Here are
the ending week’s best picks. As usual, I try to select links that provide
unique points, or help summarizing the key drivers. Last week’s ‘Best of’ here.
Previously on MoreLiver’s:
EUROPE
The
Year Ahead in the Eurozone: Lower Risks, Same Problems – EconoMonitor
Nouriel Roubini: Underlying all this is the issue of
the loss of external competitiveness associated with external current account
deficits that private foreign investors are unwilling to finance. Some internal
devaluation is ongoing, leading to a reduction in unit labor costs, but that
process is recessionary and occurring too slowly. Thus, though financial
conditions have improved and tail risks have lessened, the fundamental problems
of the euro zone remain.
About that sovereign-bank
link we said we’d break… – alphaville
/ FT
So it looks
like the EU maybe won’t be breaking the sovereign/bank doom-loop after all!
Euro at 10-Month High Poses Economic Threat,
Juncker Says – BB
The euro’s
8 percent gain against the U.S. dollar in the past six months is posing a fresh
threat to the European economy just as it shows signs of escaping the debt
crisis, said Jean-Claude Juncker, who leads the group of euro-area finance
ministers.
ECB
Euro calm must not cost price
stability: German economy minister – Reuters
Measures to
combat the euro zone crisis must not come at the cost of price stability,
German Economy Minister Philipp Roesler said on Thursday, a day after he urged
the ECB to return to its core mandate as soon as possible.
Mario Draghi has saved the
rich, now he must save the poor – The
Telegraph
Ambrose
Evans-Pritchard: The ECB has washed its hands of any further responsibility for
the 27m people across the eurozone listed as unemployed or classified as
discouraged workers.
ECB to start buying soon? – Nordea
After the
huge falls seen in Spanish yields, such a request has moved even further away.
However, Ireland could soon meet the eligibility
criteria for the programme.
LTRO
REPAYMENT
The great European bank heist reversal – alphaville
/ FT
LTRO
repayment chat is speeding up the closer we get to the fateful day at the end
of January when Euro-banks might actually start sending back once cheap cash to
the central bank. How much will be repayed, by whom and when are the questions
that need to be answered.
We don’t want your money – Nordea
Banks will
have the first chance to repay the 3-year money borrowed from the ECB on 30
January. Early repayments are likely to lead to expectations that excess
liquidity would fall notably, giving rise to pricing of higher short rates.
However, despite the repayments, plenty of excess liquidity will most likely
remain, keeping short rates very close to current levels.
UK
UK's Cameron faces tightrope EU speech, shuns exit vote – Reuters
Prime
Minister David Cameron will spell out plans to dilute Britain's membership of the EU, a move that
could reshape its role in the world, upset some of the premier's allies and
decide his government's fate.
Cameron Speech Excerpts Raise Specter of EU
Exit – BB
Cameron publishes parts of unlucky EU speech – euobserver
CYPRUS
Cyprus Bailout Could Fail in German Parliament – Spiegel
The urgently needed bailout of the Cypriot banking
industry is in danger of being vetoed by the German parliament. The opposition
Social Democrats say they are leaning towards voting no, according to a media
report. With Chancellor Merkel unable to rely on her own majority, that could
be bad news for Cyprus and for
the euro.
Germany wants Russian contribution to Cyprus bailout – euobserver
No official
figures have been put forward yet, with the results of an audit of Cypriot
banks' needs by US consultancy Pimco expected at the
end of this week. But the figure discussed by EU diplomats is €17 billion,
almost as much as the total yearly economic output of the small country (€18bn).
The Coming Cyprus Challenge for the Euro Area – PIIE
First, the
clock is ticking as the Cypriot government has announced it only has financing
through March 2013. No one, however, should expect a deal much before then.
Second, Cyprus’s financial problems derive largely
from its oversized banking system at more than 700 percent of GDP… But that is just the start of the
problems.
German views on aid for Cyprus – Bruegel
After the Cyprus’s application for EU aid in June
2012, the negotiations on the programme are now getting concrete. The
discussion in Germany about possible aid that is estimated
between EUR 12 and 17.5 billion for the period 2013-2016 is focusing on the
Cypriot financial sector which doesn’t enjoy a good reputation. In the German
media, Cyprus and its banks are widely seen –rightly or
wrongly - as a tax haven and a money-laundering base.
Will Cyprus be bailed out by gas? – alphaville
/ FT
Debt
dynamics from 140% debt/GDP level can look scary but Cyprus is sitting on huge reserves of
natural gas and potentially oil reserves too. How much are these worth? Initial
gas reserves discovered are likely worth 300% of GDP. This could rise to 2950% GDP.
Cypriot offensive: the leaked
money laundering report – The
Brussels Blog / FT
Cypriot
officials launching an offensive to convince other eurozone governments that it
is no longer a haven for money laundering. The effort has included summoning EU
ambassadors in Nicosia to the Cypriot finance ministry, where they
were given a 23-slide presentation detailing the country’s anit-money
laundering efforts. As is our practice here at the Brussels Blog, we’ve decided
to post a copy of the report here.
OTHER PIIGS
Greece: IMF Executive Board Completes First and Second
Reviews Under Extended Fund Facility Arrangement and Approves €3.24 Billion
Disbursement – IMF
Portugal: IMF Completes Sixth Review Under an EFF Arrangement,
Approves €838.8 Million Disbursement – IMF
In Ireland, to OMT or not to OMT? – Brussels
blog / FT
The Irish
website TheStory.ie got its hands on the new European Commission report on the
Irish bailout, which makes clear on page 44 that Dublin is in discussions with the troika
about whether the ECB’s bond-buying programme – known as Outright Monetary
Transactions – can be accessed
UNITED STATES
Secrets of the crisis
revealed – Wonkblog
/ WP
The Federal
Reserve keeps transcripts of its meetings to set monetary policy, and releases
them with a five year delay. It does not announce in advance when they will be
released, but if the past is a guide, any day now we will be getting full
transcripts of the 2007 meetings of the Federal Open Market Committee.
Citi
On The Debt Ceiling: "First Complacency, Then Horror" – ZH
Who
said what, when? An unofficial guide to Fed speak on QE3 – MacroScope
/ Reuters
ASIA
The Setting Sun – Japan’s Forgotten Debt Problems – EconoMonitor
Japan has an average debt maturity of 6
years, shorter than Spain, Italy and France. Around 60% of its debt must be
refinanced in the next 5 years. This will expose Japan to the discipline of market
investors at a vulnerable moment. Once the problems emerge, they will be
difficult to contain.
Koo, Posen, and other
Abenomics dissenters
– alphaville
/ FT
Koo: There is
simply no conclusive evidence that ending deflation will end the recession that
has caused so much economic pain.
ECONOMICS
Finding
economists’ common ground – Opinion
/ Reuters
Concerned that laymen have come to see all economic
proposals as being equally valid, the University of Chicago's business school
has led an effort to figure out what economists agree on, where they diverge
and how certain they are about their views.
Besides Gold, Economists
Don't Agree On Much
– Businessweek
Is economics divided into
warring ideological camps? – noahpinion
Why do people think
economists are charlatans? – noahpinion
Inflation versus Price-Level
Targeting in Practice
– Macroblog
/ FED
Consider the book
value – Free
exchange / The Economist
The ratio of a country’s public debt to its annual
income is an undeservedly popular indicator. Presumably, we care about this
ratio because we want to determine whether today’s policies burden future
generations. But the government’s debt is just a collection of
income-generating assets owned and serviced by people in the private
sector—often the same people.
Global house prices – The
Economist
Our latest round-up shows that many housing markets are
still in the dumps
Bank
liquidity – The
Economist
Global regulators soften their stance on liquidity
Betrayed by Basel – Economix
/ NYT
Simon Johnson: Faced with renewed pressure from the
international banking lobby, these officials caved in, as they did so many times
in the period leading to the crisis of 2007-8. As a result, our financial
system took a major step toward becoming more dangerous.
On diminishing capital
intensity – alphaville
/ FT
The
commonly held belief that companies’ capital investing ratios have been
falling, whilst hoarded cash pools have been going up, is inaccurate…In short,
capital investment incentives seem to be skewed in many corporate sectors. By
which we mean corporates in many cases are being incentivised to invest less,
simply to support underlying capital goods prices.
MARKETS
Financial forecasts – New
Year is over, but the party is not – Nordea
(pdf)
or read the summary
361 Capital Weekly Research
Briefing – The
Reformed Broker
Deutsche's
Bullish For 2013 Despite These 6 Huge Downside Risks – ZH
Full 2013 Outlook link included
Global Alpha’s Macro, Rates
& FX Strategy: Views for 2013 – Nordea
(pdf)
Summary here
OFF-TOPIC
White
House Responds To Imperial Death Star Petition – ZH
The
Placebo Phenomenon – The Harvard
Magazine
An ingenious researcher finds the real ingredients of
“fake” medicine.
Howard Stern
Interviews Quentin Tarantino for 75 Minutes – The
Reformed Broker
IN FINNISH
Pelastammeko seuraavaksi rahanpesijöitä? –
Jan
Hurri / US Puheenvuoro
Kypros on pieni ja pinteessä – ja europäättäjien poliittinen
painajainen. Saarivaltio anoi hätärahaa jo viime kesänä mutta ei ole vielä
saanut rahaa tai vastausta. Kypros on vaarassa "kaatua" ja jopa
ajautua ulos eurosta, mutta "pelastustoimia" viivyttää epäily
tukimiljardien päätymisestä rahanpesijöille.
Suomen valtiolla
tuplanaaman tukipolitiikka –
Jan
Hurri / TalSa
Suomen valtion tukipolitiikka
näyttää ristiriitaiselta. Luottokelvottomien eurovaltioiden tukemiseen on
enimmillään luvattu jopa 50 miljardia euroa – jotta työpaikat ja eläkkeet
olisivat turvassa. Turun telakka ei saanut tuhannesosaa tuosta tukimäärästä –
ja nyt Turun seutu uhkaa menettää satoja työpaikkoja.
Kun työttömyys nousee
tarpeeksi suureksi, niin kyllä ne palkanalennukset menevät lävitse – tyhmyri