Stay tuned
for more Weekender-madness soon!
Previously on MoreLiver’s
29.9. Weekender: Weekly Support (week in review, next one previewed)
EUROPE
Dad, you were right – FT
The structural foundations of the eurozone
project were indeed flawed and the current crisis is forcing leaders to correct
them
Europe’s Austerity Madness – Krugman
/ NYT
Suddenly, Spain and Greece are being racked by
strikes and huge demonstrations. The public in these countries is, in effect,
saying that it has reached its limit: With unemployment at Great Depression
levels and with erstwhile middle-class workers reduced to picking through
garbage in search of food, austerity has already gone too far. And this means
that there may not be a deal after all.
Federalism or death! – Le
Point / presseurop
For French philosopher
Bernard-Henri Lévy, Europe has no option but advance towards the simple goal of political union.
If not, the euro will die.
Wynne Godley and the Eurozone’s Eventual
Sovereign Crisis – EconoMonitor
Steve Keen dug up a 1992 post by Wynne Godley
on the London Review of Books that offers sharp insight into the fundamental problems
with the euro. “Godley’s remarks, no doubt seen as extremist when he uttered
them,” Keen writes, “have proven to be utterly prophetic.”
What Remains: On the European Union – The
Nation
This essay is adapted from Mark Mazower’s
Governing the World: The History of an Idea, coming this month from the Penguin
Press.
BizDaily: The EU and Democracy – BBC
(mp3)
European governments have become unpopular -
exceptionally so in some cases - as they pursue austerity policies. Can we
reconcile policies that face widespread opposition with democratic political
principles? Indeed are democratic systems themselves in any kind of danger?
Andrew Walker debates with Manuel de la Rocha, an economic analyst at the
Fudación Alternativas in Madrid, Philippe Maniere, CEO of Footprint Consulting
and author of a book 'Le pays où la vie est plus dure' which looks at how how
France has to open up to globalisation and in London Dr Sabine Selchow from the
London School of Economics. (25 min)
Greek Bad Loans Climb To Record 25% Of Total – ZH
Dutch housing market declines, high household
indebtedness, and rising unemployment could spark bankruptcies – Sober
Look
External Imbalances in the Euro Area – IMF
The paper examines the extent to which current
account imbalances of euro area countries are related to intra-euro area
factors and to external trade shocks. We argue that the traditional
explanations for the rising imbalances are correct, but are incomplete. We
uncover a large impact of declines in export competitiveness and asymmetric
trade developments vis-à-vis the rest of the world –in particular vis-à-vis China, Central and Eastern Europe, and oil exporters—on
the external balance of euro area debtor countries. While current account
imbalances of euro area deficit countries vis-à-vis the rest of the world
increased, they were financed mostly by intra-euro area capital inflows (in
particular by the purchase of government and financial institutions’
securities, and cross-border interbank lending) which permitted external
imbalances to grow over time.
Karolina Ekholm, Deputy Governor of the
Sveriges Riksbank, at a meeting at Handelsbanken, Stockholm, 27 September 2012.
Euro-zone inflation still stubbornly high – Nordea
French budget relying too much on tax increases
and economic growth
– Nordea
EUROPE: BANKS
Capital shortages, Basel III, and credit crunches – Free
exchange / The Economist
The European Banking Authority (EBA) released
its second report monitoring compliance with Basel III regulations on September 27. The
big finding is that the aggregate European banking sector needs about 338 billion euros of additional equity
capital to comply with the rules. While firms have several more years to adjust
their balance sheets and raise funds, this seems like a tall order, especially
given what has happened to bank share prices:
European repo is on the rise – alphaville
/ FT
US money market funds are still cautious about
building up exposure to European banks. However, according to Fitch’s latest
Macro Credit Research report on Friday, they seem much more confident about
building up exposure on secured terms.
EUROPE: CENTRAL BANKING
Meet the World's Worst Central Banker – The
Atlantic
Bundesbank chief Jens Weidmann gets basic facts
wrong and thinks his colleagues are the devil.
