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Saturday, December 15

15th Dec - Weekender: Economics & Markets

This weekend's economics-section is huge: both UK and US are moving towards changing their monetary policies, while the fiscal cliff, general uncertainty over the recovery and Europe's continuing trouble caused a flood of articles.

Previously on MoreLiver’s:

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Mervyn King Speech at Economic Club of NYThe Big Picture

How soon is now, UK NGDP targeting editionalphaville / FT

Think the Fed has been too timid? Check out Britain and JapanWonkblog / WP

Monetary Policy Innovationsmainly macro
It is always interesting to compare the Fed, ECB and Bank of England. For both the Fed and ECB it has been quite a year for innovation.

Central bankers are saving the world because politicians won’tEdgy Optimist / Reuters

GuidanceBank of Canada
Mark Carney, Governor of the Bank of Canada, 11-Dec-2012, Presented to CFA Society Toronto

Conditional Inflation Targeting in EffectEconbrowser

The Man Who Occupied the Fed: How Charles Evans Saved the RecoveryThe Atlantic
Chicago Fed president Charles Evans has gone from dissenter to intellectual leader in just a year. The future of the recovery might be at stake.

How risky is the Fed's major move?Fortune
Mohamed A. El-Erian: A bold and necessary move? Yes, but the Fed's growing activism has limits and is ultimately inconsistent with the proper efficient functioning of a market economy.

The Fed specifies an unemployment threshold for raising ratesThe Economist
Low inflation and full employment have been statutory goals of the Federal Reserve since 1977, but its officials have always felt more comfortable with the first than the second.

Over-optimistic Fed may backtrack again on forecastsReuters
Has the Federal Reserve watched the U.S. recession and painfully slow recovery through rose-colored glasses?

A dreadful third optionFree exchange / The Economist
Negotiations over the fiscal cliff appear to have stalled.

America's economy: Over the cliff?The Economist
Barack Obama must do more than avoid an economic abyss. He has a chance to fix America’s finances

The fiscal cliff: On the edgeThe Economist
What the cliff means, and why America’s deficit woes are so intractable

Fiscal tightening + monetary stimulus = ‘borderline insanity’?MacroScope / Reuters
It’s a curious pattern being repeated around the industrialized world. Governments are trying frantically to tighten their belts even as the monetary authorities loosen their purse strings.

Politics Makes a Comeback in BusinessNYT
That was one of the persistent themes at an invitation-only high-powered international conference about systemic risk in the financial services convened by the Global Risk Institute

Some Thoughts on Fiscal Rulesmainly macro

The UK is well ahead of the US and the EU in its use of fiscal ruleseuropp / LSE

The IMF’s Half StepProject Syndicate
The IMF now recognizes that capital flows also bring risk, particularly in the form of inward surges and sudden stops, which can cause a great deal of financial instability. Unfortunately, the Fund’s new position on capital controls does not go far enough, in at least three ways.

Global Capital RulesProject Syndicate
The IMF has now put its stamp of approval on capital controls, thereby legitimizing the use of taxes and other restrictions on cross-border financial flows. Now the task is to devise the traffic rules needed in a world where different sovereigns regulate finance in diverse ways.

The multilateral approach to capital
The IMF recently endorsed capital controls as useful policy responses to certain circumstances. This column explains the logic and the research that underpins the shift.

December 2012 Quarterly ReviewBIS
Policy measures and reduced short-term risks buoyed markets (all the files here)

Reverse contagionFree exchange / The Economist
The latest q-review of the BIS shows that the turmoil in Europe can be blamed for a significant contraction in cross-border lending to emerging markets since the middle of 2011. The biggest victims are the peoples of Eastern Europe. Call it a case of reverse contagion

Why the US didn’t prosecute HSBC Felix Salmon / Reuters
HSBC to Pay $1.9 Billion Fine for Money Launderingnaked capitalism

What have the Romans ever done for us?alphaville / FT
Defending the Romansalphaville / FT

