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Monday, August 18

18th Aug - Europe blamed

Previously on MoreLiver’s:

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Draghi has few legal ways to fix the euroFT
By pussyfooting around with liquidity policies instead of acting on inflation, the ECB has signalled that it is safe to bet against the inflation target

Why is Krugman so forgiving of the ECB?The Money Illusion

Rate hike expectations in the UK shift further into 2015Sober Look
When combined with the current geopolitical uncertainty, the UK inflation report should keep the BOE on hold well into 2015. The fear of rate normalization has been pervasive across major central banks and dovish attitudes are likely to prevail at Jackson Hole (see quote). Once again, the longer the central banks delay the start of this process, the more difficult and disruptive the exit will ultimately be.

Balanced-budget fundamentalismMainly Macro
“European policymakers are doing everything they can to stop recovery taking off, so they should not be surprised if there is in fact no take-off. It is balanced-budget fundamentalism, and it has become religious.”

Blogs review: The forever recessionBruegel
As the recovery takes hold in the US, Europe appears stuck in a never-ending slump. With the ECB systematically undershooting its inflation target and recent signs that inflation expectations could become de-anchored, the bulk of commentators in the blogosphere are again calling for more monetary actions. Noticeably, some have completely lost hope in the ability of the European institutions to turn this situation around and are now calling for countries to simply break away from the EMU trap.

The Italian Runaway TrainA Fistful of Euros
With markets continuing to finance debt levels that any official study will soon have to recognize as unsustainable lack of proactive policies from the ECB will only fuel concerns that the size of the pill may become just too big for the bank to persuade Germany comfortably swallow, leaving the specter of private sector involvement to once more rear its ugly head.

Talk about being disappointed…By the BundesbankMarket Monetarist

The Bulgarian Banking DisasterForbes

Euro area international trade in goods surplus €16.8 bn – Eurostat
Euro area trade surplus narrowed in June – TradingFloor
Spanish trade deficit narrowed in June – TradingFloor

10-year JGB yields near 0.5% - Sober Look
The only way to rationalize buying 10-yr JGBs at 0.5% is believing that Japan will have a deflationary environment over the next decade and/or the central bank will absorb (or even monetize) the bulk of new issue bonds.

Daily Central Banks WSJ
Hilsenrath’s Take: Global Central Bankers Out of Sync, Head to Jackson Hole * Fed Bets It Won’t Wait Too Long on Rates * Kocherlakota Says Fed Still Missing Inflation, Jobs Goals * Carney Says U.K. Rate Rise Doesn’t Need Wage Growth * China’s Effort to Clean Up its Banking System is Gaining Momentum

Daily MacroWSJ
Geopolitical concerns continue to be the driving factor in markets, as the conflict in Ukraine replaces that in Iraq as the problem du jour. But as we get toward the end of the week, expect the names “Yellen” and “Draghi” to get more and more mention among analysts, due to speak at the Kansas City Fed’s annual monetary policy jamboree in Jackson Hole, Wyoming, which kicks off on Friday.

Expect No Fresh Signals from Yellen and Draghi at Jackson HoleMarc to Market
Week ahead: 1) Minutes from BoE, Fed and RBA 2) Aug purchasing manager indices from Europe 3) Geopolitics of Ukraine, Gaza, Iraq 4) Jackson Hole a non-event

Before Jackson Hole, roundup of Yellen’s quotes on the labor marketFT

When Packing for Jackson Hole, Include These Economic ReportsWSJ
Inflation Is Warming Up * Housing Still Has Problems *

At Jackson Hole, Central Banks Moving in Different DirectionsWSJ

There are two types of central bankers . . .The Money Illusion
Britain is starting to catch up to Germany in the jobs/growth stakes.   Some people who are sympathetic to my ideas wonder why I wasn’t tougher on Ben Bernanke.  Perhaps because I see his role as being similar to Carney’s—pushing the Fed to move as far as he could, given the institutional inertia.  At the other extreme you have the ECB, and also the new head of the Indian central bank

Secular Stagnation, Meet DataEvan Soltas
If real interest rates are going to be low for a long period of time, as secular stagnation implies, then the market should say that, and the way it would is through forward rates. So what do we see?... Markets anticipate that real interest rates will return slowly to one percent. For reference, prior to the recession, these rates averaged about 1.5 percent, at least on an ex-post basis.

Global macroeconomic imbalances are shrinking (and not)FT
There’s a flows vs stock issue here, and the improvement in the former hasn’t been enough to bring about an improvement in the latter

Dollar is Mostly Firmer, with Sterling as Notable ExceptionMarc to Market

Mitä aiot, Vladimir Vladimirovitš?Nordea
Ukrainan kriisi pitkittyy ja viimeisetkin Venäjän taloutta kannatelleet tekijät, luotonannon kasvu ja yksityinen kulutus, ovat murenemassa. Talous ei kuitenkaan määrittele Venäjän politiikkaa.