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Saturday, March 2

2nd Mar - Weekender: Best of the Week

Best picks from my posts since the previous 'Best of'.

Previously on MoreLiver’s:

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Is a monetary union without fiscal/political union doomed? mainly macro

The Euro Crisis: Mission Accomplished?* Bruegel
The improvement in financial stability is real, but the clear analogy, unfortunately, is to President George W. Bush, who in 2003, stood on an aircraft carrier beneath a banner that read, “Mission Accomplished,” only two months into an Iraq war that would last another decade. The dark clouds of euro crisis are hardly behind us.

Death by DavosKrugman / NYT
This is the way the euro ends: not with the banks but with bunga-bunga. OK, the euro isn’t doomed — yet. But the Italian election signals that the eurocrats, who never miss an opportunity to miss an opportunity, are getting very close to the edge.

The Euro Crisis: Mission Accomplished?* Bruegel
The improvement in financial stability is real, but the clear analogy, unfortunately, is to President George W. Bush, who in 2003, stood on an aircraft carrier beneath a banner that read, “Mission Accomplished,” only two months into an Iraq war that would last another decade. The dark clouds of euro crisis are hardly behind us.

Euro zone private lending falls, but the ECB gets its excuseTradingFloor
Juhani Huopainen: In the aftermath of the Italian election, the European Central Bank's whatever it takes promise is being doubted. To assure investors that there is a backstop, the ECB needs an excuse - and today it got it.

It’s Frankfurt that should be your worry – not RomeThe Market Monetarist
The logic is that a ‘bad’ political outcome in Italy will lead the ECB to become more hawkish and effectively tighten monetary conditions by signaling that the ECB is not happy about the ‘outcome’ in Italy and therefore will not ease monetary policy going forward even if economic conditions would dictate it.

The inbuilt political stand-off in the ECB's bond-buying programme Open Europe

A flaw in euro zone defencesMacroScope / Reuters
The story of the last five months has been the bond-buying safety net cast by the European Central Bank which took the sting out of the currency bloc’s debt crisis. But now it has an Achilles’ Heel. The ECB has stated it will only buy the bonds of a country on certain policy conditions.

3 Numbers to Watch: EZ inflation, unemployment and LTRO repaymentTradingFloor
Juhani Huopainen: Today's data on low inflation and record-high unemployment should give Mr Draghi what he needs to push for continued easy monetary policy in the European Central Bank's meeting next week.

Will Irish & Portuguese bailouts get Greek treatment?Brussels blog / FT
The document – obtained by the Brussels Blog under the condition that we not post it on the blog – makes pretty clear that while an extension might help smooth “redemption humps” that now exist for Ireland (lots of loans and bonds come due in 2019 and 2020) and Portugal (2016 and 2021), it’s not a slam dunk case.

Cyprus is a small island, they DSA things differently therealphaville / FT
A simulation of how the Troika might carry out a debt sustainability analysis (DSA) for Cyprus. It’s pretty epic, and we don’t just mean that Sterne finds the debt unsustainable under the IMF’s “So Italy’s sustainable, right?” definition of sustainability for eurozone sovereigns

The burning of Rome spreadsalphaville / FT
We’re talking a deep reversal back towards eurozone crisis trends.

Special: Italian Elections MoreLiver’s Daily

Italy economic overview – graphic of the dayThomson Reuters

Italian elections – what’s next? Danske Bank (pdf)

Economic fact book: ItalyDanske Bank (pdf)

Austerity, Italian Style Krugman / NYT

(audio) Weekly with Gideon Rachman: Instability rules in ItalyThe World / FT
Italian national elections have ended in chaos and the voters’ message is that they are tired of austerity and the political elite. The country faces a hung parliament after votes were split between a former comedian, an ex-prime minister who faces corruption charges, and the centre-left, who won narrowly in the lower house. Mario Monti, the technocratic prime minister who was appointed 15 months ago, came a distant fourth place.

