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Sunday, October 12

12th Oct - W/E: Linkfest

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How to break Europe’s economic taboos without shattering its unionFT
Reza Moghadam: Skip the stages of grief and accept a comprehensive solution now, writes Reza Moghadam

The eurozone’s low inflation problemFT
Lorenzo Bini Smaghi: It is now widely recognized that the eurozone suffers from a lack of aggregate demand.

Europanic 2.0  Krugman / NYT
Not that long ago the austerians who had dictated macro policy in the euro area were strutting around, proclaiming victory on the basis of a modest uptick in growth. Then inflation plunged and the eurozone economy began to sputter — and perhaps more important, everyone looked at the fundamentals again and realized that the situation remains extremely dire.

Experts react: EU progress reports 2014Europp / LSE
On 8 October, the European Commission released its annual reports on the progress achieved by EU candidate and potential candidate countries. Experts on the seven countries for which reports were issued give their responses below to the key points raised for each state.

Record poll surge gives Ukip 25%Daily Mail
David Cameron remains the most trusted political leader in the poll, but Nigel Farage is on track to win 128 seats at the General Election. The Tories could lose more than 100 seats allowing in Ed Miliband. Polls suggest the public want Cameron and Farage to run the country

Progress through crisis?ECB
Proceedings of the conference for the 20th anniversary of the establishment of the European Monetary Institute

Germany needs to fix its economic modelFT
Berlin has the potential to contribute more to reviving global growth

Schaeuble Says Germany Will Shift Spending to InvestmentBB
Germany’s response to a “clear weakening” of the economy will be a shift in public spending toward investments and away from government consumption.

If recession strikes, will Germany embrace QE?Nordea
No. But does it matter? By contrast, a recession would lead to at least a passive loosening of fiscal policy

France Squares Off With Brussels Budget Hawks — the Fight So FarWSJ
PM Valls urges Europe to respect France, and its budgetReuters
French Prime Minister Manuel Valls said on Saturday that it is up to France to decide on its budget and that Paris should be treated with respect by its European partners.

Ratings agency S&P cuts France's outlook to negative from stableCNBC

French jihadists: Self-serviceThe Economist
France worries about its would-be jihadists, especially those who return

Bungle Bungle: Italy's Failed Economic Turnaround Spiegel
Ever since Matteo Renzi became Italy's new prime minister, officials in Berlin and Brussels have had newfound belief that Italy's deep-seated economic problems are being tackled. But that won't happen until the country stops deceiving itself.

Italy and reform: Renzi revisitedThe Economist
The Italian prime minister stakes his credibility on the passage of big reforms—but faces plenty of doubters

Fraught Greek bailout exit to test euro zone resilienceReuters
Greece is not yet giving European leaders sleepless nights again, but as the euro zone's problem child approaches the end of its second international bailout, political uncertainty in Athens is set to test the currency area's resilience.

Finland’s Lost AAA Rating Prompts Premier Plea for ActionBB
Finnish Prime Minister Alexander Stubb said lawmakers must abandon their political differences and draft a set of measures to help cut debt after the Nordic country was stripped of its AAA rating.

Finland: Rating king slaughteredNordea
The rating agency Standard & Poor’s delivered the latest blow to the already ailing Finnish economy yesterday, when it stripped Finland of its precious AAA rating. Finnish bonds should feel more pressure on the back of the move, but the losses are likely to end up being contained for now. Because of the weak momentum in the Finnish economy, we remain negative on Finnish bonds.

Dam breaks in Europe as deflation fears wash over ECB rhetoricThe Telegraph
Ambrose Evans-Pritchard: 'We are reaching the end game in Europe. If they don’t launch real QE soon, the consequences are too awful to contemplate,' warns RBS

Draghi Says Growing ECB Balance Sheet Is Last Stimulus Tool LeftBB
Draghi said expanding the ECB’s balance sheet is the last monetary tool left to revive inflation although there is no target for how much it might be increased.

It’s Draghi versus Weidmann on ECB QEFT
Gavyn Davies: Any shift to sovereign bond purchases would run into fundamental objections from the Bundesbank, requiring (at the very least) safeguards to ensure that there is no monetary financing of budget deficits, especially in countries with unsustainable public debt positions. That would certainly complicate any programme of sovereign bond purchases very considerably.

