, this would imply absolutely no negative effect on private markets expectations. If anything, it will signal Europe's willingness to use the monetary system to support the process of resolving banking insolvency-induced stress on the sovereigns. Reduction in Ireland's debt burden in this context will be non-trivial and will help restore bonds markets confidence in both Ireland and the Euro zone system.

The bond markets operate - basically speaking - at the following level of logic:

• If an action reduces supply of debt, ceteris paribus, price of debt goes up, yields go down. Restructuring Irish Government's banks-linked debt will act to deliver exactly this effect.
• If an action reduces future potential haircuts that can expected by the private sector holders of debt in the event of prababilistic restructuring, price of debt goes up and yields go down, since future expected losses on privately held debt will be lower. Restructuring officially (Euro system) held ELA will deliver exactly this.
• If an action improves debt sustainability of the sovereign, yields will go down. Restructuring ELA will do exactly this.
• If an action does not introduce new moral hazard into future funding incentives for the sovereign, longer-term yields will be lower. By restructuring ELA - which has nothing to do with Irish exchequer past poor performance or policy choices, but has to do with rescuing risk-taking behaviour of the foreign funders of the Irish banks - the Euro zone can achieve exactly such long-term consistent repricing of Irish debt.
• If an action reduces the need for future funding, expected future bonds issuance falls and with it, the yields will fall. By removing the need to fund future repayments of promissory notes, the EU can achieve exactly this effect.
• If an action improves economic growth prospects for the nation, thus lowering risks associated with future tax revenues growth, deficits and debt financing, it will reduce yields on Government debt. This, again, is something that a restructuring of ELA/promissory notes will achieve.

Any way you spin it, aggressively restructuring the promissory notes and the ELA will deliver the benefits for the Irish exchequer. If, as Mr Schauble clearly believes, there is a case for contagion of risks across the peripheral sovereigns, such benefits will also be positively felt by other peripheral economies. In addition, such benefits will also help give some much needed credibility to the Euro zone overall policy efforts in dealing with the crisis.

23/8/2012: Mortgages Arrears in Ireland - Q2 2012

At last we have the data for Q2 2012 mortgages arrears in Ireland, and these are ugly. That's right, folks - ugly.

Let's keep in mind: Irish average household size is at 2.73 persons per household as per Census 2011.

Top numbers:

• Total number of outstanding mortgages in the state stood at 761,533 in Q2 2012, down 0.34% q/q and down 2.03% y/y. In the previous quarter (Q1 2012) the rate of mortgages decline was 0.63% q/q and 2.34% y/y. This suggests a slowdown in mortgages repayments (deleveraging) in the economy, despite the Government claims to the economic stabilization (something that would be consistent with accelerating deleveraging).
• Outstanding balances of mortgages are at €111.99 billion in Q2 2012, a decline of 0.62% q/q and 2.69% y/y. Again, compared with Q1 2012, there is a slowdown in deleveraging (-0.70% q/q and -2.82% y/y in Q1 2012).
• Of all mortgages outstanding, 45,165 mortgages or 5.93% (totaling €7.53 billion or 6.73% of all balances) were in arrears less than 90 days. In Q1 2012 the number was 46,284. This is a mew category of reporting and Central Bank deserves credit for continuing to improve data disclosure to the public.
• Of all mortgages outstanding, 17,533 (2.3%) of mortgages were in arrears between 91 and 180 days, with mortgage balance of €3.13 billion (2.79%). Good news, there has been a deecrease q/q in these mortgages - down 3.52% (in Q1 2012 there was a rise of 2.06% in this category) in number of accounts and a drop of 5.73% (against a rise of 1.32% in Q1) in mortgages volumes. Year on year, this category of mortgages arrears is up 11.64 in Q2 2012 which marks a slowdown from 27.5% rise y/y in Q1.
• However, the decline in the 91-180 days category of mortgages in arrears (-640 mortgages q/q) is almost ten-fold smaller than the rise in the arreas 180-days and over category (up 6,261 q/q in Q2). In other words, the decline in mortgages in arrears 91-180 days is explained fully by the rise of mortgages in arrears over 180 days.
• Number of mortgages in arrears in excess of 180 days now stands at a massive 65,698, up 10.53% q/q in Q2 2012 (in Q1 2012 the same rate of increase was 11.89%) and up 64.1% y/y. These mortgages amount to €13.35 billion - which represents a 10.64% q/q increase and a 67.22% increase y/y.
• Using old methodology, total arrears over 90 days now amount to 83,251 mortgages (up 7.24% q/q and 49.3% y/y), with a balance of €16.48 billion (up 7.11% q/q and 52.1% y/y). 
• Thus, currently, 10.93% of all mortgages in Ireland are in arrears 90 days and more, and these amount to 14.72% of total mortgages balances. For comparison, in Q2 2011 these percentages were 7.17% and 9.42% respectively.
• Using newly available data on mortgages in arrears less than 90 days, total number of mortgages in arrears in Ireland is 128,416 (16.86% of all mortgages outstanding) and these amount to €24.01 billion (21.44% of all outstanding balances).
• Now, put the above number in perspective - that is around 350,576 people (actually more, since mortgages arrears are likely to impact younger and larger households over retired and smaller households) in this country who are missing payments on their mortgages.
• In Q2 2012 there were 84,941 restructured mortgages (up 6.56% q/q and 21.63% y/y). The rate of restructuring has declined from Q1 2011 when q/q there was a rise of 7.17% and y/y there was a rise of 26.66%.
• Of restructured mortgages, 47.35% were not in arrears. Percentage of restructured mortgages in arrears has fallen from 56.41% in Q2 2011 and from 48.50% in Q1 2012. Which, of course, means that more an more restructured mortgages are falling back into arrears, implying that the restructuring solutions do not work for at least 53% of mortgages to which they were applied.
• As of the end of Q2 2012, there were total of 169,598 mortgages (22.27% of all mortgages outstanding) that were at risk (in arrears, restructured and not in arrears, and subject to repossessions). This represents (using average household size) 463,003 persons.

Charts to illustrate above trends:

At this stage, there is no point of denying that all restructuring and other 'solutions' deployed by the banks and designed by the Government are not working. The mortgages crisis is raging on. When you look at the third chart above, even using old definition of mortgages at risk (>90 days arrears), the trend up is linear, implying a constant rise in mortgages risk. Even abstracting away from the possible effects of the new insolvencies legislation on mortgages defaults, the trend above suggests that by Q1 2013 we will be close to 150,000 mortgages at risk (using in arrears more than 90 days metric). This would push overall mortgages at risk to beyond 200,000. More than half a million Irish people will be living in households at risk of falling behind on their mortgages repayments. The question I would like to ask of our 'leaders' is "Then, what?"

23/8/2012: More time for Greece is not an asnwer

As Greek PM, Samaras, heads for talks with Angela Merkel this Friday, here's why 2 more years won't work for Greece: link here.

22/8/2012: Charting Russian Reserves rise, and fall, and rise again

A mighty nice chart courtesy of FRED database, showing the recovery in Russian state reserves (ex-gold) following marking down and deficit financing during the crisis.

In 1998-1999 reserves stood at a monthly average of USD8.73 billion, by their peak in 2008 the monthly average was USD507.0 billion. In the first 6 months of 2012 the reserves averaged USD466 billion, which is only 8.1% below their peak year levels. At the crisi trough, the reserves were down to USD368 billion.

22/8/2012: Globe & Mail: The Good, the Bad & the Ugly

My tongue-in-cheek piece for The Globe & Mail on Euro area crisis: here.