Vitor Constâncio @VMRConstancio Twitter profile

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@DayFromBK

Vitor Constâncio

@VMRConstancio

1 year

The battle of Cocos. Swiss authorities made a mistake with consequences and potentially a host of court cases. They wiped out $17 billion of Additional Tier 1 bonds ( or Contingent Convertible Bonds or Cocos).These were invented after the 2008 crisis to shore up banks’ capital 1/

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Vitor Constâncio

@VMRConstancio

4 years

14 out of the 19 eurozone countries are now asking for Eurobonds to finance expenditures linked to the virus crisis. The new 5 ones are Latvia, Lithuania, Estonia, Cyprus and Slovakia, according to

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Vitor Constâncio

@VMRConstancio

4 years

Tesla just announced that it had bought 1.5 billion dollars of bitcoin and could in the future sell cars in bitcoins. Since this morning both Bitcoin and Tesla are going up in the market. Maybe there is afterall something in the saying that“Bitcoin is Tesla without the cars”1/ 20

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Vitor Constâncio

@VMRConstancio

2 years

The ECB went for a 75bps hike (I was for 50bps). That difference doesn't matter so much, but what concerns me is what was announced, what it can mean for the rest of the cycle, and the underlying monetary policy views. My concerns can be assembled into four points 1/

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Vitor Constâncio

@VMRConstancio

9 months

A Economist/Commerzbankshocking chart illustrating the size of German public autonomous funds apparently used to bypass budget rules. Imagine if this referred to a southern country…. For others, Germany continues to block a revision of the Stability Pact

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Vitor Constâncio

@VMRConstancio

2 years

Bad news for Euro Area prospects.The ECB decisions, language and forecasts,point to an excessively hawkish policy that will aggravate the coming recession unnecessarily.The expression“rates will still have to rise significantly”is grounded on controversial inflation forecasts.1/

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Vitor Constâncio

@VMRConstancio

4 years

A potential problem is looming, and the media are pursuing a new story that builds on the following chain of reasoning: 1) higher inflation is coming;2) if CBs increase interest rates debts will explode and recession may ensue; 3) CBs are caught in an impossible dilemma 1/12

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Vitor Constâncio

@VMRConstancio

4 years

The French/German proposal for a €500 bn Recovery Fund to be integrated in the multi-year budget, is a great proposal. The Funds will be distributed as budget transfers, not grants, prioritising the more affected countries and not according to GDP (or GNI) /1

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Vitor Constâncio

@VMRConstancio

4 years

It became now clear that there will be a global recession with world output going down already in the first half of the year by more than in 2008/9. Unimaginable, if the virus will stay strong still in the autumn ̶ humanly, socially, and economically. 1/4

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Vitor Constâncio

@VMRConstancio

5 years

The texts by the B.of England and the Bundesbank about money creation, quoted by this strange article, are absolutely correct. Banks create money, but not of course, unconstrained and without limit.The article does not seem to dispute these views 1/n

Banks do not create money out of thin air

In recent years, some have claimed that banks create money ‘ex nihilo’. This column explains that banks do not create money out of thin air. From an economic viewpoint, commercial banks create...

cepr.org

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Vitor Constâncio

@VMRConstancio

4 years

You are absolutely right. Eurobonds/corona bonds are for all countries and ESM would be used only by weaker countries, carrying stigma and bad market signaling. Why use it, even if it would have almost no conditionality, when the ECB action reduced already the yields so much?

Robin Brooks

@robin_j_brooks

4 years

@VMRConstancio @JAndritzky @PeterBofinger @MSchularick @ErikFossing @DanielGrosCEPS @SDullien @jsuedekum @michael_huether @ALeipold Quite right. Perhaps the advantage of #coronabonds is that, unlike borrowing from ESM, they aren't an exclusive liability of Italy, so they wouldn't erode fiscal space as much as Italy borrowing from the ESM. And hasn't ECB PEPP made the ESM cost advantage sort of a mute point?