Goldman Sachs on natural disasters, climate change and Justin Bieber (really)alphaville / FT
The most compelling piece of evidence in our work is the steep increase in the number of weather-related events in contrast to the very small increase in geophysical events. If climate change is playing a role, then this is exactly the pattern you would expect

IMF Research Bulletin Dec-2012IMF (pdf)
Market Failures and Macroprudential Policy * Measurement Matters for House Price Indices * Seven Questions on Turning Points of the Global Business Cycle * IMF Working Papers

What Drives Target2 Balances? Evidence From a Panel AnalysisSNB (pdf)

The robot economy and the new rentier classalphaville / FT

The financial cycle and macroeconomics: What have we learnt?BIS

Consumer credit trend remains the same; guess who is doing all the borrowing?Sober Look
Much of the gain is once again tied to loans for students who, limited by the soft jobs market, continue to stay in school.

Nonsense nonsense crisisFree exchange / The Economist
America and Europe face a troubling demographic future. Declining birth rates will probably result in an older population and a smaller share of the population working to pay for their retirement. Does this necessary spell doom and gloom?

Claudio Borio on the financial cycleFree exchange / The Economist
What is this "financial cycle"? While "there is no consensus on the definition," according to Mr Borio, it can be understood as a sequence of "self-reinforcing interactions between perceptions of value and risk...which translate into booms followed by busts."

Grade The RecessioveryZH
Barclays’ charts compare the current business cycle with four prior ones: the mild recession/recovery episodes of 1991 and 2001 and the deep V-shaped cycles of 1973 and 1981.

Jobs, Productivity and the Great DecouplingOpinion / NYT

'Cautionary Details on U.S. Manufacturing Productivity'Economist’s View
Add all these factors up, and the condition of U.S. manufacturing looks more ominous than the standard story of high productivity and resulting job losses.

Great Graphic: IMF GDP ProjectionsMarc to Market

What Is Wrong with the UK Economy?PIIE
The economic understanding underlying the Government’s economic priority on deficit reduction without regard for investment – public or private – has proven wrong along every line.  Many of Britain’s current economic problems are the result of economic conditions these excessive austerity policies themselves have caused. 

(audio) ITB: Troubles Ahead?BBC (mp3)
In the Balance takes on looming economic threats and financial deadlines. Manuela Saragosa's guests ride right up to the edge of America's fiscal cliff and peer down into the abyss. What's at stake for the rest of us? And is this a deadline that will just keep coming back? Plus could Italy push the eurozone's debt crisis back into first gear - and why it matters from Nigeria to China. And Colm O'Regan reflects on whether a deadline is always what it seems. 25 minutes

Goldman Sachs: Top Ten Market Themes for 2013The Reformed Broker

Is The U.S. The "Cleanest Dirty Shirt" Or Just Kidding Itself?ZH
Morgan Stanley’s EPS comparison charts

"Momentum Ignition" - The Market's Parasitic 'Stop Hunt' Phenomenon ExplainedZH

CitiFX's 12 Charts Of ChristmasZH

Market failureButtonwood’s / The Economist
One of the most mysterious market phenomena is momentum - the tendency for fast-rising stocks to keep going up. How come such an obvious market anomaly is not arbitraged away?

Research Review: Dividend Yield & Equity ReturnsThe Capital Spectator

Where Hedge Fund Mogul Steve Cohen Learned to TradeBusinessweek

A Warning About That Guy Who Is Beating the MarketNYT

Book Bits The Capital Spectator

Don Yacktman: A fund manager's faith produces resultsFortune
Don Yacktman has led two of the world's fastest-growing stock funds while helping his daughter recover from a devastating stroke.

Malkiel: Cheap Money Advice For The WiredIndex Universe
The legend of passive investing is now chief investment advisor of Wealthfront, a Silicon Valley-based financial advisory firm that is serving up a dirt-cheap online approach to money management.

'Fund managers are worse than investment bankers'The Guardian

Banking risk and compliance: 'We should have let more of the banks fail'The Guardian

Machine Learning, Big Data, Deep Learning, Data Mining, Statistics, Decision & Risk Analysis, Probability, Fuzzy Logic FAQWilliam M. Briggs

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