27th Jul - W/E: The World

Here is a collection of some of this week's more interesting articles on Europe, US and Asia.

Previously on MoreLiver’s:

Monday: Continued Ukrainian hiccups

W/E: Off-Topic & Finnish

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EUROPE

Juncker’s new start for Europe – Bruegel

A brief summary of past Bruegel research as it relates to Juncker’s new agenda for the European Commission

Europe’s Options – Project Syndicate

Michael J. Boskin: The EU has three broad options as it confronts its economic malaise and increasingly frustrated voters. Unfortunately, the most likely option – business as usual, with improvised fixes to mini-crises – is the one least likely to deliver the growth that Europe desperately needs.

The Transatlantic Growth Gap – Project Syndicate

Daniel Gros: The key to the economic-performance gap between the US and the EU in the last three years is the resilience of private consumption by American households. How were US households able to reduce their debt burden during a period of high unemployment and almost no wage gains while sustaining consumption growth?

Stalled recovery leaves Europe defenceless against economic shock from Russia – The Telegraph

Stagnation is automatically causing debt ratios to spiral upwards yet again across a large part of the currency bloc

Partial corporate tax harmonisation in the EU – VoxEU.org

Tax harmonisation has been controversial since the establishment of the European Economic Community, and corporation tax proposals are currently on the table in the EU. Although tax competition can be beneficial, tax harmonisation could curb tax competition that leads to the under-provision of public goods or to burden-shifting from mobile to immobile tax bases. As yet, no agreement has been reached on any ambitious harmonisation plan for mobile tax bases. This column explores the possibility of implementing partial tax harmonisation for corporate taxation and the taxation of the banking sector.

Europe’s Surplus of Stagnation – Project Syndicate

So we will have to rely on Draghi and quantitative easing to save the euro from Germany. Money will have to fall from the proverbial helicopter before Germany shows any willingness to reduce its surplus.

A ‘crowding out’ theory of the Eurozone crisis – VoxEU.org

By 2010, Eurozone periphery countries had faced severe debt problems and a falling credit to the private sector. This column proposes a theory to interpret these events. Governments can discriminate in favour of domestic creditors and public debts trade in secondary markets. This leads to a shift in the debt holdings from foreign to domestic residents. Finally, private financial frictions crowd out private investment, potentially reducing growth.

EU Competences Review sets out need for reform – finally – Open Europe

Balance of Competences round-up: Part II – Open Europe

  EUROPEAN CENTRAL BANK

Draghi Faces German Hard Line on Avoiding Deflation – BB

Simon Derrick, chief market strategist at Bank of New York Mellon Corp, sees parallels with the early 1990s when Germany refused to surrender its hard money dogma even as it transmitted pain elsewhere.

Draghi Safety Net Becomes Blindfold to Risk as Bonds Soar – BB

Two years since European Central Bank President Mario Draghi’s historic promise to defend his currency bloc, there are signs bond investors are growing too complacent under his protection.

Current ECB programs create QE-like environment, setting up moral hazards – Sober Look

A recent report from Natixis argues that the combination of the TLTRO lending and the OMT backstop program creates conditions that are nearly identical to quantitative easing.

Fact of the week: Lithuania changes the ECB’s voting system – Bruegel

Membership threshold triggers change in the ECB’s Governing Council’s voting system, which starts rotating.

  IMF ON EUROPE

Progress Towards External Adjustment in the Euro Area Periphery and the Baltics – IMF

Rebalancing in the Euro Area and Cyclicality of Current Account Adjustments – IMF

Adjustment in Euro Area Deficit Countries: Progress, Challenges, and Policies – IMF

Euro Area: An Unbalanced Rebalancing? – IMF

  UKRAINE / RUSSIA

Putin’s Tipping Point? – Project Syndicate

World’s Biggest Wealth Fund Reviews $8 Billion Russian Holdings – BB

The EU’s confusing course on Russian sanctions – FT

EU to Mull Russian Sanctions as Black Box Analysis Starts – BB

Leaked Russia sanctions memo: the details – FT

Leaked paper: EU options on 'stage three' Russia sanctions – euobserver

Europe Sleeps as Putin Waits – BB

Russia, MH17 and the West: A web of lies – The Economist

Russian central bank hikes to 8.0% - smells of desperation – Danske Bank

Russia Unexpectedly Raises Key Rate Third Time on Ukraine – BB

Europe Unveils Preliminary Sanctions Against Russia – ZH

Van Rompuy’s letter on Russia: the complete text – FT

  MACRO NUMBERS

Government debt increased to 93.9% of GDP in euro area – Eurostat

Seasonally adjusted government deficit almost stable at 2.7% of GDP in the euro area – Eurostat

