Previously on
MoreLiver’s:
EUROPE
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 Doubt – NYT
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 states – Spiegel
/ 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?
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
Hegemony – ZH
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 Singing – Mark
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
Euroland – EconoMonitor
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 English – europp
/ 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.
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.
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 squeeze – Free
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-Sheet – ZH
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.
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
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.
EUROPE: PIIGS
Press release Statement by the EC and the ECB
following the conclusion of the first review of the financial assistance
programme for Spain – ECB
Irish housing market turnaround – Danske
Bank (pdf)
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 Worse – ZH
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 Sell – ZH
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.
ASIA
Billions in Hidden Riches for Family of
Chinese Leader – NYT
Family has
at least 2.7 billion USD.
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.
Unwelcome
revelations about wealth of family of Chinese premier, known for his humble
background and populist appeal
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.
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 country – Sober
Look
When the Growth Model Changes, Abandon the
Correlations – mpettis
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.
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.
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.