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EUROPE
Europe’s New Year’s resolution should be
to implement policies to reduce conflicts in neighboring countries, and to
increase growth and jobs
Kohl’s
Euro – Bruegel
The great
challenge today is to undo the legacy of Kohl’s rhetoric. Breaking up the euro
is too costly. Thus the task is to weaken the ties that bind while preserving
the peace and unity
Marco
Buti: Lacklustre investment in the Eurozone: The policy response – vox
Weak
investment is a key macroeconomic problem in the Eurozone, and the new European
Commission has proposed an ‘Investment Plan’ to complement existing policy
initiatives. In this column, the Commission’s Chief Economist explains the key
rationale behind the Investment Plan.
It is no
exaggeration to say that the EU is currently both internally and externally
threatened by reactionary nationalism, which is why the next euro crisis will
come in the form of a political crisis. So why are Europe's leaders still not willing to
change their policies, which quite obviously have made a bad situation worse?
RUSSIA
Why the
Russian oil crash could threaten Putin with a palace coup – The
Guardian
With a
growing economic crisis and less money to share among the oligarchs, there is
talk of splits in the Kremlin elite that could undermine the president’s power
Ruble
Defense Cuts Russian Reserves by $15.7 Billion in Week – BB
The reserves fell to $398.9 billion
in the week through Dec. 19, a 22 percent drop from January
Ruble
Rallies 34% After Biggest Russian Intervention In 5 Years – ZH
OTHER CRISIS COUNTRIES
Is Italy becoming the Eurozone’s most
anti-euro country? –
Open
Europe
A growing
number of political parties in Italy are publicly voicing opposition to
the euro, and a growing number of Italians think the single currency is bad for
their country. Will Matteo Renzi be forced to adopt a tougher anti-austerity
stance in Europe to avoid losing voters to the
anti-euro camp at home?
Today,
Greece offers an opportunity to modestly test the eurozone’s pressure points
Greek
clash with the Eurozone would be like a self-devouring Ouroboros – TradingFloor
Greek Prime
Minister Antonis Samaras has failed to win enough backing today for his nominee
for President. This brings Greece a step closer to early elections,
and a likely victory by the anti-austerity party Syriza. So, on December 29, if
the voting for a new President tips Greece into new elections, be prepared to
liquidate Greek assets.
Greek PM
offers 2015 election once bailout talks complete – Reuters
EUROPEAN CENTRAL BANK
The
dangerous ambitions of the European Central Bank – Paul
De Grauwe
It is
important that the ECB reduces its ambition to rule the politicians. Failure to
do so will greatly harm the ECB.
ECB QE.
To mutualise or not?
– Tony
Yates
A choice
about whether the ECB chooses to put its own balance sheet at risk in the event
that purchases of member state sovereign debt imply losses. Or whether to delegate the task of purchase
to member central banks.
Combatting
Eurozone deflation: QE for the people – vox
Eurozone
deflation is likely to become reality when the annual inflation figure for 2014
is announced in January. This column argues that the ECB should develop a
strategy that works in the Eurozone’s unique financial setting, instead of
following the Fed’s lead. The author proposes that the ECB should pursue
‘quantitative easing for the people’, such as sending each adult citizen a €500
cheque.
UNITED STATES
FEDERAL RESERVE
Asked
and Answered. Mostly.
– Tim
Duy’s Fed Watch
Final
result is data dependent, but nothing at the moment is dissuading the Fed from
their intention to hike rates in the middle of 2015.
Stephen
S. Roach: The Fed Sets Another Trap – Project
Syndicate
The US
Federal Reserve is headed down a familiar – and highly dangerous – path.
Steeped in denial over its past mistakes, the Fed is pursuing the same
incremental policy approach that helped set the stage for the financial crisis
of 2008-2009.
