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Sunday, June 16

16th Jun - Weekender: The World

IMF finished the Article IV consultations on US, and said what we already knew: solve the political mess, stop the austerity, do not taper the Federal Reserve's asset purchase programs too early. In Asia, Abenomics is heavily debated. The Economist had a special briefing on the role of Germany in Europe.

Previously on MoreLiver’s:

Brussels blog round-up for 8 – 14 JuneEuropp / LSE
Turkey’s protests continue, Hollande declares crisis over, and Iceland suspends EU negotiations.

Erkki Liikanen: Banking after the regulatory reforms - business as usual?BIS (pdf)
Governor of the Bank of Finland and Chairman of the Highlevel Expert Group on the structure of the EU banking sector, at the Bank of Finland SUERF Conference, Helsinki, 13 June 2013.

Europe tries to skirt both chaos and complacencyBreakingviews / Reuters
The two engines of the euro zone bond rally are sputtering. Rising yields on risk-free debt are hitting one, and the German constitutional court hearing has thrown a little sand in the other. But a tougher ride for peripheral debt is not necessarily all bad.

ITB: Which way for Turkey?BBC (mp3)
How will the turmoil on the streets across Turkey affect the country's economic prospects? Its economy has flourished over the last decade, but is it robust enough to withstand political shocks? And does it matter to business whether the politically conservative government of this secular nation takes a more religious line? Nkem Ifijeka is joined on the banks of the Sea of Marmara by Pelin Yenigun-Dilek, an economist at the Turkish Economic and Social Studies Foundation. And in London Manuela Saragosa discusses whether the protests have scared off foreign investors with Turkish Lawyer, Mutlu Manyas, and Guntram Wolff, acting director of the Bruegel think-tank in Brussels. And Nkem also hears from the former chairman of Goldman Sachs asset management, Jim O'Neill, on whether Turkey is still a good bet.

Deutsche Bank 'horribly undercapitalized': U.S. regulatorReuters
Deutsche Bank "Is Horribly Undercapitalized... It's Ridiculous"ZH
A top U.S. banking regulator called Deutsche Bank's capital levels "horrible" and said it is the worst on a list of global banks based on one measurement of leverage ratios.

Warnings Lurk in the Euro Zone’s Current AccountWSJ

Spain’s new transparency law could become the first step into a real process of institutional regenerationEuropp / LSE

 The IMF in Greece Mistakes We Knew We Were MakingPawel Morski
Fiscal implications of the ECB’s bond-buying
Paul De Grauwe, Yuemei Ji: The monetary-fiscal policy connection is under scrutiny by the German Constitutional Court in the context of the ECB’s OMT bond-buying programme. This column argues that most analyses are deeply flawed by the misapplication of private-company default principles to the central bank. ECB bond-buying transforms public bonds into monetary base, and sovereign-default risk into inflation risk. The real question is: What is the non-inflationary limit to money-base expansion? This depends upon the economic situation and is much higher in the current liquidity-trap setting.

Rajoy calls on ECB to create bank lending scheme for smaller companiesReuters
Spanish Prime Minister Mariano Rajoy on Saturday called on the European Central Bank to create a cheap funding scheme for small businesses, mirroring those used by authorities outside the euro zone to try and get credit flowing via banks.

The reluctant hegemonThe Economist
Germany must start taking the lead if Europe’s battered economies are to recover, but is unwilling, due to the weight of history, the perception that the “laziness of southern Europeans” is the cause of the eurozone crisis, and the strategic approach of guiding “from the rear”.

Europe’s reluctant hegemonThe Economist

The Merkel planThe Economist
Germany’s vision for Europe is all about making the continent more competitive.

The ja and nein of euro rescuesThe Economist

German leadership: Overcoming the demonsThe Economist

Colours of the rainbowThe Economist
Guide to Germany’s federal elections

The IMF lowered its 2014 growth outlook and suggested that the Fed should continue its $85 billion a month bond buying until at least the end of 2013 and repeal government spending cuts.

Concluding Statement – IMF
Video: Press Conference on Consultation – IMF
Transcript of a Press Conference – IMF

IMF Sees Fed QE Through 2013, Warns of Exit Plan Challenges – BB
U.S. Stocks Fall on IMF Outlook, Warning on Stimulus Exit – BB
IMF urges repeal of 'ill-designed' U.S. cuts – Reuters

IMF Urges Repeal of 'Ill-Designed' Spending Cuts – Economist’s View
IMF Article IV on the USEconbrowser
I.M.F. Urges Washington to Repeal ‘Ill-Designed’ Spending Cuts – NYT
IMF to Congress: No, seriously, guys, stop it – Wonkblog / WP
IMF Wades Into Fed Exit Debate, Urges No Change Through 2013 – WSJ
IMF: It Ain’t Over Till The Fat Lady Sings – ZH
Against Stupidity, The IMF Itself Contends In Vain – Krugman / NYT

The Biggest Economic Mystery of 2013: What's Up With Inflation?The Atlantic
Despite QE3, core inflation just hit a 50-year low

Asset purchases tapered in June?Handelsbanken (pdf)
We expect the FOMC to taper asset purchases either at the June or September meeting. In our view, the FOMC at its June meeting will either taper asset purchasing or explicitly signal (in its post-meeting statement, for example) that a reduction in the pace of asset purchases is coming soon.

Goldman FOMC Preview: "Calming the Market" – Calculated Risk
The Fed Is Tightening, Whether or Not It Wants To – View / BB
Is the Fed Going to Dial Down Its QE Taper Talk? – naked capitalism
The Fed and emerging markets: The end of the affair – The Economist
Five Stages of Fed Tapering – WSJ

Industrial output flat in May – Reuters
Industrial Output in U.S. Unchanged as Utility Use Drops – BB
Industrial Output Unchanged In May – The Capital Spectator
Industrial Production unchanged in May – The Calculated Risk
Industrial Production Misses, Capacity Utilization Lowest Since October – ZH
Industrial production at zero percent in May, weaker than expected – Handelsbanken

Consumer sentiment slips in June – Reuters
Consumer Sentiment in U.S. Declines From Six-Year High – BB
Preliminary June Consumer Sentiment decreases to 82.7 – The Calculated Risk
Sentiment: June Preliminary Down Fractionally from May Final – dshort
Consumer Sentiment Dips in Early June – WSJ

Market jitters could crush Japan’s inflation driveBreakingviews / Reuters
Skittish markets are a threat to Japan’s anti-deflation drive. The rising yen, falling stocks and lower government bond yields suggest investors once again view Japan as a safe haven. The Bank of Japan may need to be bolder to prevent their expectations from becoming self-fulfilling.

Fixing Japan’s deflation requires labour-market
Ayako Saiki: Abenomics is all the rage. Japan’s GDP grew at an annual rate of 3.5% in the first quarter, the stock market went up by almost 30% since December, and despite some uncertainties, sentiments, consumption, and exports are all picking up. However inflation is at -0.9% and survey-based inflation expectation has remained flat. Is inflation going to happen at all? This column argues the answer crucially hinges upon the implementation of structural reforms, especially in the labour market.

Japan's economic activity, prices, and monetary policy - monetary policy in the past and presentBIS (pdf)
Speech by Ms Sayuri Shirai, Member of the Policy Board of the Bank of Japan, at a meeting with business leaders, Asahikawa, 13 June 2013.

Abenomics: Not so superThe Economist

Saving Abenomics: No Time for Cold Feet on QEPIIE

Grading Abenomics: After Stock Slide, Japan Economic Reforms Under ScrutinyTIME

The third arrow of Abenomics: MisfireThe Economist