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Sunday, October 6

6th Oct - Weekender: The World

This week's 'World'-linkfest is heavy on the US shutdown and the approaching debt ceiling. 

Previously on MoreLiver’s:

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Brussels blog round up 28 September – 4 OctoberEuropp / LSE
Letta survives, Austrian elections and should Ireland’s Seanad be abolished?

Goodbye to all that centrismReuters
John Lloyd: The euro zone crisis is already forcing integration, yet citizens are recoiling from the EU. That’s the central contradiction of Europe, stark and grim. It's nearly impossible to be a centrist politician in Europe these days.

Europe’s Responsible SolidarityProject Syndicate
Enrico Letta: If Europe is to reverse the growing divisions among eurozone countries, it must extend the principle of shared responsibility to all major EU economic-policy initiatives. But doing so requires a broader view of supranational coordination, with all the implications for political legitimacy and accountability that would follow.

Opinion: How about a social troika?euobserver
Picture the scene: Troika members go to a member state and are greeted with enthusiasm.

Why Barroso’s pessimism about achieving EU decentralisation is sort of irrelevantOpen Europe
The war on EU red tape: Will this time be any different?Open Europe

German politics: Afraid of AngelaThe Economist

Merkel, SPD welcome further talks on German governmentReuters
Angela Merkel's conservatives and the opposition Social Democrats (SPD) agreed to meet again in 10 days to explore forming a "grand coalition" government after an initial three-hour meeting on Friday was called constructive by both sides.

Austria’s election: The Eurosceptics’ victoryThe Economist

The asset-quality review: Gentlemen, start your auditsThe Economist
Close scrutiny of Europe’s banks may turn up unexpected shortfalls.

About The "Europe Is Recovering" MemeZH
European macro data is not only now worse than the US but has fallen to 7 week lows.

Computing the bill for European taxpayers, come the next crisisalphaville / FT

Italian and Spanish Debt ‘More Stable Than U.S. Treasurys’WSJ
Citigroup’s FX strategist Steven Englander: The range in bond yields in the U.S. has risen to 0.065 percentage points from 0.03 percentage points to 0.04 percentage points back in May. Meanwhile, Italian and Spanish government bonds, which were more prone to gyrations over the course of the financial crisis are now more sedate in comparison.

Hold on, the periphery looks relatively calm?alphaville / FT

Capital Flight inside the Euro Area: Cooling Off a Fire SaleThe Big Picture

Stability Fund Chief Expects Third Greek BailoutSpiegel
Greece might need a third aid package as soon as next year, Klaus Regling told a German paper Friday. But the head of the ESM permanent bailout fund is much more optimistic about the situation in Portugal and elsewhere in the euro zone.

Spanish banks: Health checkThe Economist

Italy's productivity puzzleThe Economist

IMF Fiscal Chief to be Italy’s First Budget WatchdogWSJ
His move is unlikely to cause a short-term fall in Italian bond yields. But longer term, Rome’s headhunting of the IMF’s top budget expert, Carlo Cottarelli, could yield major sovereign-debt dividends.

US loan-to-deposit ratio the lowest in 30 years and fallingSober Look
This creates material headwinds for economic growth. Unfortunately there is no evidence that the current monetary policy will reverse the trend of weakening loan growth.

A Time of TestingMinneapolis Fed
Narayana Kocherlakota, President Federal Reserve Bank of Minneapolis, October 4

Note to Fed: Get Out in Front of the Potential Debt CrisisMacro and Market Musings
The Fed's QE programs have been able to able to offset much of the fiscal drag over the past three years. A NGDP level target would step up the Fed's game and make it better able to deal with the fallout of debt default.

Fed's Lockhart: No Jobs Report, Fed "more cautious" – Calculated Risk
Fed’s Lacker: Unknown Whether Shutdown Would Delay Decision on Bond Buying – WSJ
Fed’s Kocherlakota: Must Do ‘Whatever It Takes’ to Aid Job Market – WSJ
Fed doves strike back – Reuters

U.S. shutdown seen dragging on as debt ceiling fight nears Reuters
The shutdown of the U.S. government appeared likely to drag on for another week and possibly longer as lawmakers consumed day three of the shutdown with a stalling game and there was no end in sight until the next crisis hits Washington around October 17.

Game theory and America's budget battleReuters
Anatole Kaletsky: Financial markets and businesses have responded with a tolerance bordering on complacency to the shenanigans in Washington, but this attitude could change abruptly if the House Republicans’ capitulation is delayed too long. 

Will Shutdown Screw Up Next Month’s Jobs Report Too?WSJ
A prolonged government closure could cause more damage to other data -- more than simply delaying reports.

Markets (still) aren't too worried about the debt ceiling. Markets are sometimes wrong.WaPo

Debt Ceiling Drama Scenarios: BGOV Executive OutlookBB
Immediate ‘Clean’ Extension * Extension With Some Conditions * Administration Invokes 14th Amendment * Administration Prioritizes Payments * Temporary Default Followed by Compromise *
Kick the Can *

Why Republicans Shut Down the GovernmentBB
They feel the culture is running away from them (and they're mostly right). They lack the power to control their own government. But they still have just enough to shut it down.

You probably think the shutdown’s about spending. It isn’t.WaPo

Goldman's 3 Debt-Ceiling Debacle Scenarios ZH

What Does The Market Know That Boehner Doesn't?ZH

America's government shutdown: No way to run a countryThe Economist

The federal government: Closed until further noticeThe Economist

Shutdown Shuts Down Commitment of Traders Reports From CFTCWSJ

How a game theorist would solve the shutdown showdownWaPo

Analysis: Washington gridlock may disrupt vital money marketsReuters
The fight over raising the U.S. debt ceiling is starting to rattle the money markets and could eventually disrupt the flow of cash needed for banks to lend and companies to invest.

How to Make a Non-Disastrous Debt-Limit DealView / BB

Dancing on the Edge of Default NYT

Wall Street Seeks to Soothe, While Preparing for TroubleNYT

Shut Down Round Up: The Latest In Dysfunctional Government NewsZH

What If We Go Past The "X" Date?ZH
BofAML: Most options are unviable – the most fair and sensible option would be to implement a delayed payment regime where no payments would be made until they could all be made on a day-by-day basis.

Economic Confidence PlummetsNYT
The shutdown and the economySober Look

Washington enters fifth day of shutdownReuters
No end in sight even as another, more serious conflict over raising the nation's borrowing authority started heating up.

BOJ Beat: Abe Adviser Wants Stronger Commitment Fom KurodaWSJ

Shanghai Free Trade Zone: The next Shenzhen?The Economist

Japan’s economy: Third arrow, pleaseThe Economist

Japan and Abenomics: Taxing timesThe Economist