Previously on MoreLiver’s:
EUROPE
Brussels blog round-up for 6 – 12 Jul – Europp
/ LSE
Forward for the ECB,
Romania’s retro railways, and is Europe the ‘sick man of the world’?
The EU’s standoff with Hungary
shows that there is little agreement on how European institutions can intervene
in the policies of national governments – Europp
/ LSE
EU Crisis Roadmap: Key Milestones Ahead – WSJ
Key events from July
15 – Aug 9
Loose Lips Sink Euro Bond Markets in Crisis:
Cutting Research – BB
A ECB paper released
last week used 25,000 news media releases between January 2009 and October 2011
to investigate how much political communications affected sovereign bond yields
during the region’s fiscal crisis.
Help, Juncker is leaving – Presseurop
Senior European leader
Jean-Claude Juncker resigned as prime minister of Luxembourg on July 11. Frankfurter Allgemeine Zeitung
asks how the EU would be able to function without this figure, who embodies the
key elements of European unification.
Here’s the full text
of Fitch Ratings’ one-notch French downgrade, which makes it the last of the
big three agencies to remove AAA ratings from France.
The Political Economy of Central Bank Activism – Econospeak
I agree with Noah
Smith’s hypothesis that the true motivation, or at least one of them, is to not
let a crisis go to waste, and to use economic pain as leverage to achieve other
goals—a smaller state, less regulation, etc.
This is a strategy that dare not speak its name. Proponents don’t say “let’s hold governments
and populations hostage through austerity in order to force them to pursue a
neoliberal agenda”; that would not go over well.
Carney Seen Echoing Fed in Tying BOE Guidance
to Data – BB
Mark Carney will align
Bank of England policy closer to the Federal Reserve next month by tying
guidance on interest rates to economic developments, according to the Bloomberg
monthly survey of economists.
Sergei Magnitsky – A reading list – The World / FT
The biggest impact of
the Magnitsky affair may come not from any official response by western
governments, but precisely where it now hurts Russia and its leadership most – in investment.
Latvia will become the common currency area's newest member in January 2014 --
the same time that new tax laws go into effect allowing the country to compete
with the likes of Cyprus and Malta. This could further destabilize the European economy.
How to limit the ECB’s OMT? – voxeu.org
How well has OMT done?
This column attempts to temper Mario Draghi’s recent plaudits that “it’s really
very hard not to state that OMT has been probably the most successful monetary
policy measure undertaken in recent times”. Yes, OMT should provide unlimited
liquidity to troubled countries, but not at the expense of necessary structural
reforms. The ECB should cover Eurozone countries’ current expenditures, but
should not pay off all long-term debt holders. That way, capital markets will
be disciplined and incentives for implementing economic reforms will be
maintained.
IMF AND
THE EU
Charlemagne: Lessons from Lagarde – The
Economist
When the euro crisis
began in 2010, Germany insisted that the IMF should be brought in as an
enforcer: to be tough with the ill-disciplined Greeks and put steel into the
soft-hearted European Commission. Three years later the fund is dispensing
tough love not just to bailed-out countries but to the euro zone itself.
A Eurozone-wide IMF programme could save both – re-define
All of this may just
be acceptable, if the EC and ECB led ‘Troika’ programs were actually working,
but they are failing. Recent commentary that 'the Eurocrisis is back' is not
accurate; the crisis had never gone away.
BANKS
Europe’s zombie banks: Blight of the living
dead – The
Economist
Europe’s financial
system is in a terrible state, and nothing much is being done about it
Germany, France split over EU banks plan – Reuters
Germany and France
were split on Friday over European Union plans for a new agency to wind down
troubled banks, with Berlin saying they go too far in centralizing control in
Brussels.
PIIGS
Spanish Banks Petition To Convert Historical
Losses Into Bank Capital – ZH
Portugal's Presidential Warning Spikes Yields
To 8 Months Highs – ZH
Portuguese Stew: 10-Year Bond Yield Spikes to
7.84%; Portugal's President Once Again Pleads for "National
Salvation" Agreement – Mish’s
Portugal's PM says committed to reaching
cross-party deal – Reuters
The opposition
Socialists demanded a renegotiation of Portugal's bailout terms on Friday,
raising a hurdle to a cross-party pact the president says is needed to end the
euro zone country's dependence on international funding next year.
How much pressure can the lira take? – beyondbrics
/ FT
UNITED STATES
Number of the Week: Potential Perfect Storm of
Debt Ceiling and Fed – WSJ
The U.S. will once again run into is debt limit this
fall, and the smart money isn’t on whether there will be another congressional
showdown, but when it will happen.
JPMorgan Slashes Q2 GDP By Half To 1% – ZH
US housing’s resilience – alphaville
/ FT
FEDERAL
RESERVE
Bullard: If Inflation Weakens Further, Fed Must
Act – WSJ
Fed’s Plosser: Time to Taper Bond Buying, End
by Close of Year – WSJ
Friday Afternoon Fed Blogging – Tim
Duy’s Fed Watch
It is increasingly
important that we get some real clarity on the Chairman's 7% unemployment
trigger. I think it might help more
clearly define where he sits on the policy spectrum. That might be on a more
hawkish side that we tend to believe.
And with the FOMC increasingly divided, should we be expecting a real
power struggle within the Fed in the waning days of the Bernanke era?
The Fed's latest dilemma – Sober Look
We are likely to see
the Fed even more divided going forward, adding to more uncertainty and
frustration by investors (including those outside the US) as well as the public.
MACRO
NUMBERS>
Producer Price Index:
Headline Inflation Rises 0.8%, Core Rises 0.2% - dshort
Goods Disinflation
Reappears, but Shouldn’t Worry Fed – WSJ
Preliminary July
Consumer Sentiment decreases to 83.9 – Calculated
Risk
Consumer Confidence
Misses For First Time In 2013 – ZH
Michigan Consumer Sentiment: July Preliminary Down
Fractionally – dshort
Consumer Sentiment
Dips Slightly – WSJ
ASIA
The internet enters
the real world * The new industrial revolution? * Manufacturing won’t be the
same * “Made in China” under threat * What China can do about it