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Monday, December 16

16th Dec - France bad, waiting for Fed

Previously on MoreLiver’s:

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Should German workers be paid more? Or, Do we have an omitted variable bias?Money Matters

Can we move beyond the Maastricht orthodoxy?
Today's Eurozone operates in a way that is momentarily advantageous for capital-owners in the surplus countries and creditors at large, but damaging for workers and entrepreneurs, debtors of all types and most users of public services. This column argues that this is unsustainable. The Eurozone must be reformed to avoid the risk that the EU itself could be destroyed by political conflict among the winners and losers. 2014 is a window of opportunity for seriously re-considering the Eurozone's functioning and for moving away from the 'Maastricht orthodoxy'. To recover from stagnation and regain citizens’ trust, Europe needs a genuine paradigm shift on the Eurozone.

And finally...Merkel's third term in officeMerkelnomics

Lack Of Cash Flows Ends Greek Export "Miracle"ZH

Dutch revolt over bank rules: Dijsselbloem vs Borg Round IIBrussels blog / FT

Wolfgang Schäuble’s Letter on Backstops for the SRMWSJ
Upon popular demand, we are publishing in its entirety the German finance minister's letter on how far his country is willing to fund a new system for winding down sick banks in the euro zone.

European banking sector: Finally heading for better times?DB Research
Following years of struggle and having seen their world turned upside down, European banks may finally be heading for a (somewhat) smoother ride in 2014. Profitability is returning, though so far this is mainly driven by lower extraordinary charges rather than improvements in revenues and costs. Pressure to build capital may lessen thanks to significant progress over the past two years, yet currently banks are still shrinking relentlessly. Much will also depend on regulatory and supervisory actions, especially on how the EU Banking Union is implemented.

Draghi: Hearing at the European Parliament ECB

ECB board member quits to take deputy minister post in German govt – Reuters
Draghi Ally Asmussen to Leave ECB for German Government – BB
Another German departure – The Economist

Eurozone Flash Composite PMI – Markit
Germany Flash Composite PMI – Markit
France Flash Composite PMI – Markit
Euro zone business recovery ends year on a high – Reuters
European PMIs: France is the Eurozone's sick man – TradingFloor

FOMC Projections Preview: To Taper, or Not to TaperCalculated Risk
Clearly the data is broadly consistent with the September FOMC projections, so a small taper should not be a surprise (even if most analysts think the FOMC will wait until early 2014).

FOMC Meeting Something of a NailbiterTim Duy’s Fed Watch
Unless you are living in a cave, you shouldn't be surprised if the Fed decides to taper this week.  At the same time, you shouldn't be surprised if they do not taper.  Even if they don't at this meeting, they soon will.

Fed Taper Message Succeeds With Bonds Adjusting to Economic DataBB
After misleading investors with a time line for tapering its unprecedented stimulus, the Federal Reserve now is stressing that any reduction in bond purchases will depend on the economic outlook -- and the message is sinking in.

Focus firmly on Bernanke’s penultimate FOMC meeting WednesdayTradingFloor
This week’s FOMC meeting will be the year’s final major US event risk ahead of the New Year. There should be plenty of volatility potential considering the divided opinions on what the Fed will say on Wednesday.

Central Station: Taper time? Close call for FedWSJ

Ask the Economists: Should the Fed Taper in December?WSJ
Market participants are on edge about whether Fed officials will start reducing, or tapering, their $85 billion in monthly bond purchases, a program known as quantitative easing or QE.

Bernanke Defends Transparency PushWSJ
Fed Chairman Bernanke defended a push for greater central bank transparency during his tenure, arguing it is essential for public acceptance of Fed policies and can help ease financial conditions with interest rates at zero.

Industrial Production Surges Due To Cold Weather Boost For Utility Demand – ZH
Industrial Production increased 1.1% in November, Above Pre-recession Peak – Calculated Risk

Japan: Tankan business sentiment suggests recovery – Danske Bank
Japan business mood hits six-year high as 'Abenomics' takes hold – Reuters
BOJ Beat: Five Takeaways From Tankan – WSJ

HSBC China Flash Manufacturing PMI – Markit
China: HSBC PMI falls in December, but details resilient – Danske Bank
Economists React: Is China’s Manufacturing Sector Losing Steam? – WSJ
China: Flash PMI gives early warnings of slowdown – Nordea
China Flash PMI: not always on the money – beyondbrics / FT

FX Forecast Update DecemberDanske Bank
ECB deposit cut to weigh on EUR in 2014

Your FX year that wasalphaville / FT
Some annotated charts courtesy of HSBC

Party like it’s 1999alphaville / FT
Lombard Street ‘s Dario Perkins released research entitled “Party like it’s 1999″

Basel risk weights can’t be
Recent research shows that capital requirements are only loosely related to a market measure of bank portfolio risk. Changes introduced under Basel II meant that banks with the riskiest portfolios were particularly likely to hold insufficient capital. Banks that relied on government support during the crisis appeared to be well-capitalised beforehand, suggesting they engaged in capital arbitrage. Until the regulatory concept of risk better reflects actual risk, the proposed increases in risk-weighted capital requirements under Basel III will have little effect.

Velka kasvaa ja hallinto paisuuTalouden Tulkki

Julkisen puolen säästöt eivät tuhonneet USA:n taloutta mutta tekivät hallaa EuroalueelleTyhmyri
Ongelma on se ettei Euroalueen rahapolitiikka ole kasvuhakuista

EKP:n inflaatiotavoite ja nollakorkorajoite HSE

Onko suomalainen asuntokupla puhkeamassa – tule deflaatio, tuleTyhmyri