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Saturday, January 26

26th Jan - Weekender: Best of the Week

Here are the best article links from my ending week’s blog posts. Previous ‘Best of’ is here.

Previously on MoreLiver’s:

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Euro area PMIs show a divided EuropeDanske Bank (pdf)

Special: Cameron's SpeechMoreLiver’s Daily

Special: LTRO repaymentsMoreLiver’s Daily

All pain and no (productivity) gainsalphaville / FT
One of the reasons that the eurozone’s peripherals should be willing to put up with austerity is that it’s helping address internal balances and address falls in competitiveness. That’s the story being sold by the politicians at least.

Great Graphic: Europe's Unit Labor Costs and ProductivityMarc to Market
Italy now has the highest unit labor costs in the euro area and has seen no substantial improvement since the onset of the crisis. France also has seen little improvement.  The labor market reforms are pending and may change change this, but it is too early to tell.   In addition, Portugal's improvement seems to have stalled recently. 

Eurozone crisis: It ain’t over
All G7 economies are struggling in the post-crisis climate, but US GDP has recovered to pre-crisis levels, while the Eurozone simply hasn’t. This column portrays the global crisis as a transitory shock for the US, but as a quasi-permanent shock for Europe. The policies that are needed get the Eurozone back on track do not seem to be politically feasible. As tension rises with every quarter of stagnation, prospects for the survival of the euro are not only not improving, they are actually getting worse.

Europe's Cognitive DissonanceZH
Many are arguing that all is well, crisis averted and the world can go on its merry way to Dow 30,000. However, the reality is extremely different in the real economy

Analysis: No respite for euro zone in long rebalancing slog Reuters
The euro zone crisis is entering a new, treacherous phase for governments, which can only cross their fingers that slow-burn reforms will pay off before voters get fed up with austerity and high unemployment.
Europe and the danger of soft-pedallingMacroscope / Reuters
We’ve been here before. When the drumbeat of market pressure eases, euro zone policymakers have tended to lose their sense of urgency.

Euro Ministers Set to Clash Over Terms of Channeling Bank AidBB
European finance ministers gathering for the first time this year begin the long march to enacting policies they promised to subdue the debt crisis, beginning with how to channel firewall funds directly to banks.

Euro Area Grapples With ESM Rules as Legacy Assets LoomBB
Ministers seek an agreement in the first half of this year on how and when the 500 billion-euro ($668 billion) European Stability Mechanism can bypass governments and provide direct help to banks.

Haven for Oligarchs: Europe's Mounting Reluctance to Bail Out CyprusSpiegel
There is growing resistance in Europe to the planned aid program for Cyprus, because it would also benefit illegal Russian money parked in bank accounts in Cyprus. The government in Nicosia is willing to make concessions, but Brussels is demanding more reforms.

Why Cyprus Is Big Enough To Cause TroubleZH
UBS: The conditionality that comes with this programme does not go down well with the current Cypriot government, whereas politicians in core eurozone countries have started to point fingers at the small economy’s low-tax, soft banking regulation business model. What emerges is the threat of another deadlock

Italy: Economy Rotting While Focus on ElectionsMarc to Market
Unappreciated by many is the fact that the Italian economy has seen the largest contraction (7%) since the crisis began within the euro zone after Greece.  Per capita income is back, according to former ECB's Bini Smaghi, to where it was in the mid-1990s (talk about a lost decade).

Is Grexit dead? The IMF seems to think not.Brussels blog / FT

It’s Mostly Fiscal (Transfer), all over againalphaville / FT
We saw this coming from the IMF all the way back in March 2012 — when Greece’s PSI was just over, and vague notions of OSI were already in the air.

Spain back under the spotlight soon?Open Europe
Spain's public deficit for 2012 will be somewhere around 7% of GDP - higher than the target of 6.3% of GDP agreed with the European Commission… A day of bad news for Spanish Prime Minister Mariano Rajoy and his government - not least because Spain had already obtained a relaxation of its deficit target for this year.

The Legacy of Timothy Geithner Economix / NYT
Mr. Geithner came to Treasury in the middle of a severe financial crisis, a set of problems that he helped to create and then worked hard to prevent from worsening. As president of the Federal Reserve Bank of New York, starting in 2003, he watched over – and failed to defuse – the buildup of systemic risk.

FED in 2007 MoreLiver’s Daily

Koo: I’LL tell YOU when we’re delevered!
alphaville / FT
Nomura’s Richard Koo believes the news of deleveraging’s end are premature.

