Here
are the ”best” from my posts of the ending week. Last week’s edition here.
Follow ‘MoreLiver’ on
Twitter
EUROPE
The ECB is irrelevant and the Euro is a failure – Pieria
Frances Coppola: The
Euro is a failed experiment. We should not waste any more effort trying to make
it work. It is time to consign it to the dust of history.
EUROPEAN SEMESTER: MACROECONOMIC IMBALANCES
Press release: In-depth reviews – Europa
Memo: In-depth reviews – Europa
Communication to the European Parliament – Europa
Macroeconomic Imbalance Procedure – Europa
EU Says Italy Faces a ‘Major
Challenge’ in Reducing Debt – BB
EU warns Italy is in economic
trouble, France to miss deficit
targets – Reuters
EUROPEAN
CENTRAL BANK
ECB Said to
Experiment With Governing Council Meeting Minutes – BB
The ECB has started to draft trial minutes of its Governing Council
meetings and will experiment with different formats in coming months, according
to two euro-region central-bank officials.
What
Does the ECB’s ‘Sterilization’ Program Do? – WSJ
One option that has gained ground in recent weeks is for the ECB to
suspend its nearly four-year-old policy of draining funds from euro-zone banks
on a weekly basis, a process known as sterilization.
Euro
Area — “deflation” versus “lowflation” – iMFdirect
So far there is no sign of classic deflation, i.e., of widespread,
self-feeding, price declines. But even ultra low inflation can be problematic
for the euro area as a whole and for financially stressed countries, where it
implies higher real debt stocks and real interest rates, less relative price
adjustment, and greater unemployment. Along with Japan’s experience, which
saw deflation worm itself into the system, this argues for a more pre-emptive
approach by the ECB.
All talk, no action
from ECB disappoints markets – TradingFloor
Juhani Huopainen: The European Central Bank's meeting left rates
unchanged and did not introduce any new easing measures to combat deflationary
threats. Instead, Draghi explained why its monetary tools would not work. The markets took note and took the
EURUSD higher.
The face behind the
euro
– FT
This time with inflation at 1 per cent there was a belief that Draghi would
make some sort of compromise gesture while keeping rates on hold, even if it
amounted to SMP tokenism. But, nope, he disappointed… despite the ECB’s own
2016 inflation forecast coming in well below 2 per cent. Doing nothing in the
face of that isn’t exactly reassuring…Given how far off piste the ECB is, the
central bank could easily justify a policy step at any time. Maybe the exchange
rate will provide some sort of trigger but who on earth knows.
UNITED STATES
Seven
things you absolutely need to know about Obama’s budget – WaPo
.
Five
basic questions about Obama’s budget that you were not afraid to ask – WaPo
Jobs Report
Highlight: From Bad to Merely Sluggish – WSJ
Economists React:
Hints of Spring in February Jobs Report? – WSJ
FEDERAL
RESERVE
Economists warn of
more market 'tantrums' as U.S. Fed tightens – Reuters
Turbulence on Wall Street will likely return when the Federal Reserve
decides to hike interest rates, top U.S. economists said in a
paper that warned the Fed's huge stimulus program could have harmful
consequences.
The Fed and Financial
Stability: Three Questions – WSJ
A lasting consequence of the global financial crisis is the expansion of
the Fed’s mandate: It is now one of the chief guardians of financial stability.
There is, obviously, good reason to think a lot more about maintaining
financial stability. What’s not so obvious is how to do that.
Fed
Talk Shifts to Higher Rates – Tim Duy’s Fed Watch
The timing of the first rate hike and the subsequent tightening is dependent
upon the consensus on overshooting. If
wage growth starts to accelerate, the Fed's focus will shift from fears of too
much to too little slack. If they are
concerned about overshooting, they will need to accelerate the tightening time
line. Where Yellen ultimately falls on the issue is
critical.
EMERGING
Emerging Economies on
Their Own – Project Syndicate
José Antonio Ocampo: Both ECB President Mario Draghi and US Federal
Reserve Chair Janet Yellen recently asserted that their policy decisions would
account only for domestic conditions. In other words, emerging economies –
though subject to significant spillover effects from advanced-economy monetary
policy – are on their own.
Bernanke Urges Emerging Markets to Prepare
for End of Fed Stimulus – WSJ
Former Fed Chairman
Bernanke urged emerging-market countries to do more to protect themselves from
the impact of an eventual end to the Fed's economic stimulus efforts.
OTHER
Robert Shiller says
markets have become more prone to bubbles – Institutional Investor
The Nobel laureate contends that investors need to study human nature
and history, and avoid falling victim to groupthink.
The
Great Divide over Market Efficiency – Institutional Investor
The Nobel committee
decided to split the economic prize between Eugene Fama and Robert Shiller –
and that’s okay.
FINNISH
Eurotalous kiristää vyötä kummastakin päästä – Jan
Hurri / TalSa
Euroalue toipuu
talouskriisistä muita talousmahteja hitaammin ja vaisummin. Tämä ei ole sattuma
vaan rahaliiton rakennevikojen ja talouspolitiikan syytä. Näin sanoo
eurotalouteen erikoistunut tutkija. Hän patistaa euromaita korjaamaan
virheensä. Keinoja on kaksi: liittovaltio tai jäähyväiset eurolle.
Kruunun merkitys Ruotsin menestykselle – Roger
Wessman
Finlands sak är svår – Lars Calmfors / DN
I vanliga fall har valet av valutasystem ingen större betydelse, däremot
i kritiska lägen. Finland hade haft lättare
att möta sin strukturkris om man inte gått över till euron.
Jouko Marttila & Reagan – MoreLiver’s
Kansantaloudellinen aikakauskirja 1/2014 – Taloustieteellinen
Yhdistys
Rupla ja Suomen vienti – Roger Wessman
High
yieldistä ??meli-nimimerkille – MoreLiver’s
Talouden kylmä sota kävisi kaikille kalliiksi – Jan
Hurri / TalSa
Venäjän painostaminen talouspakottein on
vaikeaa, ja yritys kääntyy herkästi pakottajia itseään vastaan. Länsi tarvitsee
Venäjän energiaa kipeämmin kuin Venäjä lännen rahoja. Talouden kylmä sota
kävisi kalliiksi kaikille, mutta raskaimmin kärsisivät Länsi-Euroopan
energiajuopot uhoajat.
Vaihtotaseylijäämä sopii taantuvalle
taloudelle – Roger
Wessman