The Fed to face challenges as it ultimately exits the unprecedented monetary expansionSober Look

Ben Bernanke to Congress: You're doing it wrongWonkblog / WP
There seem to be no serious monetary policy doves in Congress… The toughest real talk, actually, tends to come from Bernanke himself, who uses his occasional visits to the Hill to politely, opaquely scold Congress about their approach to fiscal policy.

Draining excess reserves and the exit strategySober Look
Questions continue to surround the Fed’s eventual exit from years of quantitative easing. The ultimate fate of what is to become of the 3.5 - 4 trillion dollar portfolio of securities

Bernanke’s Senate tone not that of Fed Chairman seeking third termMacroScope / Reuters
In unapologetic and sometimes testy exchanges before the Senate Banking Committee on Tuesday, the Fed chief defended his record and dismissed one Senate critic in unusually blunt terms.

Yen Plunges As Uber-Dove Kuroda Set To Head Bank Of JapanZH

Abenomics: Where the Rubber Hits the RoadMarc to Market
Abenomics is the traditional LDP economic policy on steroids.  It distracts from the kind of structural reforms that are necessary to boost Japanese growth capacity. 

Ye olde Abenomicsalphaville / FT
All this has happened before and will happen again… at least, so hopes the Japanese government.

Blogs review: The safe asset shortagebruegel
Safe debts – or what is often called information insensitive assets, as they do not suffer from the types of financial frictions that are characteristic to other financial assets – play a major role in facilitating transactions for institutional investors. And, as we have learned in the recent years, they also play a major role in triggering financial crises when they loose their safety status and turn into information sensitive assets. As central bankers start backpedalling on their commitments to increase the supply of safe assets and start worrying about the negative effects of the “search for yield”, there has been a renewed discussion in the blogosphere about the role of safe assets and whether they remain in short supply.

The Pareto Economyof two minds
The Pareto distribution suggests that costs could be cut by 80% across the entire economy.

When Brain Damage Unlocks The Genius WithinPopsci
Brain damage has unleashed extraordinary talents in a small group of otherwise ordinary individuals. Will science find a way for everyone to tap their inner virtuoso?

The Extraordinary Science of Addictive Junk FoodNYT
A chemist by training with a doctoral degree in food science, Behnke became Pillsbury’s chief technical officer in 1979 and was instrumental in creating a long line of hit products, including microwaveable popcorn.

DIY Weapons of the Syrian RebelsThe Atlantic

Gangster Bankers: Too Big to Jail Rolling Stone
How HSBC hooked up with drug traffickers and terrorists. And got away with it

Eksynyt EUHenri Myllyniemi / piksu

Miksi Saksa ei anna Euroalueen toipua – miksi antaisi koska kaikkihan menee Saksan kannalta kuten pitääkintyhmyri

Humun raportti kallis kuplaApu
Puhallus. Huippu-urheilun muutostyöryhmän eli Humun hintava loppuraportti on osoittautunut asiantuntijoiden mukaan nollatutkimuksen arvoiseksi.

Kostaako EKP Italian "väärän" vaalituloksen?Jan Hurri / TalSa
Italian kansa on juuri äänestänyt väärin maansa parlamenttivaaleissa, jos markkinoiden ensireaktiot asiasta mitään kertovat. Samaa mieltä lienevät EU:n talouspäättäjät. Eurooppalainen demokratia sen sijaan sai vaihteeksi välierävoiton – jota kestää, kunnes EKP ja markkinat taas kiristävät Italiaan mieleisensä hallituksen.

Perussuomalaiset selvitti omaan valuuttaan palaamistaYLE
Perussuomalaisten oma ajatushautomo Suomen Perusta tilasi selvityksen, jossa liittovaltiokehitys nähdään EU:n olemassaololle välttämättömänä. Ulkopuolisilta tilatussa tutkimuksessa esitetään vahvoja epäilyjä siitä, toimiiko euroalue kunnolla enää tulevaisuudessa.

Miten euroalue kehittyy?Suomen Perusta (pdf)