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Vitor Constâncio

@VMRConstancio

15 days

In Jackson Hole, Chair Powell announced the start of a new cycle of rate cuts, putting an end to the inflation episode since 2021. It is, therefore, time to draw some lessons for economics, economists and monetary policy. 1/

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Vitor Constâncio

@VMRConstancio

1 year

Spain inflation at 2.9% in May! It reflects the efficient mechanisms Spain has to ensure the quick pass-through of sharply declines in the prices of oil and gas to the price of electricity. Other European countries will also get there.

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Vitor Constâncio

@VMRConstancio

1 year

The Bloomberg survey of professional investors shows that 90% think that “companies on both sides of the Atlantic have been raising prices in excess of their costs since the pandemic began in 2020. “ Almost four out of five said that tight monetary policy is the answer 1/

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Vitor Constâncio

@VMRConstancio

1 year

Yes, an illustration that macro policy was not responsible for spikes of inflation (but wars and oil price shocks) or that interest rates did not engineer the sharp ongoing disinflation (long transitory). So much for inflation being “always and everywhere a monetary phenomenon”

Frederik Ducrozet

@fwred

1 year

🇩🇪 One for the history books.

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Vitor Constâncio

@VMRConstancio

2 years

Italian drama. Salvini maneuvers to compound the position of Conte (5Stelle) and the Draghi Government is apparently finished, regardless of the (deliberate) absence of quorum in the ongoing vote in the Senate or its possible favourable outcome. Perfect storm for the ECB tomorrow

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Vitor Constâncio

@VMRConstancio

4 years

A quick way to have European common debt financing expenditures to deal with the crisis would be to use the EU Commission to issue bonds to finance exceptional programmes within the EU budget rules under the emergency clause of TFEU article 122.2 1/8

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Vitor Constâncio

@VMRConstancio

4 years

Terrific animation of the shocking development of taxes on the wealthy in the USA since the times of Eisenhower!

Nick Kapur

@nick_kapur

4 years

Watch how the ultra-wealthy in America gradually raised the taxes of the poor and eventually bent the curve downward until they paid the lowest tax rate of all

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Vitor Constâncio

@VMRConstancio

4 years

Economics is indeed struggling with inflation theory. Monetary aggregates and monetarism have been correctly abandoned. Domestic slack explanations (the Phillips curve) have been under attack but are still a bit alive...1/n

Roger E. A. Farmer

@farmerrf

4 years

I’m pleased they’re finally listening @TimDuy @DavidBeckworth @dandolfa @GeorgeSelgin @warwickecon @warwicknewsroom @ojblanchard1 @RameshPonnuru @VMRConstancio @RebuildMacro @NIESRorg @jagjit_chadha @angusarmstrong8

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Vitor Constâncio

@VMRConstancio

3 years

There is a growing chorus in “market literature” about the alleged coming back of the inflation spectre. Inflation is increasing this year because of oil and pent-up demand one-off effects. Still, the hawks are invoking all possible inflation causes to justify their warnings.1/

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Vitor Constâncio

@VMRConstancio

3 years

Great news. Agent-based models with stock-flow relationships, coming of age in forecasting and beating both mainstream accepted VAR and DSGE models at @RebuildMacro site, 1/4

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Vitor Constâncio

@VMRConstancio

1 year

The FAO Food price index dropped sharply in March (-20.5% yoy!), but that had no impact on the unit profit-driven increase in Food prices in the Euro Area. 1/

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Vitor Constâncio

@VMRConstancio

1 year

Extraordinary chart from the Economist about the dramatic divergence since 2020 between the University of Michigan consumer sentiment index and a set of economic variables, that until the pandemic had a very good fit in explaining the consumer’s mood

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Vitor Constâncio

@VMRConstancio

4 years

This is the big risk. New court cases will come immediately in Germany against PEPP. The Court insists in the ridiculous distinction between monetary policy and economic policy and wants proportionality in its effects. Can a German economist explain what this means?

Henrik Enderlein

@henrikenderlein

4 years

Today, the German Court shot at the PSPP, but hit the PEPP.

