The media
in Finland has finally woken up to the TARGET2 balances
and the fact that the euro crisis is definitely not over. This is either a
surprisingly well-planned action to prepare the voters for the coming Spanish
losses and/or a closer fiscal union. Or it might be that they simply are good
journalists. As Finland is soon the only remaining
AAA-rated country, together with Germany, any rhetoric signaling a possible
policy shift should be watched very carefully.
I had a
very angry and speculative rant of the long-term game plan in last night’s post
You Better Read This. I think the market is moving to a new
phase. Policy is no longer dictated by the level of PIIGS bond yields, but the
political support on the national level. In a way there is nothing new to this,
as everyone knows in the end it will be what Germany decides it will be. But losing
valuable friends (first Holland, then France and next perhaps Finland), Germany cannot pretend anymore that what
they do is for something greater than simply Bundesbank’s receivables from the
eurodisaster.
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News – Between
The Hedges
Markets – Between
The Hedges
Recap –
Global Macro Trading
The Closer
– alphaville / FT
Debt
crisis: live – The
Telegraph
Europe Crisis Tracker – WSJ
FX Options
Analytics – Saxo
Bank
EURO CRISIS
The Coming European Growth Pact – Credit
Writedowns
These
events mark the beginning of the push back against German-led austerity, but it
is even bigger as the IMF’s call for the ECB to cut rates illustrated
Now that the Dutch Prime government has fallen,
with elections likely for 12 September, political commentator Les Oomkes argues
that Wilders’ railing against Europe might prove fortuitous: leading to Europe
as the central theme of the election campaign and a shift in the political
balance of power.
The European Commission on Wednesday (25 April)
had an uphill struggle explaining why next year's EU budget needs to go up by
6.8 percent, even as it preaches austerity to member states.
FED’s FOMC
FOMC Statement: Economy "expanding
moderately" – Calculated
Risk
Fed Policy Remains on Hold – Economist’s
View
Mark Thoma:
The question is whether this is the
correct policy. Presently, the Fed is missing its employment target, and it is
also below its declared inflation target of 2 percent. As the statement says,
"the Committee anticipates that subsequently inflation will run at or
below the rate that it judges most consistent with its dual mandate." So
there is no risk of overshooting the inflation target according to the Fed,
only a risk of undershooting it.
FOMC statement – no QE in June unless… – Pragmatic
Capitalism
FOMC Wrap: Forecasts more hawkish, but Bernanke
dovish – Saxo
Bank
Bernanke and the wrong credibility issue – alphaville
/ FT
Other reactions to the FOMC – alphaville
/ FT
BRITAIN’S RECESSION
Fiscal policy: Austerity bites – Free
exchange / The Economist
Britain's economy has substantial structural problems… a key monetary
transmission mechanism is broken… despite significant economic headwinds,
including substantial financial-market spillover from Europe, Britain is doing all right.
UK Back in Recession, Did it Really Ever Leave?
Disappointing Details; Five Reasons the UK Recession Will Get
Much Worse – Mish’s
1) Credit
markets, Spain and Italy 2) ECB undecided 3) UK services 4) UK exports to Eurozone 5) even the
good macro numbers will probably disappoint soon.
OTHER
Preliminary international banking statistics at
end-December 2011 –
BIS
Large
movements in the latest data are highlighted in the Statistical commentary