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Wednesday, January 28

28th Jan - Fed repeats "patient", adds "international"

Stephen King, chief economist of HSBC on Twitter:

I once told some Bavarian investors that they were responsible for the €zone crisis. They looked at me in stunned disbelief! It's amazing to think that creditors believe they are in no way responsible for the €zone crisis.

Germans struggle to understand that a large BoP surplus means their savings are used to acquire foreign rather than domestic assets and that those foreign assets may, at times, offer the wrong mix of risk & reward. Creditors and debtors [are] two sides of same coin.

The history of debt crises suggests that what begins as a crisis for the debtors eventually becomes a crisis for the creditors. When creditors realise debtors can't repay, the creditors will be worse off. How? Choose from restructuring, bailout, default, devaluation.

My comment to George Magnus, ex-chief economist of UBS
The fathers of the European monetary union thought that building a monetary union would later lead to it becoming an optimal currency area. And that building a monetary union would later lead to a political union after a series of crises.

But the monetary union did not turn into an optimal currency area, and the current crisis is so large that it has stopped movement toward a closer political union.

Previously on MoreLiver’s:

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The EU new fiscal flexibility guidelines: An assessmentvoxeu
New guidelines on Stability and Growth Pact do not change the existing rules, but work to improve transparency, encourage fiscal discipline, and underline that fiscal adjustments should vary based on the circumstances a country finds itself to be in. But by operating within to the existing rules, the new guidelines conform to austerity bias and complexity of implementation.

The Eurozone Needs More than QEProject Syndicate
Martin Feldstein: Although the European Central Bank has launched a larger-than-expected program of quantitative easing, even its advocates fear that it may not be enough to boost real incomes, reduce unemployment, and lower governments’ debt-to-GDP ratios. They are right to be afraid.

Restructure EU banks to facilitate resolutionvoxeu
Systemically important banks should reorganise into a ‘holding company’ structure, where the parent company holds unsecured term debt sufficient to cover losses at its operating financial subsidiaries. This would facilitate a ‘single point of entry’ resolution procedure, minimising the risk of creditor runs and destructive ring-fencing by national regulators.

Denmark: Central bank not finished cuttingDanske Bank

Why did the Swiss franc spike? Blame the localsFT

How Draghi's Perfect Timing Will Save EuropeBB
Bond buying + improving economy = potential bonanza for markets

Yanis Varoufakis – Tyler Cowen
Greece says No to EU statement on Russia – euobserver
Greece Begins The Great Pivot Toward RussiaZH
Greeks rebuff EU call for more Russia sanctions – FT
Greece's Coming Clash in Europe Starts With Russia Sanctions – BB
Why Greece needs debt relief – Philippe Legrain
Greek PM Tsipras names anti-austerity cabinet, port sale halted – Reuters
George Magnus: Can Syriza get what it wants from Brussels? – Prospect
Martin Wolf: Greek debt and a default of statesmanship – FT
Greek Bonds, Stocks Decline as New Government Takes Charge – BB
Greek Stocks Crash, Bonds Plummet, Banks Have Worst Day Ever – ZH
The Greek Economy: Which Way Forward? – CEPR
Greek Credit Risk Spikes, Default Probability Tops 70% - ZH
Take the money and run – The Economist
Thinking About the New Greek Crisis – Krugman / NYT

While We Wait For Yet Another FOMC Statement... – Tim Duy
Fed Decision Day Guide: From Rate Patience to Too-Low Inflation – BB
What to Watch at This Week’s Fed Meeting – WSJ
Unchanged Fed statement and EURUSD ping-pong? – TradingFloor
Parsing the Fed: How the Statement Changed – WSJ

Daily Central BanksWSJ
Hilsenrath’s Take: China’s Local Government Debt Could Be Source of Trouble * Hard Choices on Easy Money Lie Ahead for Fed Chief * What to Watch at This Week’s Fed Meeting * Singapore Pulls Trigger in Deflation Fight * Swiss to Compensate Workers Hurt by Franc Strength

Daily MacroWSJ
Currency wars are the name of the game. Singapore’s central bank is just the latest to focus on foreign exchange as a policy tool in a time of falling inflation and weakening growth. With everyone seemingly looking to cut their exchange rates, upward pressure builds on the dollar, especially with the Federal Reserve now on a tightening bias.