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Vitor Constâncio

@VMRConstancio

4 years

Stock markets collapsing despite central banks actions. The FED cut rates to near zero and restarted QE. Futures for US S&P500 at -10%. US Senate reluctant to approve House bill deciding only a quite narrow paid sick leave, that didn’t exist at all in the US. 1/2

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Vitor Constâncio

@VMRConstancio

4 years

It is indeed shameful for some EU countries. Should be stopped. “close to 40% of multinational profits (more than $700 billion in 2017) are shifted to tax havens each year” . Great work by @gabriel_zucman & colleagues. e.g.

Jean Pisani-Ferry

@pisaniferry

4 years

Fascinating map @gabriel_zucman . So many losers, so few and tiny winners.. That can't last.

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Vitor Constâncio

@VMRConstancio

1 year

There will court cases. The market for AT1 is about $250 billion and prices are now going down. There is the concern that the tool may have been destroyed. The ECB, EBA and the SRB issued a statement saying that the Swiss treatment will never happen in the EU. To be followed.. 5/

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Vitor Constâncio

@VMRConstancio

4 years

The main letdown is not that they need more meetings to reach a solution commensurate with the crisis. It´s that the EU Council could not agree on any principles or guidance about the Recovery Fund. Nothing about size or funding or distribution rules ( transfers or loans). /1

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Vitor Constâncio

@VMRConstancio

4 years

According to the newspaper El País,the Commission disclosed a proposal of a Recovery Plan of 1.6 trillion euros, financed by increasing the EU budget with countries’ contributions going up to 1.9% of EU GDP in 2022! To do transfers to countries and not loans that’s the best path

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Vitor Constâncio

@VMRConstancio

4 years

Historic, unprecedented, essential, are all deserved adjectives to qualify the EU Summit decision on the €750bn Recovery deal. Common debt issuance (almost Eurobonds) to fund European fiscal stimulus in a recession is the big innovation /1

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Vitor Constâncio

@VMRConstancio

5 years

After 10 months on Twitter I finally decided to publish a blog (still in construction) where I could post my recent texts or presentations, making them available beyond my summaries in tweets. You can visit it at

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Vitor Constâncio

@VMRConstancio

5 years

Johnson did not invent this solution to get rid of the backstop, it was on offer long before the WA and that is why the EU reopened the negotiations. In spite of it, the Tory press is praising Johnson for accepting something that they opposed in the past. Such is politics. 2/n

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Vitor Constâncio

@VMRConstancio

1 year

The Swiss authorities didn’t respect that sequence. Formally, equity was not wiped out to absorb losses, it was sold at a price well below market value. The shareholders lost money only because of that low price which is not a reason to bail-in the Cocos. 4/

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Vitor Constâncio

@VMRConstancio

4 years

Many papers have emerged analysing the March episode of price collapse and illiquidity in US treasuries, an unprecedented event in the “deepest and most liquid “ financial market in the world. Many things hinge on this analysis 1/n

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Vitor Constâncio

@VMRConstancio

1 year

I would like to see some European institution explaining the causes of such striking differences in the Food prices evolution in the Euro Area and the U.S. as shown in the chart below

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Vitor Constâncio

@VMRConstancio

2 months

The Sintra ECB Forum had a poor start with a paper by Primiceri and Gianonne using a simple inadequate model to reach the (wrong) conclusion that demand-driven effects are dominant in explaining the recent inflation episode, particularly in the EA(!!) 1/

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Vitor Constâncio

@VMRConstancio

1 year

Disinflation momentum in the Euro Area has broadened. That will be reflected in the future wage/price decisions, contributing to a future decrease in core inflation that, wrongly, has been taken as the proxy target of monetary policy 1/

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Vitor Constâncio

@VMRConstancio

1 year

The big issue now is what CBs will do with interest rate policy. The ECB went ahead with a 50bps hike, despite the connection stated in its new Monetary Strategy between monetary policy and financial stability (slide). The FED will decide this Wednesday: nothing or only 25? 7/7

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Vitor Constâncio

@VMRConstancio

4 years

The ECB, “ahead of the curve”, just increased QE emergency purchases, PEPP, by €600 bn to €1350 and prolonged it to at least Until June 2021 with reinvestment in full at least to the end of 2022. The other purchase programs continue. The euro is going up, periphery yields down.