Both barrels?Free exchange / The Economist
Japan seems to be preparing to embark on a major effort to right its economic ship. As it does so, an interesting debate is emerging over just what the Japanese economy needs.

Special: Bank of Japan MoreLiver’s Daily

China Economic Paradigm Nearing End Gamenaked capitalism
GMO, in a compelling analysis, not only confirms the skeptics’ case but provides reasons why the Chinese growth model faces an end game. While it may not be nigh, it seems to be closer than most people think.

Deep Dive: Financial Repression ReconsideredMarc to Market

Ending 'Too Big to Fail': A Proposal for Reform Before It's Too LateFED
(With Reference to Patrick Henry, Complexity and Reality), Remarks before the Committee for the Republic, Washington, D.C. · January 16, 2013

Have we solved 'too big to fail'?
The Subprime Crisis became the Global Crisis when one too-big-to-fail bank was allowed to fail. This column argues that too-big-to-fail is far from gone despite years of reform efforts. It is important that it not be forgotten. Further analytical work, weighing the costs and benefits of different structural reform proposals, would help keep memories fresh and policies on the right track.

More Ideological Excuse Making for Bad BanksThe Big Picture

The end of 200 years of expansion? alphaville / FT
Tim Morgan of Tullet Prebon has been threatening this tome for a while. And now it has actually appeared…click to read…

Monetary targetry: Might Carney make a difference?
The Bank of England’s Governor-elect has argued for a switch to a nominal GDP target. This column points out problems with nominal GDP targets, especially in levels. Among other issues, nominal GDP targeting means that uncertainty surrounding future real growth rates compounds uncertainty on future inflation rates. Thus the switch is likely to raise uncertainty about future inflation and weaken the anchoring of inflation expectations.

The practicalities of the currency warsalphaville / FT
Winning the “currency wars” isn’t easy. From Citi’s Steven Englander on Tuesday

Currency Wars: Causes and ConsequencesMarc to Market

World Economic Outlook UpdateIMF
Global growth is projected to increase during 2013, as the factors underlying soft global activity are expected to subside. However, this upturn is projected to be more gradual than in the October 2012 World Economic Outlook (WEO) projections.

Special: Davos World Economic ForumMoreLiver’s Daily

How Bucket Shops Lured the Masses Into the MarketBB

Daily QuickieHistorySquared
A Quick Look at Global Real Estate Bubbles For Hints of Bank Risks

Location, Location, Locationalphaville / FT
The 2013 Demographia International Housing Affordability Survey – a piece of work often quoted by bubble hunters and rubbished by the property bulls

Long-term pessimism, short-term frothiness, and the recovery in world wealthalphaville / FT
Viewed in longer perspective the state of investor risk appetite is severely depressed – arguably worse than at any time in the last 25-30 years.

Persuuntunut IMFHenri Myllyniemi / US Puheenvuoro
Kansainvälisen valuuttarahasto IMF:n uusin Kreikkaraportti on luettavissa täältä. Raporttia on maamme tiedotusvälineissä käsitelty perin ylimalkaisesti.

Navigaattori – Auringonnousua AasiassaNordea (pdf)
Kiinassa ja Japanissa talousnäkymät ovat piristymässä * BRIC-valuutat - vahvistumisen vuosi 2013 * Euriborien nousu on alkanut * Yrityksen tulokseen kohdistuva valuuttakurssiriski

Euromaat jäävät valuuttasodan ristituleenJan Hurri / TalSa
Japanin keskuspankki BoJ ilmoitti samaan tapaan kuin Yhdysvaltain Fed aiemmin, että se ryhtyy ostamaan kotivaltionsa velkakirjoja määrää ennalta rajaamatta. Tarkoitus on heikentää jeniä vaikka väkisin. Fed tekee samaa dollarille. Näin käydään valuuttasotaa – jossa euro on jäänyt ristituleen.

Raimo Sailas: Suomi ajelehtii EU:ssa ajopuunaTalSa
Suomen asemasta eurokriisin setvimisessä tulee mieleen ajopuu. Eteenpäin ajelehditaan, eikä vaihtoehtoja ole. Näin näkee helmikuun 11. päivä eläkkeelle jäävä valtiosihteeri Raimo Sailas. Hän ennustaa, että hallitus joutuu vielä syömään aiempia sanojaan.