Yellen’s
First Year at Fed: A Remarkably Steady Course – NYT
MACRO NUMBERS
Fed
Tightening On Deck After Q3 GDP Soars To 5% On Revisions, Highest Since 2003 – ZH
Here Is The
Reason For The "Surge" In Q3 GDP – ZH
U.S.
economy grew in Q3 at a rate of 5%, the fastest in more than a decade – WaPo
UMich
Consumer Confidence Near 8-Year High, Inflation Expectations Hit 4-Year Lows – ZH
ASIA
China Said to Plan Waiving Reserve
Requirement for Some Deposits – BB
China to Ease Rules to Boost Lending – WSJ
Beijing Eases Again, Sets Non-Bank Deposit Reserve To
Zero – ZH
China Stocks Rise Most in Three Weeks as
Machinery Shares Surge – BB
Japan 10-Year Yield Falls to Record;
Topix Declines as Yen Gains – BB
OTHER
If
Everyone Agrees, What Could Go Wrong? – Marc
to Market
The most
important events in 2014 were not anticipated.
Review: Ten
Economic Questions for 2014 – Calculated
Risk
Ten
Economic Questions for 2015 – Calculated
Risk
Global View:
Climate Change in Perspective – BB
QuickTake:
Watching for Bubbles
– BB
QuickTake:
The Volcker Rule – BB
How a
Simple Idea to Rein In Banks Got Supersized
Five
Interesting Posts to Whet Your Political Economy Appetite – Marc
to Market
ECONOMICS
Banking has
recently proven much more fragile than expected. This column argues that the
Basel III regulatory response overlooks the interactions between different
kinds of prudential policies, and the link between prudential policy and
competition policy. Capital and liquidity requirements are partially
substitutable, so an increase in one requirement should generally be
accompanied by a decrease in the other. Increased competitive pressure calls
for tighter solvency requirements, whereas increased disclosure requirements or
the introduction of public signals may require tighter liquidity requirements.
My macro
toolkit – Scott Sumner
A proof
of the need for fiscal policy to escape the liquidity trap – Worthwhile
DEBATE
John
Cohcrane: An Autopsy for the Keynesians – WSJ
We were
warned that the 2013 sequester meant a recession. Instead, unemployment came
down faster than expected.
Commie
commie commie commie commie K-Keynesian – Noah
Smith
I suspect
that much of the motivation for John Cochrane to write this latest blast comes
from his ongoing personal feud with Paul Krugman… an article which has a few
good points buried deep inside it, but which is mostly wrong.
Botching
the Keynesian Autopsy
– Cullen Roche
Cochrane says
that Keynesian ideas have failed since the crisis. He goes on to cite a series of remarkably
weak strawman arguments.
The
gullible economist –
Frances
Coppola
I think
John Cochrane has lost his marbles. Or maybe his dispute with Paul Krugman has
blown his brains. Anyway, he has written one of the worst op-eds I have ever
seen.
FINNISH
Tutkimus sen todisti – leijonanosa karsastaa pakkoruotsia
– PS
SDP leikkaamassa
pienituloisten verotusta? – Henri
Myllyniemi / US
Lahjonta-aikeistaan on EU:ssa syytä kertoa itse
poliisille – Henri
Myllyniemi / US
Mutinaa talouden shokeista ja joustotarpeesta –
kummastelua psykologisista syistä joustotarpeesta luopumiselle – Tyhmyri
Poliittinen kaaos – Henri Myllyniemi / US
Euromaiden politiikasta on tulossa suunnatonta * Kreikassa
ennennäkemätön poliittinen teatteri
Perintövero, sukupolvenvaihdokset ja uutisointi – Valtteri
Aaltonen / US
Suomelle irlantilaisia opetuksia? – Peter
Nyberg
Löytyykö Suomesta aivan lähiaikoina päättäjiä joiden
sanoihin ja tekoihin luotetaan kyllin paljon ja kauan tällaisen matokuurin
onnistuneeksi toteuttamiseksi?