The ECB’s Magic Wand – bruegel
Criticism
towards OTM program is missing the EFSF / ESM program requirement, which has to
be accepted by all the member countries. Thus, ECB is not stepping over
national parliamentary process.
ECB move weakens impact of ratings agencies for
banks – Reuters
A little-noticed move by the ECB is likely to
encourage Spain to apply for a bailout and lessen the impact of ratings agency
downgrades on euro zone debt.
Accorinti and others
v ECB – alphaville
/ FT
Italian retail
investors in Greek sovereign bonds filed a case way back in May to take the
European Central Bank to court over its seniority in March’s debt
restructuring. We don’t know what their chances are.
Financial stability challenges for EU acceding
and candidate countries: making financial systems more resilient in a
challenging environment , by IRC Expert Group of the ESCB – ECB (pdf)
ECB publishes the results of the Euro Money
Market Survey 2012 –
ECB
Publication Euro Money Market Survey 2012 – ECB
(pdf)
EUROPE: SPAIN
My answer to the question is no. Eventually I
think it will, but not soon. Here’s why:
Spanish Banks Beat Expectations – WSJ
Bailout Costs Seen Less Than Feared As Audit
Sets Stage for Europe Funds
A week of Spain-related excitement is not over
just yet – alphaville
/ FT
UBS strategist Justin Knight rightly points out
“the areas of concern are now becoming numerous” and it’s making the question
of when Spain might request aid increasingly complex.
Those Spanish stress
test results – alphaville
/ FT
Seven (many already
nationalised) lenders, comprising 37 per cent of Spanish banks’ loan
portfolios, failed and need more capital. Seven lenders passed. It’s almost
€60bn, as initial estimates had suggested in June.
Spanish banks need €59bn – Nordea
Spanish Bank Capital Shortfall As
"Good" As Expected – ZH
The macroeconomic
scenarios were laughable (stocks in 2013 -0.4%, -5% worst case. Home prices
2013 -2.8%, -4.5% worst case). As a
reminder in August, the ECB provided Spanish banks with €412 billion in
funding. That is 7 times as much as the adverse case liquidity needs.
How Oliver Wyman Manipulated The Spanish Bank
Bailout Analysis – ZH
Spain lost billions of euros in capital for a 13th consecutive month in July
amid investor fears about its troubled and shrinking economy, although the rate
of outflows slowed from the previous month.
USA
Long-term real yields hit another record low, punishing US savers – Sober Look
The Data Don’t Support That The U.S. Bank Bailouts
Were Better Than the Swedish Model – naked
capitalism
USA: FED’s QE3
HSBC: Don’t say printing! – alphaville
/ FT
The Global fixed income strategy team at HSBC
*believe* they’ve come up with a non-consensus view on the effects of QEternity
The expectations bluff – alphaville
/ FT
“What’s he thinking with QEternity? It’s so
inflationary. AGHH!” But what if, as Dario Perkins at Lombard Street Research wonders this week, that’s exactly the reaction Bernanke was
hoping for?
Winners and Losers Since QE3 – ZH
Silver and
Gold are the big winners from the 9/12 (pre-Bernanke) close… While Treasuries
did well, the real winner in bond-land was the MBS market…QE-sensitive stock
sectors have been sold.
Attempting to measure what QE3 will and won’t
do – MacroScope
/ Reuters
Deutsche Bank economists have tried to quantify
what effect QE3 is likely to have on the U.S. economy.
USA: HOUSING
The Housing Market: For Real or Fakeout? – Cognitive
Concord
Housing Was at the Root of the Great
Depression, Too – View
/ BB
ASIA
The Emerging Headache of QE3 – Caixin Online
The Fed's latest quantitative easing may cause
problems for countries grappling with inflation and should prompt China to press ahead with
economic reforms
That mission is to turn China into a consumer
society, rather than an export-driven one. It is also to turn China from a mere
manufacturer and producer nation, to a creator nation. And in a close third,
they will oversea a new China, one that is becoming
more open to the world.
Coy Chinese elephant
reveals ever slimming ankle – alphaville
/ FT
China New Export New Orders Decline At Fastest
Pace in 42 Months; China's Precarious Rebalancing Act – Mish’s