Previously on MoreLiver’s:
16-Nov Weekender: Weekly Support (updated!)
EUROPE
More delays
for Greece’s bailout, strikes across Europe, and will France be the next victim of austerity
politics?
Merkel has decided to pay up for the euro – FT
The best
way to look at what is happening in the eurozone is as a classic negotiation
between creditor and insolvent debtors. Germany knows that the debtors cannot pay
in full but before it agrees to a writedown, it is determined to extract
guarantees that history will not repeat itself. Ms Merkel has decided to pay
up, but in return she needs assurances sufficient to convince German voters
that this is not just a first instalment.
Demographics suggest low for long – Nordea
(pdf)
The European
working age population will decline in coming decades. The pattern in Germany is similar to that of Japan, whose demographic problems are
well known. The declining population is expected to lead to lower growth, which
limits the scope of grow-ing out of the current debt burden. An ageing
population also points to low interest rates.
Why France could become the biggest danger to Europe’s single currency. The threat of
the euro’s collapse has abated for the moment, but putting the single currency
right will involve years of pain.
The euro
zone needs a banking union, but this isn’t it
Eurogeddon – The
Economist
Two bold writers
on what needs to be done to fix the euro
Which
country holds the key to the euro's fate? Which of the 17 members will turn out
to be the "pivot state" - the country around which the future of the
eurozone will turn?
PIIGS
Spain’s’ only three options
for recovery – Fabius Maximus
The
Euro-crisis began in March 2010, and yet its causes and basic elements remain
widely misunderstood — including, based on their public statements, by many of Europe’s leaders. Here Prof Pettis gives a clear explanation of
what’s happening, and of Spain’s only three ways out of this
crisis.
The first
hints of optimism are appearing in Europe’s troubled Club Med countries. They are not to
be found in unemployment or growth figures, but mostly in the mouths of
ministers.
Is the EZ’s “cunning plan” for Greece credible? – Kiron
Sarkar / The Big Picture
The meeting
of the EZ finance ministers next Tuesday (20th November) to “settle” on a deal
for Greece is certainly a “must be watched “event. The market consensus
suggests that some kind of deal will be done. Well, that may be the case, but
let me just raise the following.
ECB
In short,
Draghi did not acknowledge that the ECB faces huge political constraints and
that the European crisis is far from over.
Here Is Why The ECB Should Be Freaking Out – ZH
The current
EURUSD rate implies a balance-sheet ratio of 1.08x (see chart above) - which
therefore means the market expects the ECB to expand its balance sheet by
EUR740bn; this just happens to be the sum-total of Spanish sovereign debt
OLD BUT
RELEVANT
Eurozone summits: Moments of truth or waste of
time? (22-Oct) – BBC
UNITED STATES
Analysis: Early "fiscal cliff" talks
show possible path to deal – Reuters
President
Barack Obama and top lawmakers agreed on Friday to work on a framework for
reforming the U.S. tax code and
"entitlement" programs next year, in what could be an important first
step in averting the upcoming 'fiscal cliff."
Household formation to boost housing starts -
assuming government funding stays intact – Sober
Look
China Persists In Refusing To Buy US Paper As Foreign LTM Purchases Of
Treasurys Plunge To Three Year Lows – ZH
in
September, the month that Bernanke launched QEternity, for the first time in
2012, foreigners were net sellers of US Treasurys, dumping a total of $17.3
billion in paper, with foreign official institutions selling $919 million and
non-official "Other Foreigners" offloading a whopping $18.3 billion:
a record amount for this data series
FED
Expect more from the Fed — and soon – The
A-list / FT
Mohamed El-Erian:
officials are considering additional measures, and are confused about what they
should do next.
How big will the Fed’s QE3 end up being? – MacroScope
/ Reuters
Minutes
from the Federal Reserve’s October meeting point to solid support within the
central bank for ongoing monetary easing via asset purchases well into 2013.
Understanding the Fed’s Primary Purpose – PragCap
It allows
the money supply to be elastic and based almost entirely on a market based
demand structure, but has elements of a nationalized banking system that help
create oversight and order in a market that would otherwise be fragmented. Unfortunately, it’s all the other stuff the
Fed does that gets all the negative press and takes the spotlight off this
rather ingenious system design.
INDUSTRIAL PRODUCTION
-0.4% on
Sandy Effect – BB
Is October
Slide Another Storm-Related Victim? – The
Capital Spectator
ASIA
China's New Leaders (Agenda) stratfor
The data in
the coming months will demonstrate whether China’s financing model has indeed
shifted away from normal bank lending. If this is the case, analysts need to
consider the consequences of the shift. Responsibility for supporting the
investment heavy growth model would have then shifted to private and retail
investors. With it would come the risks associated with continued lending after
overinvestment has already become problematic.
China shuffles its leadership, putting a
“princeling” in command
China may be just a few years away from
becoming the world’s leading economic power, and America’s strategic centrality may be on
the wane. But America still makes people dream, and, as
Barack Obama's reelection showed, its emotional hold on the world remains
unique.
A key
question for China's new leaders over the next decade
is whether official growth targets will be enough to preserve social cohesion
as further economic and political reforms are gradually implemented. As the
economic pie grows less rapidly, greater social justice, it seems, will be
crucial to maintaining stability.
Deng
Xiaoping launched China’s rise by reforming its economy and
opening the country to the West. With this opening, however, came a
long-running, state-sponsored espionage program to acquire advanced technology
and accelerate the growth of Beijing's civil and military industries.
But what was tolerable for a developing economy is no longer acceptable when it
is a potential military competitor.