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Tuesday, October 15

15th Oct - Still no deal, Europe darkens

Starting last Monday, I am posting only once (or twice) a day. I will also skip the “regular” link section, but you can access them from my Links-page. I want to have more time to read what I link to – and write as well.

Previously on MoreLiver’s:

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Round Two of Talks Grand Coalition Looks Increasingly LikelySpiegel
Angela Merkel's conservatives are holding their second round of preliminary coalition talks with the Social Democrats Monday and there's speculation that the parties could reach a deal sooner than expected. A government could be formed by mid-November.

Towards a German government: Parties talk about negotiationsDB Research
This is the crucial week for talks between the major parties CDU/CSU, SPD and the Greens to decide the shape of the next coalition government. We expect the final decisions to be taken by the parties over the coming weekend.

François Hollande’s cold showerThe World / FT

French Politics and EconomicsMarc to Market
A second round of a local election in France (Brignoles) resulted in a victory by Le Pen's National Front… The latest Ifop polls shows Le Pen ahead in the national polls, with 24% support.  The UMP has 22% support and the Socialists 19%

Finland prime minister ready to support further eurozone bailoutsFT

The enormous unnoticed collapse in London property pricesalphaville / FT
House prices hit a record – or do they?Money Supply / FT
London house bubble: location, location, locationLong Short / FT

Brussels: An EU capital in the makingeuobserver

An unusable backstop: 10 reasons why the ESM might never take a stake in a bankBrussels blog / FT

ECB’s Draghi: Knowing Too Much About Our Big Banks Could Set Off A PanicTestosterone Pit
European regulators are desperate. The only thing known about the holes in bank balance sheets stuffed with decomposing assets is that they’re deep. No one knows how deep. No one is allowed to know – not until Eurocrats decide who will pay for bailing out these banks. How do we know? ECB President Mario Draghi said that.

Wealth-taxing, reduxalphaville / FT
A box on “one-off capital levies” — or wealth taxes — burrowed away on page 49 of the IMF’s latest Fiscal Monitor.

The artificial fuel for growth cannot last foreverThe A-list / FT
Unhelpful politics and policy responses likely to make worse the disconnect between artificially-bolstered asset markets and the sluggish fundamentals of the real economy.

Fed’s Dudley: Large Balance Sheet Increases Inflation-Fighting DisciplineWSJ

Default Risk - You Can Run But You Can't HideZH
Oct/Nov Bills are improving, but Feb 2014 Bills are now slamming higher in yield +5bps to 9bps for now

The House GOP’s shutdown deal is a big improvementWaPo

This number is the reason Republicans will end the shutdownWaPo
74 percent of Americans disapprove of how the Republicans are handling the budget negotiations. That's three-out-of-four Americans.

House Republicans are falling for the sunk cost fallacyWaPo

USA Credit Risk Now Worse Than 2011ZH
CDS Q&A JICalphaville / FT

Yield Forecast UpdateNordea (pdf)
Long-end EUR rates to move higher on stronger recovery

Global FX Strategy: The debt ceiling and the dollarNordea (pdf)
Find our take on the dollar reaction to an expected upcoming debt ceiling deal, alongside updated stories on GBP, SEK, NOK and market quant in this week's edition of Global FX Strategy.

FX Forecast Update: October - Scandi upside limited in the near termDanske Bank (pdf)

EM currencies: are the “fragile five” really that fragile?beyondbrics / FT
Nomura’s number-crunching is welcome. It is interesting that a ballooning trade deficit matters more than the size of the deficit. A hike in real interest rates is more likely to herald a crisis than a diminishing chest of forex reserves, if we believe the research. It also seems east Asia has learnt from its 1997/98 crisis, as the World Bank recently concluded.

Global liquidity: selected indicatorsBIS (pdf)
Focusing on flow measures, global growth in international bank credit remains virtually zero, with declines in aggregate interbank credit offsetting positive growth in credit to non-banks…In turn, monetary indicators in advanced economies imply sustained policy accommodation, even though term premia (the extra compensation for bearing a bond’s duration risk) and, with them, long-term yields have risen from their earlier lows.

BCA Research Launches New Application: BCA AnalyticsBCA

Introducing the Saxo Bank FX Carry TradeTradingFloor
Saxo Bank FX Carry Trade Portfolios (week 42)TradingFloor
We introduce the Saxo Bank Carry Trade model, which can accommodate both EUR- and USD-denominated accounts and allows the investor to choose between a G-10 portfolio or a broader portfolio of 16 currencies.

Fama, Hansen, and ShillerEconomist’s View

Robert Shiller: ‘When I look around I see a lot of foolishness, and I can’t believe it’s not important economically’WaPo

Kroatian vientisektori kiittääJuhani Huopainen

Tutkimus: Eliitti hallitsee eurokriisin julkisuuttaPS

Soini povaa suurta muutosta europolitiikkaan: ”voimasuhteet tulevat muuttumaan rajusti”PS

Katainen FT:ssä: "Olemme hyvin pragmaattisia - on oltava valmis auttamaan muita"Verkkouutiset
Suomen pääministerin Jyrki Kataisen (kok.) mukaan Suomi on valmis tukemaan uusia euroalueen tukipaketteja Kreikalle ja Portugalille, jos tarve vaatii.

Soini: Kataiselle voi kelvata vähempikin kuin komission puheenjohtajuusHS
Kumpula-Natri näkee pääministerin lausunnoissa komissaaripeliä

Teollisuuden liikevaihto supistui touko-heinäk. yli 4%y-o-yTilastokeskus

Palvelualojen liikevaihto kasvoi touko-heinäk. 1,3% y-o-yTilastokeskus

Elämää ja entropiaaEsko Seppänen

Tamminiemen pesänselvittäjätKemppinen

Suomeen 6,54 miljardin euron investoinnit - Katainen katsoo Etelä-EurooppaanProfessorin ajatuksia