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Vitor Constâncio

@VMRConstancio

5 years

The agreement just achieved between EU and UK about Brexit follows mainly an old EU proposal to have a border at sea between Northern Ireland and the rest of the UK. This was strongly rejected then by the UK Government as it split the UK sacrossant unity. 1/n

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Vitor Constâncio

@VMRConstancio

1 year

Bank regulation (Basel III) accepted Cocos or AT1 as part of Tier 1 bank capital, as good as equity for loss absorbing. AT1 should be called-in only after equity was wiped out and the bank capital comes below the percentage mentioned in the AT1 bonds contract 3/

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Vitor Constâncio

@VMRConstancio

5 years

Following other BIS papers Kristin Forbes published an empirical research showing that in times of globalisarion there are many drivers of inflation besides monetary policy and domestic slack in the economy. CB must heed the evidence

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Vitor Constâncio

@VMRConstancio

1 year

Cocos are perpetual bonds (traded in the market though) that can be wiped out if the capital of a bank comes below a certain percentage around 6%. They earn a higher interest while alive and that was the incentive to get an easy capital equivalent tool without voting rights. 2/

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Vitor Constâncio

@VMRConstancio

2 years

Europe will be highly affected by the Russian war on Ukraine. We´re the theatre of war, millions of refugees to welcome, high prices of energy and cereals or even shortages, possibly accompanied by rationing. Governments are already trying to dispel the rumours about rationing 1/

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Vitor Constâncio

@VMRConstancio

1 year

The Sintra ECB Forum started this year with an excellent paper, presented by Silvana Tenreyro, on “Monetary policy in the face of supply shocks:the role of inﬂation expectations”. Theory and mainstream models give an exaggerated role to expectations in the inflation process 1/

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Vitor Constâncio

@VMRConstancio

4 years

A HUGE increase in public expenditure to support people’s incomes and keep firms/sectors afloat must happen everywhere. Central Banks must use QE to maintain low sovereign bond yields and low sovereign spreads everywhere. Yes, it is their task now. No inflation risk 2/4

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Vitor Constâncio

@VMRConstancio

4 years

Unfortunately the negotiations for tomorrow’s EU Council are in a more confused state than what the El País news, that I quoted before, suggeted. Any bold agreement would always be difficult and several countries still don’t agree.

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Vitor Constâncio

@VMRConstancio

2 years

The aftermath of the IMF meetings points to increased risks of possible serious financial instability, accompanying the recession created by the FED hawkishness that is putting pressure on world asset markets, from stocks to bonds to housing and commodities.1/

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Vitor Constâncio

@VMRConstancio

4 years

Excellent analysis by @ErikFossing of the huge fiscal stimulus difference between the US and the EU. A cause of concern for the European recovery robustness. Was the lesson of the 2012 double dip not enough? See this chart by Erik

Erik Fossing Nielsen 🇪🇺 🇺🇦

@ErikFossing

4 years

In today’s Sunday Wrap: - The risks associated with too much fiscal stimulus in the US and too little in Europe (spoiler: the former is a lot better than the latter) - Draghi should boost labor participation because it’s the key to stronger growth.

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Vitor Constâncio

@VMRConstancio

2 years

The striking decline of real wages reflects the reduced powers of trade unions compared with the situation in the 70s inflation. The left chart shows the difference in real wage behaviour, then and now. A FED WP explains how this change “killed the Phillips curve”(on the right)4/

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Vitor Constâncio

@VMRConstancio

2 years

These huge moves in just 2 days make it obvious that they are not “meaningful prices that reflect real scarcities “. Something is wrong with these markets.

