This weekend's economics-section is huge: both UK and US are moving towards changing their monetary policies, while the fiscal cliff, general uncertainty over the recovery and Europe's continuing trouble caused a flood of articles.
Previously on MoreLiver’s:
MONETARY POLICY
Mervyn King Speech at
Economic Club of NY – The
Big Picture
How soon is now, UK NGDP targeting
edition – alphaville
/ FT
Monetary Policy
Innovations – mainly
macro
It is always interesting to compare the Fed, ECB and
Bank of England. For both the Fed and ECB it has been quite a year for
innovation.
Central bankers are
saving the world because politicians won’t – Edgy
Optimist / Reuters
Guidance – Bank of Canada
Mark Carney, Governor of the Bank of Canada, 11-Dec-2012, Presented to CFA
Society Toronto
Conditional Inflation
Targeting in Effect – