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Saturday, October 19

19th Oct - Weekender: Linkfest

Previously on MoreLiver’s:

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Brussels blog round up 12 – 18 OctoberEuropp / LSE:
Hollande’s struggles, welfare tourism, and does Europe need a reality check on Russia?

Towards a Euro UnionBruegel
Eleven German economists, political scientists and jurists – the Glienicker Group – develop proposals for a deeper Europe. 

Europe's vision hits troubleReuters
Barely a year after European leaders set out an ambitious vision for the euro zone's future, progress has all but stalled and pressure is building for what may amount to a 'make or break' moment for the union.

Cut the EU red tapeBruegel
The UK government recently (October, 15) published a report from the Business Taskforce entitled Cut EU red tape; 30 priority recommendations of EU regulations “to ensure that the single market makes it easy for businesses in Europe to trade across borders, and to ensure that the EU regulatory framework is, and remains, competitive in the global market place”.

EZ crisis and historical
The Eurozone’s tangle of conflicting goals – a series of ‘trilemmas’ – is not without precedent. This column argues that it is reminiscent of the interwar situation. The interwar slump was so intractable not just due to financial issues, but also a crisis of democracy, of social stability, and of the international political system. The big difference in the EZ is that nations cannot go off the euro as they went off the gold standard. That is why the initial EZ crisis may not have been so acute as some of the gold standard sudden stops, but the recovery or bounce back is painfully slow and protracted.

The yin and yang of resolving the European sovereign debt crisisBIS
Andreas Dombret, Member of the Executive Board of the Deutsche Bundesbank, at the Peterson Institute, Washington DC, 17 October 2013.

Deposits are growing and lending set to recover but AQR looms large for EurozoneEY
The return to growth in the Eurozone economy is fuelling a recovery in key drivers of profitability for financial services, with companies looking to borrow again and cash flow for households and businesses improving. But the road ahead is not without obstacles. In particular, the upcoming Asset Quality Review (AQR) and the insurance industry’s vulnerability to changes in interest rates present challenges.

The banks are OK? Debt issuance editionalphaville / FT
Debt issuance by the Giips: banks across Greece, Italy, Ireland, Portugal and Spain. The good news is that it is up a lot so far this year, $7bn or a hefty 16 per cent rise on the same period last year. The bad news is that it is still down a lot compared to, say, the same period in any of the preceding six years.

ECB Nowotny: Unilateral Rate Rise Could Lead to Deflationary PressuresWSJ

Europe’s not so secret liquidity. Not any more.alphaville / FT
ECB published important data on its emergency liquidity assistance, or ELA. Notable: EUR two billion upper limit before the governing council reviews the situation.

German Court Decision Looms as Next Potential Global CrisisWSJ

Italian banks and single European supervisionBIS
Ignazio Visco, Governor of the Bank of Italy, at the presentation of the Rosselli Foundation's 18th Report on the Italian Financial System, Rome, 7 October 2013.

Spanish Bad Loans Soar To New Record HighZH

Spain: ‘Government imposes further €17.5bn adjustment in response to deficit’Presseurop

Euro-Zone Exports Rise With Help From Southern EuropeWSJ
A growing trade surplus in the euro zone this year, aided by rising exports and falling imports in southern Europe, suggests the currency area is making strides in correcting an imbalance seen as crucial to mending its broken economy.

The Periphery SixProject Syndicate
Cyprus, Greece, Ireland, Italy, Portugal, and Spain share a problem. With massive debt, no control over monetary policy, and no leeway for fiscal stimulus, they appear headed for a lost decade of high unemployment and low GDP growth. Such a path would drain the political establishment of legitimacy and prevent a real recovery in Europe.

Fed QE Taper Seen Delayed to March as Shutdown Bites BB
The Fed will delay the first reduction in its bond purchases until March after the government shutdown slowed fourth-quarter growth and interrupted the flow of data, economists said. Policy makers will pare the monthly pace of asset buying to $70 billion from $85 billion at their March 18-19 meeting. The 16-day budget impasse in Washington reduced growth by 0.3 percentage point this quarter.

Fed's default crisis tools back on the shelf - for nowReuters
Fed sighed in relief after the U.S. government avoided a default, relieving the central bank of the need to take yet more extraordinary measures to stabilize the financial system.

