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Saturday, January 18

18th Jan - W/E: Best of the Week

Here are the ”best” from my posts of the ending week. Last week’s edition here.

Europe and Basel both announced they will go easy on the banks.

Previously on MoreLiver’s:

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How to translate “QE” into Germanalphaville / FT

ECB Sees Bad-Debt Rules as Threat to Credible Bank ReviewBB
ECB is concerned that national differences in how bad debt is classified could cripple its probe into the health of euro-area banks, according to an internal ECB document.

A little more detail on the ECB’s stress testsMoney Supply / FT

ECB to simplify European bad loan definition in health checkReuters
The ECB is set to allow the euro zone's top banks to meet less stringent definitions for bad loans than previously planned when it makes an unprecedented review of lenders' balance sheets this year.

ECB Eases Stress Test: Capital Ratio Requirement From 8% to 6% - ZH
ECB Said to Favor 6% Capital Requirement in Stress TestBB

Larry Summers on why the economy is broken -- and how to fix itWaPo
The economy, even in the seemingly good times, has been incapable of creating enough demand absent bubbles or extraordinary stimulus. And that problem is getting worse by the day. In this interview, Summers lays out his concerns in more detail -- and suggests three paths we might take to restoring economic balance.

The updated FOMC dove-hawk spectrumalphaville / FT
The new spectrum applies after the January 28-29 meeting, Bernanke’s last as chair.

The Fed preparing markets for the reverse repo facility (FRFA)Sober Look
Fed’s New Tools Also Work by Adjusting RatesWSJ
Rev-repo rising alphaville / FT
Credit Suisse: In our view, the Fed needed to get some larger-scale tests under its belt to develop full confidence in the program’s capacity for both policy makers and the market. The year-end results seem to have delivered such a result.

Lockhart Greenlights TaperingTim Duy’s Fed Watch
But that's not really the big story at this point.  The big story is the communications strategy.  The era of transparency has arguably delivered only more complicated and confusing targets, thresholds, and statements.  With the Evans rule turning into a pumpkin soon, they will need to decide if they want to double-down on this strategy or move onto something else.  But what is that something else?  Whatever it is, it must be near the top of incoming Chair Janet Yellen's to-do list.
The Shiller CAPE: Addressing the ResponsesPhilosophical Economics

The Single Most Important Chart For Markets Right NowAsia Confidential
Rising inflation expectations * Winners, if the trend holds * Why I’m not buying it yet

Goldman Sachs: "The S&P500 Is Now Overvalued By Almost Any Measure"ZH

Basel Regulators Ease Leverage-Ratio Rule for BanksBB
Banks win Basel concessions on debt rulesFT
Global regulators diluted a planned debt limit for banks amid warnings that the measure would penalize low-risk financial activities and curtail lending.

Research Review: Asset Allocation Design & ManagementThe Capital Spectator

The Essence of Being A Quant
In truth the quant is as much a threat to the classic portfolio manager role as the machine is to human labor. A quant can manufacture investment approaches that are far cheaper, more disciplined, have greater scale, and are more reliable.

Hallintoalamaisen kirje pääjohtaja LiikaselleJan Hurri / TalSa
Hyvä pääjohtaja Liikanen. Lämmin kiitos kirjeestä, jolla vuoden alussa ensi kertaa lähestyitte kansaa. Kiitos erityisesti siitä, että näin valotatte kantaanne ajankohtaisiin talouskysymyksiin. Nyt tiedämme himpun enemmän, minkälaisin miettein hallitsette yhteistä rahaamme ja ohjaatte talouttamme. Kiitos myös siitä, että jätitte useita kysymyksiä avoimiksi. Se on toivon mukaan enne uusista kirjeistä.


EU-kriittiset yrittävät vallankahvaan unionissaYLE
Euroopan parlamentin ryhmät suuntaavat jo katseensa EU-vaalien jälkeiseen aikaan. Poliittisen kentän oikeanpuoliselta laidalta ponnistavat ryhmät tavoittelevat lisää valtaa keskinäisen yhteistyön kautta. Yle Uutiset kävi läpi EU-kriittisten edustajien vaikutusvallasta kertovia tilastoja.

Rehn varoittaa eurokriittisten puolueiden noususta. Soini tyrmää arvostelunYLE
Talouskomissaari Olli Rehnin mukaan eurokriittisten puolueiden vaalivoitto vaikeuttaisi EU:n päätöksentekoa. Perussuomalaisten Timo Soini pitää kritiikkiä "EU-eliitin" puheena. Vaikeuttavatko eurokriittiset tahot EU:n päätöksentekoa?

Onko eurosta hyötyä vai haittaa?TalSa
On harmillista, että maailmalla voimistuva ymmärrys oman valuutan merkityksestä ei ole vieläkään juurtunut Suomen talouspäättäjien ja -viisaiden ajatteluun.”