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Sunday, October 28

28th Oct - Weekender: Europe, US, Asia

Previously on MoreLiver’s:

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European Union Exit? Concerns Grow for Britain NYT
Now, with the euro zone almost three years in crisis, British public opinion has hardened. The overwhelming majority of Conservative lawmakers are euro skeptics, and many privately favor withdrawal.

Euro Survives, but Future Is in DoubtNYT
To a surprising extent, the perception seems to be that the European situation is under control. That is true if all you worry about is whether bondholders will get paid. It is false if you have a broader perspective.

Give us a break with your nation statesSpiegel / presseurop
Those who are arguing today for more Europe have provoked the wrath of the professional democracy purists who hold the nation-state up to them as an ideal model. But do we seriously want to live in a super-Austria?

On Europe And The Future Of International RelationsRCS / ZH
It would also be wise to ponder the idea of whether a supranational government could exist. Proceeding down a path with a likely dead end would consume precious resources and lead to widespread suffering among every day citizens.

Sovereign Self-Interest Versus European HegemonyZH
These are national choices that illustrate sovereign self interest not European hegemony. I simply ask the question how is Europe supposed to move towards closer Union when national interest remains paramount?

Hark! The Herald Angels Aren't SingingMark Grant / ZH
We are at the cross roads, at breakpoint, where solvency is no longer overcome by liquidity because the politics is dysfunctional and because after you get to “unlimited” and “uncapped” there is nowhere further to go.

Cross Border Lending and Imbalances in EurolandEconoMonitor
The immediate cause of the crisis was the imprudent lending of (mostly) European banks (just as the US crisis was caused by imprudent lending of US banks), but the lasting flaw in the EMU is the separation of fiscal policy from currency issue. As I’ve said before, if there is an “imbalance” in Euroland, it is one of power, not trade flows. With the Austerians in power, there will not be the capacity to mount a sufficient fiscal response to end the crisis.

The Euroblogosphere has great potential to contribute to the European public sphere, but it is currently restricted by a lack of deep debate and the dominance of Englisheuropp / LSE
Despite the seeming lack of deep level debate and the over presence of English, blogging is a growing contributor to an also growing European Public Sphere, and could well be an important factor in helping people to contribute to policy debates and increase political participation in coming years.

Is Europe's Emissions Trading System Broken?Spiegel
Emitting CO2 into the atmosphere is dirt cheap in Europe these days. At just 8 euros per ton, the low price is undermining the European Union's effort to establish an effective cap and trade system. Implementing necessary fixes to the system, however, won't be easy in the face of industry opposition.

The World from Berlin: 'Euro-Zone Plans to Fix Greece Have Failed'Spiegel
Greece says it has been granted an extra two years to meet austerity targets. The EU and IMF deny it. According to press reports, Athens needs an extra 20 billion euros in aid. It is difficult to determine exactly what might come next for the country, but commentators say it is clear that Europe is at a crossroads.

Rebalancing, and the big squeezeFree exchange / The Economist
That leaves external demand—net trade—to do the heavy lifting, but since member states mostly trade with themselves the going is very, very slow.

The Complete 'Advanced' Economy Sovereign Ratings Cheat-SheetZH
Citi: We expect that Moody’s will place France on a ratings review for a possible downgrade (ie Negative Watch) in the next 2-3 quarters, largely because of the fiscal program and weak economy. Moreover, we also expect that S&P will likely place the UK on Negative Outlook in the next 2-3 quarters (in line with Moody’s Aaa Negative Outlook). We also expect that Portugal will be downgraded over the next 2-3 quarters due to continued recession plus the probable need to extend its Troika programme.

UK's Q3 GDP growth was a surpriseSober Look
JPMorgan: . Growth will slow in 4Q as energy prices rise and temporary boosts fade. Moreover, the business surveys have failed to indicate acceleration, raising the possibility that the much weaker official data (up until 3Q) are playing catchup with the PMIs. Nevertheless, there is a sense that a recovery is taking place

Dodd-Frank forces European banks to review U.S. dealsReuters
Some European banks are ordering their brokers to rein in and even quit trading some derivatives with U.S.-based peers in a protest against tough new American rules.

Press release Statement by the EC and the ECB following the conclusion of the first review of the financial assistance programme for SpainECB

Spain: Statement on the First Financial Sector Monitoring MissionIMF

Irish housing market turnaroundDanske Bank (pdf)

A contrarian take on fiscal cliff worriesMarketWatch
Commentary: What are the odds U.S. will really jump off cliff?

What happens if we go over the fiscal cliff briefly?Wonkblog / WP
We all know what happens if the entire fiscal cliff takes effect for all of 2013: Some $720 billion gets taken out of the economy, growth craters and the United States runs a major risk of falling sharply into another recession. But what happens if we go over the fiscal cliff briefly

Citi: Why The Real Earnings Picture Is Bad And Getting WorseZH 
Earnings have been particularly disappointing given that sell-side expectations already underwent significant downward revisions months ago. 

GS: If Obama Wins, What to Buy and SellZH
Goldman Sachs: At the sector level, politics - and possibly policies - matter more. Over the past 35 years, Democratic terms are associated with the outperformance of cyclical stocks while more defensive and higher yielding sectors have outperformed during Republican presidencies.

Is U.S. climate policy better off without cap-and-trade?Wonkblog / WP

Billions in Hidden Riches for Family of Chinese LeaderNYT
Family has at least 2.7 billion USD.

China insider exposé is explosive and predictableReuters
Fix one problem, and along comes another. On the day China expelled disgraced politician Bo Xilai from its parliament, a New York Times investigation alleged that Premier Wen Jiabao’s family controls financial assets worth $2.7 billion.

New York Times blocked in China over Wen Jiabao wealth revelationsThe Guardian
Unwelcome revelations about wealth of family of Chinese premier, known for his humble background and populist appeal

Dirty money cost China $3.8 trillion 2000-2011Reuters
China has lost $3.79 trillion over the past decade in money smuggled out of the country, a massive amount that could weaken its economy and create instability, according to a new report.

The man who must change ChinaThe Economist
Xi Jinping will soon be named as China’s next president. He must be ready to break with the past

Forget what you've heard about the National People's Congress - in China 9 Communist Party men run the countrySober Look

When the Growth Model Changes, Abandon the Correlationsmpettis
Chiwoong Lee at Goldman Sachs has a new report out (“China vs. 1970s Japan”, September 25, 2012) in which he predicts that China’s long-term growth rate will drop to 7.5-8.5%. I disagree very strongly with his forecast, of course, and expect China’s growth rate over the next decade to average less than half that number, but the point of bringing up his report is not to disagree with the details of his analysis.

UBS: Erosion of BoJ Independence: “Fonetary-Policy”?ZH
The government is now seen as increasing pressure on the BOJ to do something to combat deflation, given that the Japanese economy is likely to post negative growth over the July–September quarter amid the economic slowdown in China and other such factors.

Meanwhile In Japan...ZH
The only source of "capital" left - BOJ monetization. The only problem, of course, is that Japan already has well over 200% of national debt to GDP. And that's the smaller problem. The bigger problem: even the smallest increase in prevailing interest rates, and the entire Japanese house of cards topples.

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