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Friday, January 11

11th Jan - Best of the Week

Picks from the ending week's posts.

Previously on MoreLiver’s:                  

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Interpreting Target2 Balances; German Banks are Pulling Out of EuropeHistorySquared

The latest way European banks could (still) mess everything upQuarz
Morgan Stanley’s Global Head of FX Strategy, Hans Redeker, foresees a problem. If some banks leave the LTRO earlier than others, the ones that stay behind might feel pressured to pay up before they’re really ready

Beginner’s guide to Italy’s general election 2013The World / FT

In the euro area, it’s pretty much going to suck for awhilealphaville / FT
research from Goldman Sachs

Special Report: How Mario Draghi is reshaping Europe's central bankReuters
The banker now in charge of rescuing the euro wants his top staff to take Sundays off. Mario Draghi, president of the ECB, eschews long meetings and refrains from lecturing his colleagues, senior ECB officials say.

Price level targeting – next ECB easing stepNordea (pdf)
A temporary price level target path would signal that the ECB will keep interest rates at the current very low level for longer and specifically beyond the point where medium-term inflation is projected to return to 2% and until prices return to the level path consistent with 2% inflation on average.

ECB Meeting commentsMoreLiver’s Daily

Why Cyprus is ImportantMarc to Market
Amounts not determined, presidential elections in Feb, Troika in disagreement, political issues, euro exit risk.

Merkel Confronts Growing Skepticism on Bailout Aid to CyprusBB
Merkel warns Cyprus not to expect special treatmenteuobserver
German Chancellor Angela Merkel has warned Cyprus it should not expect special treatment when negotiating the terms of its bailout, which she suggested would not be concluded anytime soon.

Via Goldman Sachs: Q&A On The Debt LimitZH

Don’t play with the debt ceilingNordea (pdf)
As the deadline for raising the US federal debt ceiling nears without a resolution, markets are likely to get increasingly nervous (or read the summary)

Abenomics: Japan's ThermidorMarc to Market

Recap: JapanGlobal Macro Trading

Moving targets and a lack of self-belief at the BoJalphaville / FT
BoJ plans to raise inflation target from 1 to 2% at Ja 21-22 meeting

What sub-6% Chinese growth will do to various assetsalphaville / FT

Currency Bores - What Policymakers Really Mean When They Talk About FXZH
Steven Englander of Citi: It is hard to find a policymaker who hasn’t actively tried to talk his currency down.

No free lunch for central bankersHumble Student
In conclusion, central bankers can't completely eliminate volatility and their policies come with costs. In the case of Europe, the ECB has traded Eurogeddon for a recession. In general, market volatility has risen and become far more sensitive to headline news.

What’s Inside America’s Banks?The Atlantic
Some four years after the 2008 financial crisis, public trust in banks is as low as ever. Sophisticated investors describe big banks as “black boxes” that may still be concealing enormous risks—the sort that could again take down the economy. A close investigation of a supposedly conservative bank’s financial records uncovers the reason for these fears—and points the way toward urgent reforms.

Regulators ease key bank rule to spur creditReuters
Global regulators gave banks four more years and greater flexibility on Sunday to build up cash buffers so they can use some of their reserves to help struggling economies grow.

Banks, Here’s your new liquidity regime. Now stop blaming us. Love, Baselalphaville / FT
The complete set of changes is on the BIS website, but here are some highlights.

Almost All of Wall Street Got 2012 Market Calls WrongBB

Why You Won’t Be the Person You Expect to BeNYT
When we remember our past selves, they seem quite different. We know how much our personalities and tastes have changed over the years. But when we look ahead, somehow we expect ourselves to stay the same

A Pickpocket’s TaleThe New Yorker
The spectacular thefts of Apollo Robbins.

Global Risks 2013 8th ed.World Economic Forum
Three risk cases: 1) Testing Economic and Environmental Resilience 2) Digital Wildfires in a Hyperconnected World 3) The Dangers of Hubris on Human Health

Yleinen palkka-ale olisi mieletön vikatikki Jan Hurri / TalSa
Talouspäättäjät ovat kriisin kuluessa toteuttaneet useita vikatikkejä ennenaikaisista vyönkiristyksistä alkaen. Yksi iso virhe on vielä kokeilematta: yleinen palkka-ale. Se olisi velkaiselle taloudelle myrkkyä – ja kärjistäisi omatekoisen taantuman kotikutoiseksi lamaksi. Lordi Keynes varoitti yli 75 vuotta sitten: tämä olisi mieletön vikatikki.

Mittarit todistavat: Ei perusteita palkka-alelle, mutta ei korotuksillekaanYLE
Kilpailukykymittareiden perusteella teollisuuden toivomalle palkka-alelle ei riitä perusteita, mutta ei niitä riitä koville palkankorotuksillekaan. Teollisuustuotanto kannattaa yhä Suomessa, mutta ei enää yhtä hyvin kuin takavuosina. Kannattavuutta ovat nakertaneet Nokian kutistuminen ja finanssikriisi joka vei tilaukset, mutta jätti palkankorotukset.

Navigaattori – USA:ssa talouspoliittisia linjavalintoja yhä aukiNordea (pdf)
Parin kuukauden sisällä vaaditaan myös päätöstä velkakaton nostosta, jotta liittovaltiolla riittäisi varoja menojen rahoittamiseen. Todennäköisesti tämäkin kiista päätyy kompromissiin, jonka seurauksena menoja maltillisesti leikataan. Jyrkkä finanssipolitiikan kiristäminen ei siten uhkaa USA:n kasvua ja julkinen alijäämä pienene vain verkkaisesti. Linjavalintoja on myös edessä keskuspankissa, jossa keskustellaan siitä kuinka pitkään rahahanoja voidaan pitää nykyiseen tapaan löysinä.

Tällä menolla euro pehmenee reunoiltaJan Hurri / TalSa
Euron pitäisi olla joka euromaassa samaa rahaa, ja muodollisesti näin onkin asian laita. Silti uutta rahaa syntyy ja lähtee liikkeeseen eri euromaissa erilaisin perustein. Tavallista pehmeämmin perustein syntyvät eurot ovat olleet kriisimaiden ilmiö, mutta nyt myös Ranska näyttää lipsuneen. Pääjohtaja Liikasen tarkastuskomitea tutkii asiaa.