Danske DailyDanske Bank

Fed to stick to mid-2015 hike scenario * Unchanged Fed message to push Treasury yields up * USD loses steam on data disappointments

European Developments Steal Spotlight from Today's Fed StatementMarc to Market

Daily ShotTradingFloor
Greece might blame Germany for its indebtness * Isolating Russia could have severe effects for both sides * Strong US Dollar harms US exporters

All Eyes On Yellen Who Better Not Disappoint

FX UpdateTradingFloor
The USD rally has paused ahead of today’s FOMC meeting, and it won’t take much for the new monetary policy statement to surprise on the hawkish side. Also, RBNZ up shortly after the FOMC.

From the floorTradingFloor
The big story from the floor today is the looming Federal Open Market Committee meeting, but there remain a few other developments that are stealing some of its thunder. One of these, of course, is Apple's record-setting fourth-quarter, which saw the company beat 100 analysts' expectations.

EM FX: I see fireNordea
Most EM currencies except the RUB have stabilised a bit during January. Commodity currencies have had some support from a stabilisation of oil prices in the second half of January, while most European EM currencies have benefitted from the ECB’s QE announcement.

Weekly Bond Update: The Fed's the only hawk leftTradingFloor
Michael Boye: ECB joins the monetary easing crowd * Rate surprises from a raft of central banks * US October rate hike looks premature to us

Fed ehtii ennen Englannin keskuspankkia | Tänään saadaan Saksan ja Ranskan kuluttajien luottamusindeksit | USA:n kestotavaratilaukset heikkenivät joulukuussa

Velka-armahdus loi Saksan talousihmeen Jan Hurri / TalSa
Saksan sodanjälkeinen talousihme onnistui pitkälti samoilla keinoilla, joita Kreikan vaalit voittanut Syriza-puolue haluaa Kreikan avuksi. Maailmansodan hävittyään Saksa sai kontolleen jättimäiset sotavelat, mutta sittemmin se sai voittajavaltioilta suuren osan veloistaan anteeksi ja jättimäisen investointiohjelman kaupan päälle.

Keskustan viisi tavoitetta Suomelle – Keskusta
Juha Sipilä: Suomen tilanteen oikaisemiseksi tarvitaan kymmenen vuotta – Verkkouutiset
Sipilä vaatii 2 miljardin säästöjä - Stubb: Ei riitä – IL
Stubb: Kaikkien tuloluokkien veroja laskettava – HS
Stubb jäi EK:n puoluejohtajapaneelissa yksin konsensuskritiikissä – YLE
Häkämies: Työn verotus Suomessa Ruotsia kireämpää monissa tuloluokissa – Verkkouutiset
Stubb keskustalle: Hyviä ehdotuksia, mutta miten ne rahoitetaan? – Verkkouutiset
Olli Immonen: Keskustan ehdotus palkkakilpailua maahanmuuttajien kanssa – Verkkouutiset
Neljän suuren tentti: Veropolitiikka erottaa pääministeriehdokkaita – Verkkouutiset 

Pelaako Putin Kreikka-kortin EU:ta vastaan? – IS
Syrizan talouspolitiikka – Alusta!
Mitä Syrizan onnistuminen tarkoittaa? – Politiikasta

Vanhat asunnot halpenivat koko maassa – TalSa
Osakeasuntojen hinnat laskivat neljännellä vuosineljänneksellä – Tilastokeskus
Konkurssien määrä väheni 5,7 prosenttia vuonna 2014 – Tilastokeskus