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Friday, February 7

7th Feb - W/E: Best of the Week

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

Previously on MoreLiver’s:

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ECB Preview: End of sterilisation?TradingFloor
While the ECB will not necessarily act this week, a consensus has formed that something will be coming. Sterilisation, the sacred cow of hard money policy, could be near the end of the road.

Europe’s Stress Tests: A Cheat’s GuideWSJ

Press release: ECB makes progress with asset quality reviewECB  
Note on the comprehensive assessment Feb 2014ECB
Confirms stress test parameters for comprehensive assessment. Collection of first set of data completed, portfolio selection closes in mid-February. Stress test will incorporate the results of the asset quality review. As announced by the European Banking Authority, the capital thresholds for the baseline and adverse scenarios will be 8% and 5.5% Common Equity Tier 1 capital respectively

ECB to reveal strategy for bank health checks by end-MarchReuters
The ECB kept the euro zone's top lenders on tenterhooks as it promised to reveal the strategy for its unprecedented review of bank balance sheets by the end of March, giving only scant detail on Monday.

The History of the IMF and Greece’s BailoutWSJ
While euro zone and IMF officials secretly debate how to deal with Greece’s ever-controversial bailout, it might prove instructive to go back to the genesis of the program.

Charlemagne: The euro’s hellhoundThe Economist
It is time to reform the troika that handles euro zone bail-outs

Greece Is BackZH
Germany preparing new Greek aid package – SpiegelEkathimerini
Germany, France, Creditors Hold Secret Meeting Due To Greek Bailout "Mounting Concerns"

Markets Tumble. How Will the Fed React?Tim Duy’s Fed Watch
The Fed is once again in a familiar place.  They try to pull back on policy, and markets tumble.  Tightening has repeatedly proved to come too early; one wonders if the Fed would have had to keep doing more if they didn't keep promising to do less.  If history is any guide, they will eventually reverse course.  But that same history would suggest that they need to see conditions deteriorate further before they act.

Wonkbook: Will there be another debt-ceiling fight?WaPo

Rating Agencies Differ on Impact of Debt-Ceiling Deadline WSJ

Six Ways Debt Ceiling Brinkmanship Can Hurt the U.S. WSJ
Washington’s repeated brawls over raising the federal borrowing limit all ended without causing economic disasters. They haven't ended without economic damage altogether.

Emerging Market Rout May Signal ‘Sudden Stop’: Cutting Research BB
Brazil, South Africa, Turkey and Ukraine are the emerging markets most at risk of a “sudden stop,” in the view of Morgan Stanley. That’s defined as a halt or even a reversal in capital flows into a country, slashing access to international financial markets for an extended period and weakening the economy.

Have EM outflows only just begun?alphaville / FT
SocGen’s cross-asset research team believes so, especially given the Fed doesn’t appear to care about the EM sell-off. If it keeps going, balance of payments issues could emerge as a result

EM central bankers: guiders, reactors and mavericksbeyondbrics / FT

Post-panic paranoia plottedalphaville / FT
The European / Global banks most exposed to the more fragile EM markets are the Large Cap Spanish Banks…EM stock markets in countries with current account deficits have fared far worse that those with surpluses this year…Nobody seems to care about DM current accounts right now, but you never know – that could change.

Capital controls or cooperation?Pieria
It is not beyond the bounds of possibility that, faced with currency collapse and/or unsustainable rises in debt burdens, some countries may resort to direct restrictions on capital movements. Would this be an appropriate course of action?"

It’s the hot money, stupidalphaville / FT
All of which begs one question. Should some of the blame associated with what happens when false friends leave be directed to those who sent them your way to begin with?

Emerging Market turmoil and the canary in the coal mineMoney Matters

Työpaikat tai palkat – mankeli odottaaJan Hurri / TalSa
Sisäinen devalvaatio ei onnistunut viime lamassa, eikä sen onnistuminen ole nytkään varmaa. Se on kuitenkin tiedossa, että Suomen kustannuspaine on kasvanut eikä hellittänyt. Moni meitä rujommin kriisistä kärsinyt maa on pakosta karsinut kuluja, ja on ainakin tilastoissa kohentanut kilpailukykyään. Suomelta maali karkaa, mutta ennen pitkää meilläkin mankeliin joutuvat työpaikat tai palkat tai molemmat.

Myytti Saksan sisäisestä devalvaatiostaTyhmyri
Elvis ilmestyi paahtoleivässä

Elinkeinoelämä ja euron puolustusTyhmyri
mutta nythän on jo jonkun aikaa kuulunut elinkeinoelämän ääniä euroa vastaan