Leo Haviland provides clients with original, provocative, cutting-edge fundamental supply/demand and technical research on major financial marketplaces and trends. He also offers independent consulting and risk management advice.

Haviland’s expertise is macro. He focuses on the intertwining of equity, debt, currency, and commodity arenas, including the political players, regulatory approaches, social factors, and rhetoric that affect them. In a changing and dynamic global economy, Haviland’s mission remains constant – to give timely, value-added marketplace insights and foresights.

Leo Haviland has three decades of experience in the Wall Street trading environment. He has worked for Goldman Sachs, Sempra Energy Trading, and other institutions. In his research and sales career in stock, interest rate, foreign exchange, and commodity battlefields, he has dealt with numerous and diverse financial institutions and individuals. Haviland is a graduate of the University of Chicago (Phi Beta Kappa) and the Cornell Law School.


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EUROZONE- BREAKING UP IS HARD TO DO © Leo Haviland, January 3, 2012

The decline in the Euro FX does more than reflect Europe’s sovereign debt and banking crisis. Europe does not stand or act alone. Euro currency weakness underlines the continuing epic worldwide economic disaster that emerged in 2007. The sustained slump in the Euro FX since spring 2011 warns that the worldwide economic recovery that began around early 2009 is slowing. Some headway has been made in containing Eurozone (and other European) problems, but that progress has been insufficient and it probably will remain so for at least several more months. The Euro FX will depreciate further from current levels.

First, despite the major sovereign debt and banking problems, the Eurozone’s political and economic leadership has the political desire and (ultimately) sufficient economic power to preserve the Eurozone. This means keeping even members such as Greece within it. The problems of the so-called peripheral nations in key respects have become those of the entire fraternity. The Eurozone may rely on outside economic help from the International Monetary Fund or other countries to help pay for the repairs. However, the region as a whole will, “if push comes to shove”, resolve the thorny difficulties itself. And even if Greece did exit the Eurozone, remaining Eurozone members probably would band together to keep the Eurozone intact.

For some time, the so-called fixes may involve pushing the problem (dangers) off to a more distant future. The buying-time strategies (hoping that economic recovery eventually will enable a genuine escape) of course will have some costs. For example, picture inflation risks, slower growth, and some suffering by creditors.

The substantial role of the Euro FX in official reserves underlines the importance of the Eurozone and its Euro FX in the world economic order. Most of the world surely does not want the Euro FX to disappear entirely, or to suffer a massive depreciation (as opposed to a further small or even a modest depreciation). Thus at some point (“if really necessary”), the world outside of Europe would ultimately bail out Europe.

Consequently the declines in the Euro FX over the past several months confirm worldwide economic sluggishness (and slumps in stock marketplaces and commodities). So further falls in the Euro FX may reflect- or help lead to- even more declines in equity and commodity playgrounds. That additional Euro FX debasement may even reflect or accelerate an economic downturn (not just stagnation) in some regions, and not just European territories. Thus Euro FX currency depreciation alone will not solve the Eurozone’s (or overall European) problems.

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Eurozone- Breaking Up Is Hard To Do (1-3-12)


According to conventional rhetoric, nations such as Greece, Portugal, and Ireland and their terrible sovereign debt problems are out there on the periphery. In troubling times, such concepts of distance in interest rate, currency, equity, and commodity marketplace discussions occasionally offer comfort to nervous observers. What’s relatively or supposedly unimportant nevertheless can become quite significant to a so-called or apparent center of things and allegedly core worldviews regarding it. This sometimes can happen rather fast.

Greece’s debt drama on the European periphery (and similar plays on other frontiers) highlights the acrobatic wordplay of marketplace performers. Debtors and creditors, as well as regulators and lawyers and even politicians, know the magic word “default” has ominous consequences. You can call a fiscal or other debt situation a disaster. Fine, you can label the mournful scene or event a debacle. You can swear it’s dismal, depressing, disheartening, and deplorable. But no matter what, try not to call it (and the related fix involving it) a “default”! Words such as “rollover”, “reprofiling”, and “restructuring” are satisfactory, as long as they do not cause the dreadful term “default” to spring permanently into the dialogue.

In marketplaces as elsewhere, raising the issue of the periphery suggests the merit of addressing what we take for granted and why. What is peripheral or marginal can become central (and vice versa), and so our faith in something or someone likewise can change or diminish. Or, our doubts can evolve or transform into belief. Let’s take a quick look at China and raise a couple of questions. After all, faith in the China growth story and its future near-inevitability remains widespread and deep.

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On the Periphery (The Money Jungle, Part Four)