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Monday, December 17

17th Dec - EU Open: After JP, EU

Now that the Japanese elections are done and the QE-party won, it seems all the major central banks except ECB are on extremely easy. Is ECB playing the role of hard to get on purpose - to push national politicians to the right direction, as in Spain - or are the central bank's hands tied? Who do you call when you want to call Europe, which one is in charge, Germany or ECB? I believe this is the main question that has to be answered in the first quarter. 

Perhaps politically things might become a bit easier for ECB in 2013: when everyone else is printing and targeting low employment instead of inflation, it will become harder and harder for the Europeans to convince themselves that what they do makes sense. Thus, the current policies will be buried in time. As usual, for political reasons the mistakes cannot be admitted so the tens of millions of unemployed have to wait for their 'leaders' to act.

From the policy choices it is obvious that Merkel has known what is going on for the past three years. This is again a good reminder that economy is not for people, but people are for the economy. And political leaders are not for the people - people are for their leaders.  

p.s. I updated the Calendar page.

Previously on MoreLiver’s:

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News roundup – Between The Hedges
The 6am Cut London – alphaville / FT
Emerging Markets Headlines – beyondbrics / FT

Debt crisis live – The Telegraph
The Euro Crisis Blog – WSJ
Tracking Europe’s Debt Crisis – NYT
FX Options Analytics – Saxo Bank
European 10yr Yields and Spreads – MTS indices
Economic Calendar – Forexpros

3 Numbers To Watch: EURUSD, EURGDP, USDJPY levelsSaxo Bank
A brief review of the momentum factors for EURUSD, EURGBP, and USDJPY suggests that USDJPY may be ripe for a reversal after a 3-month rally. But EURUSD still has room to run higher, based on the 3.3% return for the 20 days through December 14.

Market Preview: Eurozone trade balance eyedSaxo Bank
European markets are expected to open firmer Monday. Japan's Liberal Democratic Party regained power in elections, boosting speculation of further easing. Markets await Eurozone trade balance and US Empire state manufacturing data later today.

Danske Daily – Danske Bank (pdf) 

AamukatsausNordea (pdf)
Vaalivoittaja LDP lupaa Japaniin elvytystä * Luottamusluvut vahvistavat kuvaa vakautuvasta eurotaloudesta * EURUSD korkeimmilleen toukokuun jälkeen

AamukatsausTapiola (pdf)

Osakemarkkinat päätyivät perjantaina pieneen laskuun, budjettikiistan painaessa päälle. Japanin uusi hallitus valittiin viikonloppuna. Odotuksissa lisää löysää raha- ja finanssipolitiikkaa. Osakefutuurit nollassa, indikoiden flättiä avausta pörssiin.


European Risk Catalysts For The Next Six MonthsZH
A blueprint for macroprudential policy in the banking
The crisis has shown how the Eurozone needs instruments to control bank-funding risks, as implementation of the necessary prudential legislation at the EU level has been much postponed. This column argues that the delay creates a precarious situation, especially in the Eurozone where a banking union is been introduced. Currently all liquidity policy is at the national level. Without some form of coordination, this shift all bank funding risk to ultimate ECB support without the Single Supervisory Mechanism having any adequate transition tools.

Fight for the FinnishThe Weekly Standard
Leader of the Finns party, Timo Soini, at a polling station in Espoo last January

US housing prices revert to long-term per capita income growthSober Look

What's spooking AUD shorts?Sober Look

The Massive Move in Won/Yen CrossGlobal Macro Monitor 

Japan: landslide LDP victory paves the way for AbenomicsDanske Bank (pdf)

FX Comment: Monetary wars ONNordea