The best articles from the ending week. Some of them on Europe are classics. Last
week’s ‘Best of’ here.
EUROPE
Merkel’s lack of
vision is the Achilles’ heel of Europe – TradingFloor
Lars Seier Christensen: A more rational approach could have saved us
from the mess we are in, but declaring that the EU should be winning in the
global economic race, which is one reason why Germany wants to keep Britain in
the EU, is not a vision.
Germany must
provide a vision for the rudderless ship of Europe – TradingFloor
Steen Jakobsen: Germany must provide a vision to help restructure Europe, get credit flowing again and reduce the
overall debt load. The strong euro is doing the periphery no good and
unemployment is sky-high. The ship needs a rudder to brace the many headwinds.
How much Europe is too much Europe? – Reuters
In the dark days of Europe's debt crisis in 2012, when it seemed Greece might be forced out of the euro and the single
currency could implode, leaders believed "more Europe" was the only answer.
Europe’s
Destructive Creation: Why the Euro’s Biggest Problem is the Flawed Crisis
Narrative – EconoMonitor
William Oman,
Economist for Western
Europe and Finance
& Banking at RGE, argues that a flawed narrative holds back more than just
the euro crisis debate.
Asset Allocation and Monetary Policy: Evidence
from the Eurozone – Haraldhau
The eurozone has a single
short-term nominal interest rate, but monetary policy conditions measured by
either real short-term interest rates or Taylor rule residuals varied substantially across
countries in the period from 2003-2010.
Outright Monetary
Transactions, one year on – ECB
Speech by Benoît
Cœuré, Member of the Executive Board of the ECB, at the conference “The ECB and
its OMT programme”, organised by Centre for Economic Policy Research, German
Institute for Economic Research and KfW Bankengruppe Berlin, 2 September 2013
Peripherally, yours – alphaville / FT
The eurozone is
straggling to recovery, though apparently in spite of the ECB failing to shore
up money growth
Triple shocks threaten Europe's sickly and deformed
recovery – The Telegraph
Europe has not recovered. It has begun to stabilise,
but only just, amid mass unemployment, with debt trajectories still spiralling
out of control in Italy, Portugal, Spain and once again in Greece.
The sustainability of
the single currency: Different rates and different fates – The
Economist
Optimists argue that if a big, diverse economy like America manages to have a
single currency, Europe should too. Optimists, if not already
disillusioned, will find more to dislike in this new analysis.
Towards a banking union – the state of play from
the ECB’s perspective – ECB
Speech by Jörg
Asmussen, Member of the Executive Board of the ECB, Handelsblatt Conference “Banken
im Umbruch” Frankfurt, 4 September 2013
Portugal’s economic recovery: Between bail-outs – The Economist
Sovereign default risk and banks in the Europe’s
monetary union – voxeu.org
EZ banks are more
exposed to their own nation’s government bonds than ever. This column argues
that Eurozone members can now afford to tell their banks to diversify, but
pressure from Germany, Austria, France and the ECB might be necessary. Defusing
the pernicious entanglement between the Eurozone’s weak banks and weak
sovereigns would reduce the cost of any new crisis and reduce the likelihood of
such a crisis occurring.
Promise and
disappointments in European data – TradingFloor
Euro area economic
confidence hits two-year high – TradingFloor
UNITED STATES
The portable Summers – alphaville / FT
How the Fed chair
race became a public circus, and why it matters – Wonkblog / WP
You
can’t believe everything Larry Summers says – Wonkblog / WP
The all you can eat
collateral buffet – alphaville / FT
When it comes to
understanding the Fed’s recently touted — but initially overlooked —
fixed-rate, full-allotment overnight reverse repurchase agreement facility, Cardiff
covered pretty much all the bases here.
US: Revisiting the
debt ceiling – Danske Bank (pdf)
Once again we are heading for a budget battle in the US Congress.
Fed exit options, table du jour – alphaville / FT
Which part of future
Fed tightening “is now completely up in the air”? The answer (according to
Societe Generale) is in the useful table
Bank Leverage Is the Defining
Debate of Our Time – View / BB
Simon Johnson: There are plenty of other important debates taking place
around the world, but these questions are largely settled, and many of the issues
are more rhetorical than real.
Has quantitative easing
worked? – Reuters
The respect of
traditional policy limits reduced the effectiveness of QE. If the newly created
money had gone directly into consumer and business bank accounts, rather than
into banks, more of it would have been used to pay off excess debts or to
invest productively. But at least QE was a new idea. With some more of those,
central bankers could do a better job.
EMERGING MARKETS
Déjà vu: emerging markets and
1997 – Long Short / FT
The BRICs party is over – voxeu.org
Anders Åslund:
Emerging markets are under pressure. This column argues that this is not a mere
headwind but that the BRICs’ party is over. Their ability to get going again
rests on their ability to carry through reforms in grim times for which they
lacked the courage in a boom.
Are Emerging Markets
Submerging? – Project Syndicate
Kenneth Rogoff: After years of solid output gains since the 2008
financial crisis, the combined effect of decelerating long-term growth in China and a potential end
to ultra-easy monetary policies in advanced countries is exposing significant
fragilities in emerging markets. Is the inevitable “echo crisis” in these
countries already upon us?
OTHER
Global FX Strategy – Debt
ceiling debate looming again –
Nordea (pdf)
or the summary.
Blogs review: The global
dimension of tapering – Bruegel
Emerging markets have
had a tough summer, as central banks of advanced economies have made clear that
the normalization of monetary policy was underway. Although this development
has generated a renewed interest in the international transmission of monetary
policy and was a central part of the discussion at Jackson Hole, it remains unclear whether this sudden
reversal in capital flows will remain mostly benign or will deteriorate into a
full-fledged emerging market crisis.
Charlie
Munger: Lessons From an Investing Giant – WSJ
Warren Buffett's right-hand man is brilliant in his own right.
Banks,
economists and politicians: just follow the money – mainly macro
How can you get an
economy INTO a liquidity trap? – Worthwhile
Michael
Mauboussin, Interview No. 4 – Farnam Street
Once you understand luck’s role, you can
understand how to approach the activity more thoughtfully, including how you
develop skill and interpret results.
Michael Lewis on Writing,
Money, and the Necessary Self-Delusion of Creativity – brain pickings
FINNISH
Korkojen nousu paljastaa: olemme
velkaloukussa – Jan
Hurri / TalSa
Suomen
velkataakka on vuosikaudet paisunut huimasti talouskasvua nopeammin, ja velkaa
on nyt tuplaten se määrä kuin vuosikymmen sitten. Enää keinotekoisen matala
korkotaso peittelee karua tosiasiaa: Suomi on velkaloukussa. Totuus paljastuu,
kun korot taas nousevat – ja maksuvaikeudet alkavat.
Jämeräpartaiset
päättäjät – Saloniemi
Työttömyyttä,
luonnollisesti? – Pentti Haaparanta / Akateeminen
talousblogi
Hypo:
Asuntolainan marginaali kiipeää jopa 2,5 prosenttiiin
– TalSa