20th Sep - US Close: Austerity Fail

Here we go, Italy:

*revises  2012 GDP to -2.4% from -1.2%

*revises 2013 GDP to -0.2% from +0.5%

*raises 2012 deficit target to 2.6% from 1.7%

*revises 2013 deficit to 1.6% of GDP from 0.5%

*sees 2012 debt at 126.4% of GDP, 2013 debt at 127.1%

For full coverage of the two most important developments, see ECB Watch and Fed Extra.

Previously on MoreLiver’s:

20.9. US Open

20.9 EU Open

19.9. US Close

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Roundups and Commentary

News – Between The Hedges

Markets – Between The Hedges

Recap – Global Macro Trading

The Closer – alphaville / FT

Roundup – A View From My Screens

Tomorrow’s Tape – WSJ

Weaker Chinese, Japanese and EZ economic data – Kiron Sarkar / The Big Picture

Price of Oranges in the USSR and Treasuries in the USA – TF Market Advisors

Tyler’s European Summary – ZH

  Europe Red As Italy Continues Post-Short-Sale-Ban Slide

Tyler's US Summary – ZH

  Credit Underperforms As Stocks End Unch (At Highs)

Reference

TV: Bloomberg, BBC

Debt crisis: live – The Telegraph

The Euro Crisis Blog – WSJ

Tracking Europe’s Debt Crisis – NYT

FX Options Analytics – Saxo Bank

European 10yr Yields and Spreads – MTS indices

EUROPE

Some Brief Thoughts on European Federalism – Marc to Market

Federalism is not just missing at the euro-area level, but it does not seem particularly strong within countries.  The crisis is so profound that increasingly the only relationship that matters is creditor and debtor.

France's economic conditions dim; Eurozone core growth in trouble – Sober Look

Hollande is beginning to talk about a taboo subject for France's left-leaning politicians - labor reforms. But given the difficulties involved in implementing such reforms, especially in France (reforms may make it easier for companies to lay off workers - a difficult subject in France), it may be years before competitiveness improves and manufacturing returns.

Portugal’s austerity measures: The tipping point – The Economist

How much austerity is too much?

S&P report assesses Finland's growth prospects – Reuters

Finland benefits from multiple credit strengths, including high levels of wealth, education, and labor participation, and a relatively flexible economy * We think the rising risks to near-term growth are complicated by longer-term structural issues * A major departure from the current path of fiscal consolidation, if not combined with growth-enhancing structural reforms, could put pressure on our sovereign ratings on Finland

Creative Bailout Thinking, Spanish Style – Open Europe

Rajoy may have to make a decision fairly soon. The markets do not like prolonged uncertainty, and the first signs of impatience are already visible.

It was vital to break the adverse feedback loop between bank and sovereign risk – BIS (pdf)

Interview with Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, in Les Échos, 17 September 2012.

EU funds theft greater than reported – euobserver

EU funds fraud is considerably higher than the €600 million reported by member states in 2010. “The extent of the illicit activities that lead to losses in the EU budget is really shocking […] we assume that the real figure is considerably higher,” EU justice commissioner Viviane Reding told euro deputies in the civil liberty committee on Thursday

ECB's own budgetary discipline not inspiring confidence – Open Europe

Awkward moment at the ECB when they realised that the bank's new Frankfurt headquarters, currently under construction and due to be completed in 2014, will come in significantly over budget.

USA

The Kocherlakota Rule – alphaville / FT

The important point here is that there is another, perhaps unexpected supporter of conditionality-based easing, if one more sensitive to inflation than the dove wing of the FOMC. And this also seems like another sign that concentrating on the expectations channel (conditionality, inflation tolerance) alongside the portfolio balance channel (asset purchases) has made it easier for Bernanke to lock in support for his policies into the future.

Cliffhanger – The Economist

Ben Bernanke has done his bit to help the American economy. Now the politicians must do theirs.

Even by the standards of a weak recovery, America’s economy has looked frail lately. Growth has sunk below 2%. Unemployment is stuck above 8%. Factory activity seems to be shrinking.

The Short Run is Short – Eli Dourado

Around 40 percent of the unemployed have been unemployed for six months or longer. And the mean duration of unemployment is even longer, around 40 weeks, which means that the distribution has a high-duration tail. Now, do you mean to tell me that four years into the recession, for people who have been unemployed for six months, a year, or even longer, that their wage demands are sticky? This seems implausible.

Fiscal Cliff? The Earnings Cliff Is Already Here! – EconMatters

Durable goods orders track the S&P closely, and are rolling over.  The fiscal cliff is already starting to cause a retrenchment.

Why The 'Clinton' Recovery Is Unrepeatable – ZH

OTHER

Quantitative impact study results published by the Basel Committee – BIS

the average common equity Tier 1 capital ratio (CET1) of Group 1 banks was 7.7%, as compared with the Basel III minimum requirement of 4.5%. In order for all Group 1 banks to reach the 4.5% minimum, an increase of €11.9 billion CET1 would be required. The overall shortfall increases to €374.1 billion to achieve a CET1 target level of 7.0%

EMEA Weekly, Week 39 – Danske Bank (pdf)

IN FINNISH

Eva: Suomen suora riski euron hajoamisesta 89 miljardia euroa – HS

’EU:n ajolähtö – Kriisiunionista yhteisvastuun unioniin – EVA

koko raportti pdf-muodossa

Varautukaa maksamaan entistä enemmän – varmoja rahantekoautomaatteja veronmaksajien kukkarolla – tyhmyri