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Sunday, February 17

17th Feb - Weekender: The World

A busy week – markets were dull, but we had a near-miss comet, an asteroid hitting Russia, North Korea’s nuclear test, pope resigning… by virtue of mean reversion, one should now expect a highly volatile market week while newsflow is zero? Next week will be about the Italian elections (no polls allowed anymore) and Cyprus (first their election, followed by the bailout-talks).

Previously on MoreLiver’s:

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Brussels blog weekly round-up europp / LSE
A reduced EU budget, the Anglo-German axis, and a transatlantic trade pact?

MEPs copy-pasting amendments from US lobbyistseuobserver
A handful of MEPs have allegedly copy-pasted amendments written by giant US-based IT firms into the EU’s new data protection law.

Europe: Toward A More Perfect UnioniMFdirect
Three years later, the financial symptoms of the crisis are thankfully receding with a new sense of optimism in markets. But the underlying problems—lack of convergence of productivity and the structural flaws in the architecture of the monetary union—have only been partially addressed.

Austerity plunges Europe into recessionpresseurop
The latest statistics on the state of the eurozone economy indicate that, contrary to what political leaders have recently been saying, the crisis is far from over.

The Mad Men of Smith Square: A Lonely Battle To Save Europe in BritainSpiegel
Contempt for Europe is rising all across Britain, driven by politicians and media who blame Brussels, often absurdly, for everything from the declining economy to male impotence. A small group of pro-Europeans are waging a bizarre campaign against the country's agitated majority.

The dangers of German wage growthalphaville / FT

The World from Berlin: 'It's Worth Promoting Economic NATO'Spiegel
The European Union and United States say they will soon begin negotiations to create the world's largest free-trade zone. German editorialists argue a deal is necessary if the West wants to help shape global politics and address the challenge of a rising China.

Speech Mario Draghi: G20 priorities under the Russian PresidencyECB

In Frothy Real Estate Market, Switzerland Tightens Capital Rules on BanksDealBook / NYT

Euro crisis 'not solved,' German bank supervisor sayseuobserver
Cheap ECB loans helped calm the euro crisis, but the big problem - too much state debt - remains, Germany's bank supervisor says.

Europe’s Foreign-Policy ResilienceProject Syndicate
Europe’s image and soft power have undoubtedly continued to fade around the world (thought such a trend is difficult to quantify), while member states continue to cut defense and development budgets. The good news, however, is that European foreign policy has not unraveled in the crisis. Indeed, it has even shown some signs of progress.

Europe’s internal adjustmentThe Current Moment
Some countries within the Eurozone are achieving what many thought they could not: an internal devaluation via wages and other production costs.

Charlemagne: No to EUsterityThe Economist

Financial Transaction Tax: Sand in the Wheels?Marc to Market

French economic policy: Which way for Mr Hollande?The Economist

The Coming Push: FranceMarc to Market

The Italian election: Who can save Italy?The Economist

Italy’s election: Long after the partyThe Economist

Beppe Grillo: Five-star menuThe Economist

An Economic Agenda for ItalyProject Syndicate
Italy's new government faces the task of reforming the economy after more than a decade of bad policies, neglect, and low or negative growth. Its policy agenda should include labor-market reform, investment in human capital, fiscal adjustment, and measures to attract more direct investment.

The Italian Patient: Resisting Berlusconi's CharmsSpiegel
Silvio Berlusconi may be back with his customary bombastic campaign promises. But will the Italians bite? If they do, it could spell doom for the country. If they don't, Italy's tradition of political instability might return anyway.

First Monte Paschi Banker Arrested With $54mm StashZH

Japan has the most to lose from a fallout with ChinaThe A-list / FT
Tokyo should do what it can to rebuild trust with Beijing – not by giving ground on disputed East China Sea islands but by agreeing to put the issue on the shelf. Better to focus on restoring a relationship that can strengthen both economies – and, by extension, the domestic credibility of both governments.

Building a Chinese RechtsstaatProject Syndicate
A consensus is rapidly emerging within China that the rule of law is the single most important precondition for inclusive, sustainable, and long-term peace and prosperity. But can China establish the rule of law as it is understood and practiced in the West and elsewhere in Asia?

5 Ways China Could Become a DemocracyThe Diplomat
Few have seriously thought about the probability and the various plausible scenarios of a regime transition in China -- until now.

Beijing’s North Korea ProblemThe Diplomat
North Korea's recent nuclear test presents an interesting problem for China -- with no easy solutions.

Pyongyang's Nuclear Logic: Sometimes a Test is Just a Test Foreign Affairs
The view that nuclear weapons are merely political instruments -- suitable for sending signals, but not waging wars -- is now so common in the United States that it is hard to find anyone who disagrees. Yet that comforting assumption is not shared by leaders everywhere. North Korea, for example, does not test nuclear weapons to send messages, but to make sure that its ultimate deterrent will work. It would be tragic if the United States let misguided Kremlinology distract from the real challenges ahead.

Breaking China’s Investment AddictionProject Syndicate
Faced with sluggish external demand and weak domestic consumption, China depends on investment to drive economic growth – leading to overproduction, inflation, soaring real-estate prices, and rising debt among enterprises and local governments. To reach the next stage of development, China must break its reliance on investment.

World Weekly: How dangerous is North Korea’s nuclear test?The World / FT
Within hours of the North Korean nuclear test this week, the UN security council was meeting in emergency session. But how dangerous is this development, and what is likely to happen next? James Blitz, diplomatic and defence editor, Christian Oliver, former Seoul correspondent, and Simon Mundy, the current FT correspondent in Korea, join Gideon Rachman.

Viewing North Korea’s Nuclear Test through a South Asian LensThe Diplomat

North Korea’s Nuclear Test: A Silver Lining?The Diplomat

The Interview: Michael PettisThe Diplomat
Pacific Money's James Parker interviewed Professor Michael Pettis following the publication of his new book: “The Great Rebalancing: Trade, Conflict and the Perilous Road Ahead for the World Economy”.

China without North KoreaProject Syndicate
North Korea’s third nuclear test is a game changer not only for the US and Japan, but also for the regime’s last ally, China. Simply put, the conventional wisdom that North Korea’s collapse would be disastrous for China is misconceived.

The G20 is a sad sign of our uncooperative worldThe A-list / FT
The reality is that, despite many commitments by national leaders, the capacity of nation-states to coordinate their responses has dwindled. Problems may have gone global but the politics of solving them are as local as ever. It is hard for governments to devote resources to problems beyond their national borders and to work with other nations to address these challenges – while painful problems at home remain unsolved.