The end of US dominance?TradingFloor
Henry Kissinger's new book, World Order, tackles the sorely-needed discussion on how the world is moving towards anti-globalisation and away from US dominance. The outcome could be a US dollar?utm_medium=tf4-feed&utm_source=extract&utm_reader=feedly

Fed’s Tarullo: global downside risks are policy factor – Reuters
Fed Can’t Keep Falling Short of Inflation Goal, Says Evans – WSJ
Fed Aim Off Target as Inflation Descends Near Danger Zone – BB
Fed Officials Ready to Slow Tightening If World Growth Disappoints – BB

China Central Bank Official: No Major Stimulus Needed in ‘Foreseeable Future’WSJ

Top fund manager’s secret to successMarketWatch
Thomas Dorsey is not a household name but is widely tracked by Wall Street

The Real Great Rotation: Bond Funds Have Biggest Inflow On RecordZH

Currencies: Buck to the futureThe Economist

IMF Panel Sees Growing Risks in Weaker-Than Expected RecoverBB
World economies warn of global risks, call for bold actionReuters
Grand Central: Special IMF/World Bank EditionWSJ
IMF says countries must reform to succeedFT

Debt: Global Economy’s Damnation or Salvation?WSJ

Helicopters, redemption, and the target Worthwhile

Emerging Market Volatility: Lessons from The Taper TantrumIMF
Starting in May 2013, when the Federal Reserve publicly discussed its plans for tapering unconventional monetary policies, these emerging markets have experienced financial turbulence at the same that their domestic economic activity has slowed. This paper examines their experiences and policy responses and draws broad policy lessons.

What the rest of the world can learn from Aussie banksFT
The more a bank focuses on taking in deposits and making loans to households and businesses, the cheaper it is to run and the less money its employees make.

Why Weren’t Alarm Bells Ringing?The New York Review of Books
Paul Krugman reviews Martin Wolf’s book The Shifts and the Shocks: What We’ve Learned—and Have Still to Learn—from the Financial Crisis7

How Much is A Lot? Historical Evidence on the Size of Fiscal AdjustmentsIMF
The sizeable fiscal consolidation required to stabilize the debt-to-GDP ratios in several countries in the aftermath of the global crisis raises a crucial question on its feasibility. To answer this question, we rely on historical evidence from a sample of 91 adjustment episodes of countries during 1945–2012 that needed and wanted to adjust in order to stabilize debt to GDP. We find that, in at least half the cases, countries improved their cyclically adjusted primary balances by close to 5 percent of GDP. We also observe that, while countries typically make substantial efforts to stabilize debt, once this objective is achieved, they tend to ease their primary balances and do not necessarily get back to their initial lower debt-to-GDP ratio. We find that consolidations tended to be larger when the initial deficit was high and adjustment efforts were sustained over time. Fiscal adjustments also tended to be larger when accompanied by an easing of monetary conditions and, to a lesser extent, by an improvement in credit conditions.

More asymmetries: Is Keynesian economics left wing?Mainly Macro
Keynesian theory is not left wing, because it is not about market failure - it is just about how the macroeconomy works. On the other hand anti-Keynesian views are often politically motivated, because the pivotal role the state plays in managing the macroeconomy does not fit the ideology.

Government debt and monetary policyFT
A new paper by several Harvard economists, including former Treasury Secretary Larry Summers, argues that a little more than a third of the impact of the Fed’s asset purchase programmes was “offset” by the Treasury’s decision to lengthen the maturity of its outstanding bonds:

Bond markets help lower
Governments benefit from inflation since the real value of public debt falls but inflation is a tax on money holders. Bond holders are aware of this fact and act accordingly. This column explores empirically the role of bond markets in keeping inflation low. The existence of long, nominal, local-currency bonds lowers inflation by three to four percentage points. The results hold for inflation-targeting countries, and other monetary regimes do not have the same effects.

How To Be Efficient: Dan Ariely’s 6 New Secrets To Managing Your TimeBakadesuyo

Inside the Koch Brothers' Toxic EmpireRolling Stone

Practice Does Not Make PerfectSlate
We are not all created equal where our genes and abilities are concerned.

Freedom vs. Stability Are Dictators Worse than Anarchy?Spiegel
Although there is always reason to celebrate the toppling of an autocrat, the outcome of the Iraq war and the rise of Islamic State have demonstrated in horrific terms that the alternative can be even worse.

The Greatest Space Hack EverPopular Science
How duct tape and tube socks saved three astronauts

Saksa rohmuaa muilta kasvua yhä ahnaamminJan Hurri / TalSa
Saksa ei ole senkään vertaa talousveturi kuin se on joskus ollut. Se on kasvurohmu, jonka vaihtotaseen hurja ylijäämä pakottaa muita maita yhä raskaampiin alijäämiin. Euro ja EKP tukevat tätä rohmupolitiikkaa. Maailmantaloudelle tämä tietää tasapainohäiriöitä.

Kilpailukyky – väärät tuotteet vai väärä hinta?Henri Myllyniemi / US

Suomen luottoluokitus – ah ma nauran, kun kuvani kauniin peilissäin näänTyhmyri

Onko valuutalla merkitystä teknologiatuotteiden tapauksessa – mutta entäs KiinaTyhmyri

Kansalta pyöveliarvio Stubbin hallitukselle - "kylmää vettä niskaan"IL

Näkökulma: Pääministeri totuuden edessäIL
Kokoomuslaiset vielä uskovat, demarit ovat jo toivonsa heittäneet