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Saturday, August 30

31st Aug - W/E: Best of the Week

The more interesting articles from the ending week's posts. Last week’s edition here

European data weakened, even more than was expected, while US data improved - also even more than was expected. After ECB's Draghi gave THE speech at Jackson Hole a week ago, eyes are now firmly on the ECB's next steps. The central bank will probably sit and wait to see how the TLTRO is picked up in early September and do more preparations to get the ABS-program up and running.

Germany sees opposed to more unconventional monetary tricks - so that's it, then. Until things get so bad that even the Germans drop their pretense.

Voices against austerity in Italy and France, so France's government remixed and Merkel's new toyboy is Spanish. The lesson is that unless you drive the agenda of Germany, you will not get top jobs in the EU and you are labeled as liberal, anti-European and whatever. 

Equity markets at all-time-high in US, and even Germany bounced nicely, but toward the end of the week Ukraine soured the moods.

Italy asks EU to exclude infrastructure projects from deficits: minister – Reuters
Italy must cut growth forecast, economy minister tells Corriere – BB

French economy minister urges alternative to German austerity – Reuters
The French crisis reflects the eurozone’s woes – FT
Hollande Replaces Cabinet as EU Austerity Rebellion Stirs – BB
Hollande says euro overvalued, wants euro zone growth summitReuters
10-year Spain and Germany to record lows – BB

Merkel backs Guindos as eurogroup chair – FT

Europe Bank Cleanup Driving $1.72 Trillion of Asset Sales – BB
Bank lending rises, but not to Europe, to AsiaMarc to Market

The death of diplomacy in UkraineTradingFloor
Nadia Kazakova: Call it an incursion or call it an invasion, but the presence of Russian troops in Ukraine now seems to be a fact on the ground. Nato may baulk at calling it an invasion but Ukraine is becoming increasingly aware that diplomacy has not worked and is likely to have to tough it out alone.

ECB easing - will it work?
1: ECB's easing measures revisitedDanske Bank
2: Liquidity and money market rates – Danske Bank
3: Carry trades and 'hot potato' effect – Danske Bank
4: Impact on growth and inflationDanske Bank
5: ECB's policy going forwardDanske Bank

Europe's Real Borrowing CostsZH
Not only is demand for credit weak in the periphery as the balance sheet recession rolls on, but "real" borrowing costs are at near-record highs... stark contrast between the cost of funding the banks (low) and Governments (historically low today) and real businesses (high).

Draghi doesn’t understand what caused the eurozone double-dip The Money Illusion
The ECB tightened monetary policy sharply in 2011.  This caused NGDP growth to plunge, and the eurozone fell into a double-dip recession

Can Mr. Draghi Get Germany To Spend?WSJ
The question now is whether Germans are more allergic to massive QE than they are to relaxing their own budget constraints?

Can Mario Draghi save the euro again?WaPo
Draghi only had to say "whatever it takes" to end Europe's financial crisis. But Draghi will actually have to do whatever it takes to end Europe's economic one. That's what he's trying to do now, but the eurocrats might not let him. They have their rules, after all.

Are markets front-running the ECB, or are things just bad?TradingFloor
If the ECB is about to save the euro area with quantitative easing and "whatever it takes", why have inflation expectations continued falling? I believe the worsening economic outlook and the Ukrainian crisis are to blame for the recent market moves.

ECB says selects Blackrock to help develop ABS plan – BB
ECB’s Coeure Says ABS Push May Fail Unless States Back Debt – BB
ECB's Draghi has been 'overinterpreted', says Germany's Schaeuble – BB
Schaeuble Sees Draghi’s Instruments for Growth ExhaustedBB

EZ bank lending: reduced headwind to GDP growth – Danske Bank

Germany: The motor sputters – Nordea
German consumer confidence drops for the first time in 20 months – TradingFloor
German Unemployment Rises as Risks to Economy Build – BB
Euro area unemployment rate at 11.5% - Eurostat
Euro area annual inflation down to 0.3% - Eurostat

Surge in Durables Orders Affirms U.S. Factory Pickup – BB
Consumer Confidence Rises Again – dshort
Home Prices in 20 U.S. Cities Rose in June at a Slower Pace – BB
U.S. Q2 growth much stronger; jobless claims fall again – Reuters
Pending home sales point to stronger market – Reuters

Special: Jackson HoleMoreLiver’s

Buiter on helicopter dropsFT
There always exists – even in a permanent liquidity trap – a combined monetary and fiscal policy action that boosts private demand – in principle without limit. Deflation, ‘lowflation’ and secular stagnation are therefore unnecessary. They are policy choices.

The rules of central banking are made to be brokenFT
Barry Eichengreen: Central bankers should draw line on past

Identifying excessive credit growth and leverageECB
By using credit to GDP gaps, credit to GDP ratios and credit growth rates, as well as real estate variables in addition to a set of other conditioning variables, the model is designed to not only predict banking crises, but also to give an indication on which macro-prudential policy instrument would be best suited to address specific vulnerabilities.

How Hedge Funds Are Making Money In 2014ZH

EU on arvoyhteisöTyhmyri

Onko rahapoliittisen keskustelun käymisessä mitään järkeä?Tyhmyri

Koskenkylä: "Jos Saksa lopettaa tekohengityksen, se on euron tarun loppu"IS
Esko Ahon "pelottelu" vuodelta 1998 kävi toteen

Eurotalous yhä varmemmin Japanin tielläJan Hurri / TalSa
Euroalueella on nyt takanaan puolet ensimmäisestä talouden kadotetusta vuosikymmenestä. Enää ei liene epäselvää, onko eurotalous Japanin tiellä vai ei. Hämärää on enää, kuinka pitkä ja kuoppainen kinttupolku meitä odottaa.

Masokistinen talouspolitiikka johtaa talousanemiaanJan Hurri / TalSa
Hallitus tasapainoilee budjettiriihen linjauksia muka yllättyneenä talouden heikosta yleiskunnosta. Talouden anemian ei kuitenkaan pitäisi olla yllätys, sillä se on seurausta EU:n ja Suomenkin varta vasten harjoittamasta masokistisesta talouspolitiikasta. Samaa talouden temppurataa on kuitenkin tarkoitus jatkaa.

Suomen Natoon liittymistä vauhditettavaJukka Hankamäki

Navigaattori: Niukka vaalivoitto heikentää Ruotsin kruunuaNordea
Muita aiheita: Draghi vauhditti euron heikentymistä * Odotukset EKP:n lisätoimista painavat eurokorkoja * Raakaöljyn tuotantonäkymät vakautuvat * Osakkeiden arvostus saa tukea osinkotuotosta * Rupla kelluu vapaasti jo ensi vuonna * Korot ennätysmatalalla * Vuokrasopimuksen inflaatiosuojaus * Euroalueen inflaatio putoaa kohti nollaa

Pääkirjoitus: Suomi joutui pakkopaitaanIL
Euro suunniteltiin tietoisesti väärin, sanoo Varman Risto Murto.

EU ja talouden näkymätBrysselin kone / YLE
Varman toimitusjohtaja Risto Murto puhuu EU:n ja Suomen talouden näkymistä.