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Sunday, July 14

14th Jul - Weekender: The World

Previously on MoreLiver’s:

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Brussels blog round-up for 6 – 12 JulEuropp / 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 governmentsEuropp / LSE

EU Crisis Roadmap: Key Milestones AheadWSJ
Key events from July 15 – Aug 9

Loose Lips Sink Euro Bond Markets in Crisis: Cutting ResearchBB
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 leavingPresseurop
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.

We go live to Fitch’s Paris office…alphaville / FT
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 ActivismEconospeak
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 DataBB
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.

The UK’s proposed referendum on Europe would test commitment to the EUEuropp / LSE

An end to austerity will not boost EuropeFT

EU: Magnitsky verdict is 'disturbing' sign of Putin's Russiaeuobserver
Sergei Magnitsky – A reading list The World / FT
Magnitsky affair will hit Russia where it hurts mostThe 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 and the Euro: Meet the EU's Newest Tax HavenSpiegel
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.

Europe’s Wealth Gap NarrowsWSJ

How to limit the ECB’s OMT?
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.

Charlemagne: Lessons from LagardeThe 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 bothre-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.

Europe’s zombie banks: Blight of the living deadThe Economist
Europe’s financial system is in a terrible state, and nothing much is being done about it

Germany, France split over EU banks planReuters
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.

Spanish Banks Petition To Convert Historical Losses Into Bank CapitalZH

Portugal's Presidential Warning Spikes Yields To 8 Months HighsZH

Portuguese Stew: 10-Year Bond Yield Spikes to 7.84%; Portugal's President Once Again Pleads for "National Salvation" AgreementMish’s

Portugal's PM says committed to reaching cross-party dealReuters
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

Number of the Week: Potential Perfect Storm of Debt Ceiling and FedWSJ
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 resiliencealphaville / FT

Bullard: If Inflation Weakens Further, Fed Must ActWSJ

Fed’s Plosser: Time to Taper Bond Buying, End by Close of YearWSJ

Friday Afternoon Fed BloggingTim 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 dilemmaSober 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.

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

The Credit Crisis May Not Be China’s Biggest ProblemAsia Confidential
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