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Sunday, December 9

9th Dec - Weekender: Econ & Markets



This weekend’s edition has stuff on shadow banking, IMF’s change of attitude on capital controls, TARGET2, while the trading & markets-related links are a mixed bag.

Previously on MoreLiver’s:
7-Dec US Close Payroll monster
7-Dec EU Open US Payroll day

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BANKING
Shadow Banking RegulationFED (pdf)

Shadow Banking: Economics and PolicyIMF (pdf)
Outlines the basic economics of the shadow banking system, highlights (systemic) risks related to it, and suggests implications for measurement and regulatory approaches.

Banking in the Abstract – The “Chicago Plan”PragCap

Criticizing Basel for the Wrong ReasonsSober Look

Too big to fail: some empirical evidence on the causes and consequences of public banking interventions in the United KingdomBOE

ECONOMICS
Five myths about the unemployedOpinion / WP

Evidence in MacroeconomicsKrugman / NYT

Death Star II nowhere, sadlyalphaville / FT
This petition to the White House to secure resources and funding, and begin construction of a Death Star by 2016 has got “no brainer” written all over it…

IMF: Budget cuts hurt growth a lot. But tax increases barely matterWonkblog / WP

Adjustment Mechanisms in a Currency AreaSSRN
We focus on three badly affected states, Arizona, Spain and Latvia, to examine the working of relative adjustment mechanisms within the currency region. We concentrate on four such mechanisms, relative wage adjustment, migration, net fiscal flows and bank flows. Only in Latvia was there any relative wage adjustment. Intra-EU migration has increased, but is more costly for those involved in the EU (than in the USA). Net federal financing helped Arizona and Latvia in the crisis, but not Spain. The locally focused structure of banking amplified the crisis in Spain, whereas the role of out-of-state banks eased adjustment in Arizona and Latvia. The latter reinforces the case for an EU banking union.

  CENTRAL BANKING
What to expect when you're expecting faster growthFree exchange / The Economist
My colleague questioned the wisdom of encouraging central banks to raise inflation expectations. Having written (once or twice) on why doing so is in fact a good idea, I thought I'd respond to a few points.

How cancelling central banks’ holdings of government debt could be a useful thingalphaville / FT

Assessing the economy-wide effects of quantitative easingBOE

The impact of QE on the UK economyBOE

Asset purchase policy at the effective lower bound for interest ratesBOE

Raiders of the QE surplusalphaville / FT
As the media described it, there was a *raid* by Her Majesty’s Treasury on the Bank of England’s so-called “QE surpluses”.

  IMF & CAPITAL CONTROLS
Dampening the tidesFree exchange / The Economist
An explicit tolerance for some restrictions represents a striking shift for an organisation that once embodied the neo-liberal policy consensus. Yet it also appears to acknowledge macroeconomic reality and rigorous research.

The IMF and Capital ControlsKrugman / NYT

Is the IMF Changing Tune on Capital Controls?Marco and Markets / CFR

The IMF now supports capital controlsCredit Writedowns



MARKETS & TRADING
Low yielding assets, and sausagesalphaville / FT
Plenty of analysts and pundits have gone to the trouble of explaining the challenge confronting savers in the current low-yield environment… But how many of them go to the trouble of putting on a barbecue to illustrate various credit strategies one may respond with?

What Has (And Hasn't) Worked So Far This Year?ZH
Goldman Sachs has two charts

Stock Markets That Flummox Masses Do No One Any GoodView / BB
They have grown so complex, fragmented and opaque that they don’t serve their stated purpose. Rather than a place where individual and professional investors can put a value on shares and where companies go to raise capital, the markets today look more like a video game. The trouble is, it’s one where only a few understand all the rules.

(Re)Discovering Technical AnalysisFinancial Advisor Mag

Charts of the Day: Trading Volume Slumps Across the BoardWSJ

Current Thinking on Hedge Funds: Are They Worth It?CFA Institute
In search of enlightenment, our team of CFA Digest abstractors evaluated recent research about hedge funds and alternative strategies for hedging.

  HFT
High-frequency trading behaviour and its impact on market quality: evidence from the UK equity marketBOE (pdf)

BoE on HFT: “A large absolute noise contribution”alphaville / FT

Risk and Reward in High Frequency TradingRajiv Sethi

  BUFFETT
Just How Wise is the Sage of Omaha?  The Daily Beast

For Buffett, the Long Run Still Trumps the Quick ReturnNYT

The Next Warren Buffetts? Wisdom From Klarman, Perry, Chanos & Moremarket folly

Notes From Warren Buffett's Meeting With MBA StudentsMarket Folly

 


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