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Friday, May 17

16th May - US Close: Tapering & Europe's banks

European banks still untreated, banking union is far away. US sees no inflation, while the FED officials are all over the place on the QE tapering. Will they, or will they not, and what then… One important thing to notice: ISDA is discussing adding bail-ins to its default criteria. This is important, as it makes any possible bail-ins in Europe a bit harder to do in practice. Follow that story. Next week BoJ meeting and FOMC minutes, Bernanke speaks on Saturday.

Previously on MoreLiver’s:

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Roundups & Commentary
News – Between The Hedges
Markets – Between The Hedges
Daily Interest Rate Monitor – Global Macro Monitor
The Closer – alphaville / FT
US: Tepper Topped – ZH

Banking union on the cheap will failFree exchange / The Economist
After the German elections, Europe has a short window of opportunity to rescue the euro project. It is the moment for Germany to accept what it signed for in joining the Euro or exit.

Too many European banks and why the deleveraging has only just startedMacronomics

Stress you next yearalphaville / FT
This is one way to respond to the mess Euroland is in over who should make the calls for recapitalising banks…The European Banking Authority is delaying its next banking stress test to 2014, to wait for both new asset-quality reviews and the ECB’s Single Supervisory Mechanism

EU Referendum Bill faces many hurdlesOpen Europe
Now the Conservatives have published their EU Referendum Bill there only remains the small question of how it could become law.

Is the massive drop in lumber futures telling us something?Sober Look
If we are not witnessing a cooling in new home construction, maybe Mr. Timiraos can explain why lumber futures have declined over 20% in the last couple of months.

Key Measures show low and falling inflation in AprilCalculated Risk

The end of QE?alphaville / FT
Marc Ostwald at Monument Securities has spotted that an important theme is developing: a rise in the number of warnings about QE suspension and QE exit.

Pigeonholing Fed hawksMacroScope / Reuters

Fed’s Rosengren: Government Fiscal Policy Big Drag on EconomyWSJ
The economy would benefit much more from the Federal Reserve's aggressive monetary policy actions if not for the significant headwinds being created by government taxation and spending policies, a central bank official said.

Fed’s Raskin: Still Long Way From Feeling Like Healthy EconomyWSJ
The U.S. economy continues to recover from the 2008 financial crisis and the deep recession that followed, but it still has a long way to go until it feels "like a healthy economy," Fed governor Sarah Bloom Raskin said in a speech.

Fed’s Williams Open to Tapering Bond PurchasesWSJ
The leader of the Federal Reserve Bank of San Francisco is open to cutting the central bank's bond-buying program at some point over the next few months, provided the economy continues to grow.

Views among economists: Are economists really so divided?
Remedying a global crisis such as this requires concerted, consensual, coordinated effort. But we’re told economists are divided on what to do next. Is this true? Are we divided? This column praises efforts such as the Economic Experts Panel from the Chicago Booth School of Business. It’s from panels like this – which comprise top economists with differing political views – that we can get a sense of consensus or disagreement on major economic issues.

The Sadomonetarists of BaselKrugman / NYT
We must raise rates to avoid ... something.

Current Monetary and Fiscal Policies Need to Be ReplacedEconoMonitor
Richard Wood: Reports of the important recent IMF conference ‘Rethinking Macro Policy II: First Steps and Early Lessons’ suggest that it was refreshing and informative.  What appears (from the reports) to have been largely overlooked at the conference, however, was a rethinking of the interrelationships and scope for improved coordination between monetary and fiscal policy. 

New CDS trigger event proposed to tackle bail-inIFR Asia
ISDA is consulting on a proposal to add another credit event for financial credit default swaps in order to adapt to sweeping changes in regulation that will give supervisory authorities the power to bail-in the debt of floundering institutions.