Holger Zschaepitz

@Schuldensuehner

2 years

German 1y ahead Power Price has almost halved within 2 days from €1,050 per MWh to €545 today. This raises the question of who is operating in the electricity market. Is it pure speculation? Are these meaningful prices that reflect real scarcities?

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Vitor Constâncio

@VMRConstancio

3 years

The ECB just published a relevant working paper about which inflation expectations indicators are the best to help forecast inflation J, Rudd, in a FED WP asked “Why Do…Inflation Expectations Matter for Inflation?”, 1/18

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Vitor Constâncio

@VMRConstancio

1 year

Markets are still digesting the weekend events and are showing mistrust about bank shares. Both European and US banks stock indices are going slightly down. It is now all about confidence and that means a lot of uncertainty, despite the strong banks situation. 6/

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Vitor Constâncio

@VMRConstancio

3 years

Bitcoin tumbled again. Finally, American authorities seem to be awakening for the real problems with bitcoin and other crypto-assets. “The US Treasury announced on Thursday that any crypto transfers worth more than $10,000 must be reported” to the tax administration 1/11

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Vitor Constâncio

@VMRConstancio

4 years

The picture of a happy day:

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Vitor Constâncio

@VMRConstancio

4 years

I have seen tweets sent from Italy, criticising the ESM and quoting me. I want to recall the whole gist of what I have written. The ESM was crucial in the 2010-2012 crisis when several countries lost access to the financial markets and had very high yields 1/n

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Vitor Constâncio

@VMRConstancio

4 years

Good news for Europe from Italy. The anti-European populists lost ground in the regional elections and the government is therefore reinforced. Markets reacted by reducing the yield of 10y Italian sovereign debt to below 1% (0.88%) the lowest in quite some time.

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Vitor Constâncio

@VMRConstancio

5 years

Anchors away! Structural change in energy economics with Russia/Saudi Arabia aiming at US shale oil and expansion of renewables. Deep temporary economic shock from the coronavirus. Markets mistrust of central banks’ firepower and fiscal authorities. Both anchors needed. /1

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Vitor Constâncio

@VMRConstancio

1 year

News from the possible recession in the EA: the ECB’s Bank Lending Survey (BLS) show that firm’s demand for credit continues to tumble; down 42% in Q2 to the lowest value in 20 years, (since 2003). Factors: high interest rates and lower fixed investment 1/

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@VMRConstancio

6 years

Brilliant indeed, also implying that in this protracted low rate environment with excess planed savings for demographic reasons for years to come, the old EU debt/GDP ratio of 60%, defined in 1993, is no longer sensible and should be rediscussed (at least) among economists

Laurence Boone

@LaurenceBoone

6 years

Brilliant O Blanchard AEA Presidential address on why debt is not “so bad” in a low rate environment..as long as spending is productive. #rethinking macro in a low rate world

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Vitor Constâncio

@VMRConstancio

3 years

Bloomberg published an interesting article about the Brexit effects on financial instruments trading in Europe.See this chart on the trading of stocks displacement from London to continental cities 1/

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Vitor Constâncio

@VMRConstancio

7 months

The ECB announced that it will take a decision in March on the very important issue regarding the future operational framework to use a policy rate to influence the interbank overnight rate. The decision is also linked to the issue of the future size of the balance sheet. 1/11

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Vitor Constâncio

@VMRConstancio

4 years

A perfect initial statement! A good beginning!

Michael Steen

@michaelsteen

4 years

Statement on #BVerfG

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Vitor Constâncio

@VMRConstancio

4 years

The staggering outflows imply a EM crisis in the making that will later impact the world economy. 84 countries already requested IMF assistance, many more than in 2008/9. Let’s see if the IMF can respond with adjusted conditionality to an unprecedented situation.

Jonathan Fortun

@econchart

4 years

While the pace of outflows from EM has greatly reduced in past few days, the extent and scale of the #COVID19 shock is unprecedented. The level and speed of outflows in around 90 days of 2020 is equivalent to the worst yearly figures on record.