Periphery Business Cycle Monitor – Danske Bank

British house prices grow at slowest rate in over a year in July – Reuters

London House Prices Stagnate as Hometrack Sees Rapid Cooling – BB

June Monetary developments in the euro area – ECB

Positive news for euro activity from bank lending figures – Danske Bank

Euro zone private sector loans contract less in June –ECB – Reuters

U.K. GDP Exceeds Pre-Crisis Peak – WSJ

UK economy recovers output lost to crisis, +0.8 % in second quarter – Reuters

U.K. Overcomes Record Slump With 0.8% Quarterly Growth – BB

Welcome End to U.K.’s GDP Obsession – WSJ

U.K. Recovery Flattered by Population Growth – WSJ

Britain’s economy is finally bigger than it was in 2008. What took so long? – WaPo

German consumer morale at highest level in more than 7.5 years – Reuters

Ifo Business Climate Index Continues to Fall – CESifo

Geopolitical crises help push German business morale to lowest since Oct – Reuters

German Business Climate Drops in Sign of Economic Risks – BB

UNITED STATES

  FEDERAL RESERVE

The Fed in Denial – Project Syndicate

Simon Johnson: Senior US Federal Reserve officials seem to have slipped back into their pre-2008 ways, ignoring concerns about dangerous financial-sector behavior. That is not only unfortunate; it is also dangerous, because the Fed’s political position is much more precarious than its leadership seems to realize.

Fighting the Fed – Project Syndicate

The US Federal Reserve fears that a proposed law requiring it to use a formal rule to guide monetary policy would limit its independence, while the bill’s proponents argue that it would produce more predictable growth with low inflation. Who is right?

Should the Fed have to play by a rule? – CBS

Many economists oppose forcing the Fed to adopt a rule. For example, the current proposal gets no support at all in this survey of top economists conducted by the University of Chicago Booth School. They believe constrained discretion is a better policy.

Fed Worries About Effects of Its New Interest Rate Tool on Markets – WSJ

http://blogs.wsj.com/economics/2014/07/22/fed-worries-about-effects-of-its-new-interest-rate-tool-on-markets/?mod=blogmod

Flattening Yield Curve – Short Side of the Long

http://shortsideoflong.com/2014/07/flattening-yield-curve/

IMF Lays Out Own Fed Exit Strategy – WSJ

Fed officials are expected to continue discussions about what combination of interest-rate tools to use when they decide it’s time to raise borrowing costs across the economy, and the IMF this week offered a few suggestions.

Fed Forward Guidance Works, Sometimes Better Than Others: IMF – WSJ

The Federal Reserve’s various efforts at honing its low-rates message have been successful at keeping borrowing costs down by giving investors greater clarity about the likely path of policy, according to the International Monetary Fund.

However, the policy’s effectiveness has varied depending on the type of guidance used

  IMF ARTICLE IV CONSULTATION

Press release – IMF

IMF Executive Board Concludes Article IV Consultation – IMF

Video: Concerted efforts needed to boost long-term growth – IMF

IMF Survey Magazine Article – IMF

IMF Cuts GDP From 2.0% To 1.7%, Winter Blamed – ZH

  MACRO NUMBERS

Real Retail Sales Per Capita at September 2004 levels – dshort

Key Measures Show Inflation mostly at or below Fed's Target in June – Calculated Risk

U.S. housing turning the corner, inflation creeping up – Reuters

Two Measures of Inflation and Fed Policy – dshort

U.S. durable goods orders rebound, core capital goods rise – Reuters

Orders for U.S. Capital Goods Rose After Revised May Drop – BB

ASIA

China 2014 growth likely to slip to 24-year low, reserve ratio cut seen – Reuters

China's economy probably will grow at its slowest pace in 24 years this year, expanding by 7.4 percent, as government stimulus measures fail to fully offset the drag from a sluggish housing market, a Reuters poll showed.

Japan consumer inflation eases in June as weak yen impact fades – Reuters

Slower Japan Inflation Highlights BOJ’s Reflation Task – BB

BOJ Beat: Japan Price Target Looks Difficult – WSJ

Japan’s annual inflation rate in June was stable enough that it is unlikely to trigger a fresh round of monetary stimulus by the Bank of Japan. But the slight fall in consumer price gains worried some economists that the central bank is destined to miss its 2% inflation target next year

China's bad loan ratio rises, adding to bank sector worries – Reuters