Fed’s Williams: Unconventional Policies Unlikely Be PermanentWSJ
Some of the most prominent parts of the current monetary policy tool kit will likely be retired when the Fed is able to raise short term interest rates above their current zero percent level.

Tarullo Says Big Bank Failures Still an IssueWSJ
Regulators' efforts to deal with the failure of a big bank remain a work in progress, but the Federal Reserve will move "in the next few months" to require large financial institutions to hold minimum amounts of long-term debt.

Fed’s Evans: Bad Idea to Use Monetary Policy to Burst BubblesWSJ
Evans: those who would prefer to tighten monetary policy to reduce the threat of new financial bubbles are barking up the wrong tree.

A debt ceiling hiccup on the way to a 21st-century American world orderThe Telegraph
Unless the US Congress does something really stupid, the debt antics of 2013 will most likely fade away as fleeting trivia, and we will all wonder what the fuss was about.

Things That Make You Go Hmmm...Grant Williams / ZH

Actively PassiveGreycourt
Evidence in support of passive investing as the core of long-only equity exposure is compelling…selecting the appropriate index is not trivial.

Private and public debt in crises: 1870 to
In the aftermath of the global financial crisis, few would dispute the risks of excessive borrowing. But which debts should one worry about – public or private? This column presents new research on the interplay of public and private debts since 1870 in 17 advanced economies. History demonstrates that excessive private-sector borrowing plays a greater role than fiscal profligacy in generating financial instability. However, when the credit boom collapses, the government’s capacity to alleviate the downturn is limited by the prevailing level of public debt.

Unemployment, labour market flexibility and IMF
The state of labour markets in advanced economies remains dismal despite recent signs of growth. This column explains the IMF’s logic behind the advice it provided on labour markets during the Great Recession. It argues that flexibility is crucial both at the micro level, i.e. on worker reallocation, and at the macro level, e.g. on collective agreements. It suggests that the IMF approach is close to the consensus among labour-market researchers.

Is Nominal GDP Targeting a Rule Policymakers Could Accept?FED
The economy is too complex to be summarized by a single rule. Economies are constantly changing in ways difficult to explain after the fact and nearly impossible to predict. Consequently, policymakers seem destined to rely on discretion rather than rules.

Purpose and mechanism of quantitative and qualitative monetary easingBIS
Kikuo Iwata, Deputy Governor of the Bank of Japan, commemorating the 50th Anniversary of the Institute of Economic Research, Chuo University, Chuo, 18 October 2013.

Regulating international banksBIS
Andrew Bailey, Deputy Governor of Prudential Regulation and Chief Executive Officer of the Prudential Regulation Authority at the Bank of England, at the British Bankers Association Annual International Banking Conference, London, 17 October 2013.

Economic uncertainty and the effectiveness of monetary
Many analysts blame uncertainty for at least part of advance nations’ poor economic performance since the crisis. This column discusses new research showing that the economic impact of monetary policy is dampened when uncertainty is high. This means that high uncertainty forces monetary policymakers into a trade-off between acting decisively and acting correctly as policy must be more aggressive than otherwise in order to stabilise economic activity. The finding is particularly stark when uncertainty measures from financial markets are utilised.

The Nobel committee is muddled on the nature of economics – John Kay
The Inefficiency of the Market Isn’t an Open QuestionThe New Yorker
Beating the Market: Yes, it can be done – The Economist
Dusting off an old article – The Economist
Eugene Fama explained. Kind of. Part 1: Corporate governance – Noahpinion
Eugene Fama explained. Kind of. Part 2: Asset pricing – Noahpinion

"EU kaatuu kuin Neuvostoliitto"TE

Katainen kilpailee ehdokkuudesta EU:n pääkomissaariksiKU
Esko Seppänen: Euroopan Unionissa on käynnistynyt kaikkien aikojen valtapeli. Jo nyt jaetaan herran paikkoja vaalien jälkeiseen aikaan. Kamppailu komission puheenjohtajan paikasta käy kiivaana.

Saksan energiakäänne on myös vientivalttiTalSa
Saksan päätöksellä luopua ydinvoimasta on ollut kaksi paljon puhuttua seurausta viime aikoina. Auringosta, tuulesta ja biomassasta saatavan uusiutuvan energian kasvu on johtanut sähkön kuluttajahintojen nousuun. Samalla "energiakäänne" on johtanut tietotaidon ja ylimääräisen sähkön vientiin.