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Vitor Constâncio

@VMRConstancio

4 years

Presumably even more difficult to approve transfers to people without work in sectors that were already obliterated by the collapsed demand. Without public direct payments to citizens the US will go into a demand negative shock of epic proportions. 2/2

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@VMRConstancio

1 year

The ECB´s Persistent and Common Component of Inflation (PCCI) is the best indicator of core inflation and was in May at 3.3% (well below the 5.4% of the usual unsound indicator)! Growth of producer prices yoy was negative in May (-1.5%), having been at 43% a year ago.

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@VMRConstancio

4 years

Indeed. This would be the proper occasion to introduce Eurobonds, directly connected to the coronavirus crisis. It would be ad-hoc and not a permanent programme. But, as you say, it would show solidarity, a precious political capital for the future of Europe.

Robin Brooks

@robin_j_brooks

4 years

This is a real time for Germany to show leadership and solidarity in Europe. As a German, I would be proud to make this a turning point in Europe and turn the tragedy of COVID-19 into the beginning, even if just in small steps, of Eurobonds.

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@VMRConstancio

4 years

Balance-sheet size as a monetary policy tool is forbidden by the German Court, based on which law? Or putting it differently: which laws have to be changed to put an end to these lawyers monetary/economic nonsensical views?

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Vitor Constâncio

@VMRConstancio

4 years

So, regulate bitcoin and its clones as assets (crypto-assets), explain why the digital currency that the central banks already have should be accessible to the public and in what conditions and try to put a stop to all the irrationalities that surround these issues 20/20’

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@VMRConstancio

5 years

The ideas of Kimball, Rogoff and Goodfriend to embark into ever more negative interest rates ( in order to avoid fiscal policy..) should be resisted and debunked. In the present situation,if the downturn becomes serious, a more active fiscal policy will be indispensable 8/8

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@VMRConstancio

3 years

The Jan. number for EA inflation of 5.1% was a significant surprise against the average of market forecasts of 4.4%. One month outcome is, of course, not enough to justify an immediate substantial revision of projections, but a preliminary rethinking is warranted, 1/14

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@VMRConstancio

4 years

Some worrying developments in US financial markets last week: 1)Bond ETFs with prices significantly below the value of the underlying bonds and easy profitable arbitrage not happening for lack of market liquidity in the bond market, including longer Treasuries…1/5

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Vitor Constâncio

@VMRConstancio

4 years

Stock markets “delighted” as the elections, with the GOP retaining the Senate, imply decision-making gridlock, blocking any reforms in taxation and regulation, guaranteeing a continuation of financial excesses, inequalities, and insufficient fiscal stimulus for the real economy

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Vitor Constâncio

@VMRConstancio

4 years

The OECD just published an upward revision of world growth. However, not so much for the euro area. The EU Commission, the Dutch and a few others have started to talk about fiscal consolidation ! Remember 2011/2 ?

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Vitor Constâncio

@VMRConstancio

4 years

Powell speaking at the Jackson Hole just revealed the FED´s new monetary framework. As expected, it is based on averaging inflation targeting (see my tweet ) without indicating a precise number of years to do the averaging. Some discretion is warranted.1/n

Vitor Constâncio

@VMRConstancio

4 years

A somewhat vague averaging inflation targeting, i.e. without a precise number of years, may come in the future, formally at the end of the ongoing framework revision. Not a bad idea but also not a panacea. Good to signal acceptance of inflation above target after a major crisis/2

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Vitor Constâncio

@VMRConstancio

4 years

Another excellent @ErikFossing Note. An information nugget:”According to the Bundesbank, the German state saved EUR 437bn in interest payments between 2008-19 because of ECB policies, compared to, e.g. EUR 421bn saved by the French state and EUR 299bn by the Italian state.”

Erik Fossing Nielsen 🇪🇺 🇺🇦

@ErikFossing

4 years

In today’s Sunday Wrap: - why I’m more worried about 2020 growth than everyone else (it seems), but less pessimistic about the medium term. - how I think the ECB and Germany will resolve the mess of Tuesday’s Constitutional Court ruling.

