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Saturday, July 20

20th Jul - Weekender: The World

Previously on MoreLiver’s:

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Brussels blog round-up for 13 – 19 JulyEuropp / LSE
Greece approves more austerity, Brussels interns on the march, and the EU’s messy biofuels policy

People Like Us Fistful of Euros

Youth unemployment in Europe: Guaranteed to failThe Economist

Germany and the euro: The Merkel methodThe Economist

We Germans don't want a German EuropeThe Guardian
Wolfgang Schäuble: Germany has no taste for shaping others in its image – but we want a European Union that can compete
Angela Merkel – the Teflon chancellor?The World / FT

A better way to buy Europe? Humble Student
Redesigning the ECB with regional rather than national central
Eurozone national central banks that take a national perspective risk politicising the ECB’s monetary policy. This column argues that this is a significant risk that should be overcome with a fundamental overhaul of the Eurosystem. A central element would be to take the ‘national’ out of the EZ’s national central banks. Just as US regional Fed banks encompass more than one US state, EZ ‘national’ central banks area of responsibility should be redrawn along economic geography lines rather than nation lines. An example of such a proposal is provided.

The effectiveness of the non-standard policy measures during the financial crises: the experiences of the Fed and the ECBECB (pdf)
ECB Working papers by Seth Carpenter, Selva Demiralp, Jens Eisenschmidt

Do euro area countries respond asymmetrically to the common monetary policy?Bank of Italy (pdf)
Bank of Italy Working Papers by Matteo Barigozzi, Antonio Maria Conti and Matteo Luciani

Draghi to Carney Face Test Backing Guidance on RatesBB

Greece, Portugal and the euro: In the dumpsThe Economist

Greek Parliament Approves Austerity Measures to Release FundsBB

Portugal: ‘Disagreement’Presseurop
On the fifth day of meetings between the country’s three main parties, the PS, PSD and CDS-PP, hopes are fading of reaching a deal over how to implement President Aníbal Cavaco Silva’s July 10 call for “national salvation”.

Hallelujah, Spain is recoveringThe Telegraph

Spain to Challenge German Doctrine on ECB Funding Gov'tsBB

Does the Fed funds rate even matter?alphaville / FT

Changing the Mix, Not Level, of AccommodationTim Duy’s Fed Watch
Trying to reconcile the tapering talk with the data is not easy.  I think that's why many analysts missed the direction the Fed was heading.  It was somewhat incomprehensible based on the Fed's previous guidance.  It could be the effort to change the policy mix but not the level of accommodation was Bernanke's attempt to gain consensus within the FOMC and maintain accomodation, but he may have underestimated the importance of asset purchases in holding rates low. 

Janet Yellen for Fed ChairCalculated Risk
I've linked to a couple of articles below and they suggest the choice is between Janet Yellen and Larry Summers - and the key difference is "leadership style".  However another key difference is that Yellen has a much better track record of correctly analyzing the economic situation, while Summers has frequently been wrong (but never in doubt).

Larry Summers's Billion-Dollar Bad Bet at HarvardBB
Despite an impressive resume that includes stints as Treasury Secretary and chief economist of the World Bank, there is a very good reason Summers shouldn't be in charge of monetary policy: He seems to have trouble with interest rates.

The Fed SuccessionKrugman / NYT

Fed chairman must focus on price stabilityThe A-list / FT
First, the new chairman will need to have – or will need to develop – a firm grip on the theory and practice of how the expansion and shrinkage of a central bank’s balance sheet affects the economy… The second and arguably much more important attribute of any new chairman will be the ability and determination to safeguard the Fed’s anti-inflation credibility.

China reforms interest rate marketFT

PBOC Scraps Lending Rate Floor In "Full Liberalization" Of Interest Rate ControlsZH
China: Interest rate reform takes a welcome step forwardNordea
China’s Ponzi Bicycle Is Running Into A Brick WallKrugman / NYT

How Much Should We Worry About A China Shock?Krugman / NYT

China Removes Floor on Lending Rates as Economy SlowsBB

Will China’s slowing growth lead to unrest?Opinion / Reuters
China may look like a candidate for the type of protests currently sweeping the developing world. But for the time being, China is well-positioned to navigate challenges far better than its emerging market competitors.