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Vitor Constâncio

@VMRConstancio

4 years

My complete slides used for the Rebuilding Macroeconomics Webinar on MMT. I highlighted its shortcomings that hinder its acceptance as a whole but underlined also points of agreement regarding fiscal policy as a macro stabilisation tool.

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Vitor Constâncio

@VMRConstancio

5 years

This is a regrettable demagogic tweet by @PositiveMoneyEU . The ECB bought bonds in the secondary market when those countries were under attack with low bond prices ( high yields). It clearly helped those countries lowering their yields. The ECB was then accused by many in ...

Positive Money Europe

@PositiveMoneyEU

5 years

🔥 The ECB revealed it made 73 billions euros of profits from the countries most affected by the crisis: Spain, Ireland, Italy, Portugal and Greece. ‼️

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Vitor Constâncio

@VMRConstancio

6 years

A great chart about the folly of all follies. And they called this thing a currency! Two years ago I called it a tulip and was wrong after all by default in the thousands!

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Vitor Constâncio

@VMRConstancio

1 year

As predicted, euro area inflation in March tumbled to 6.9% from 8.5% in February (see the Eurostat table). I expect a similar decrease for April. This means that inflation is on its way down to the level implicit in the ECB projections, close to 3% by December this year 1/

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Vitor Constâncio

@VMRConstancio

4 years

The German Finance Minister extending to all member countries the possibility of using fiscal policy as needed in this crisis. Wow!

Lucas Guttenberg

@lucasguttenberg

5 years

On 🇪🇺, @OlafScholz says member states with higher debt levels should have the flexibility to do the necessary fiscal measures and should get European backing for this. „You can count on 🇩🇪.“

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Vitor Constâncio

@VMRConstancio

1 year

Although hardly mentioned in textbooks, increased profit margins over costs are, alongside wages, part of the second-round inflationary effects after the initial jump in inflation, whatever its cause. The chart illustrates the hike in US profit margins with the pandemic 2/2

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Vitor Constâncio

@VMRConstancio

4 years

Without words: “Germany’s Health Ministry confirmed a report.. which said.. Trump had offered funds to lure the company CureVac to the United States...Trump was trying to secure the scientists’ work exclusively .on a vaccine..only for the United States.”

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Vitor Constâncio

@VMRConstancio

9 months

The FED and the ECB diverged in their decisions. The FED “announced” 3 rate cuts next year, while the ECB, with the economy in a recession dampening inflation, didn’t exclude further hikes and didn’t discuss future cuts. Markets diverged from both of them betting on many cuts 1/

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Vitor Constâncio

@VMRConstancio

2 years

Recently, from an ECB official:" We must hike rates at all meetings until inflation is 2%.", totally ignoring lags and forecasts of other drivers' impact on inflation. A dangerous policy: change rates and contemporaneously look "through the window" to see the results.6/

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Vitor Constâncio

@VMRConstancio

4 years

Excellent analysis by @MESandbu on the GCC decision. Are there several legal orders in the EU on European Law? Also a Polish or a Hungarian one? Can the ECJ be overruled by national Courts on questions of European Law? There should be no doubts about this.

German court has set a bomb under the EU legal order

Its ruling on the ECB’s bond-buying programme is misguided and ill-timed

www.ft.com

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Vitor Constâncio

@VMRConstancio

3 years

Two interesting webinars on public debt by @ojblanchard1 & @B_Eichengreen . At the Paris school of Economics @ojblanchard1 presented a compressed and updated his AEA 2019 paper. He also announced an imminent new book with all the nuts & bolts of the deficits and debt issues. 1/

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Vitor Constâncio

@VMRConstancio

6 years

You are right but simple macroeconomics has not yet arrived in certain places in a few central european countries...

Brad Setser

@Brad_Setser

6 years

Germany has a lot more fiscal space than its finance minister thinks -- It doesn't need to be quite so careful this year or next. There would be nothing wrong with doing a bit more to support German demand during the current soft patch

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Vitor Constâncio

@VMRConstancio

3 years

Rivian is a 12-year-old startup to build electric cars that has never sold a single vehicle. It made an IPO a few weeks ago and now has a capitalisation above Wolkswagen and Citigroup. Rational efficient markets or financial follies?

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Vitor Constâncio

@VMRConstancio

4 years

The Spanish Government proposes an extraordinary Fund of €1.5tr, managed by the EU Commission, to spur economic recovery. The Fund would do transfers and not loans, as I suggested here a while ago, to avoid upfront increases in national debt ratios.1/4

El documento presentado por España para el gran fondo de deuda

null

issuu.com

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Vitor Constâncio

@VMRConstancio

1 year

Finally, CBs (and the FT) have awaken for the relevant contribution to inflation coming from firms’ increases in profit margins over costs, that I have been tweeting about for quite some time.

Central bankers warn companies on fatter profit margins

After focusing on the dangers of strong wage growth, rate-setters have switched to businesses raising prices

www.ft.com

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Vitor Constâncio

@VMRConstancio

4 years

Excellent succinct explanation by Brookings of all the instruments the FED has recently deployed. I could not find an equivalent text for the ECB programmes. Someone at the ECB should do it.

What did the Fed do in response to the COVID-19 crisis?

The Hutchins Center explains how the Fed reacted to the economic effects of the COVID pandemic.

www.brookings.edu

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Vitor Constâncio

@VMRConstancio

2 years

There is already a lot of noise around the exchange rate EUR/USD going to 1. However, what matters for competitiveness and import prices is the trade-weighted effective exchange rate v. main trade partners. Since Dec. the EURUSD is down 9%, but the effective rate is down only 2%

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Vitor Constâncio

@VMRConstancio

2 years

In the Euro Area consumer confidence has dropped this month almost the same as in March 2020 at the beginning of the pandemic recession (see the chart). The negative impact on economic activity stemming from the external shocks is becoming quite significant.1/

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Vitor Constâncio

@VMRConstancio

2 years

The ECB staff projections don't foresee a recession, contrary to the majority of private forecasts. Germany is already in a fragile position and can enter a recession shortly (Charts). Consumption will suffer from negative real wages, and Investment will decelerate. 3/

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Vitor Constâncio

@VMRConstancio

1 year

Inflation for June in the US came down to 3% from 4% in May. The so-called core inflation (the total minus energy and food) decreased too from 5.3% in May to 4.8% in June. However, the relevant NY FED Underlying Inflation Gauge was only 3.5% in May. Inflation decline accelerates

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Vitor Constâncio

@VMRConstancio

6 years

The advice of Tsipras to Italy “ Better to do quickly what in any case you will be forced to do later” Advice based on the value of experience.

Federico Fubini

@federicofubini

6 years

Il consiglio di Tsipras all’Italia: «Meglio che facciate subito quello che comunque vi faranno fare dopo»

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Vitor Constâncio

@VMRConstancio

4 years

Nine euro area governments ask for mutualised corona bonds: France, Italy, Spain, Belgium, Ireland, Portugal, Luxembourg, Greece and Slovenia.They wrote:“This common debt instrument should have sufficient size and long maturity to be fully efficient”

Nine eurozone countries issue call for ‘coronabonds’

Common debt instrument will ensure stable financing for coronavirus-related policies, say backers

www.ft.com

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Vitor Constâncio

@VMRConstancio

4 years

I´m Impressed by the human drama involved in US massive unemployment numbers. 20.5 million unemployed in one month. More than 1/3 from the low-income segment. Plus 11 million in part-time work. Half of the population is now not employed 1/5

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Vitor Constâncio

@VMRConstancio

5 years

The FED achieved little for the moment. Stocks went down yesterday and the 10y bond yield came to below 1 (!), both pointing to the markets believing in a weakening economy or even a recession. The cut will help later-on after the virus crisis abates. 1/9

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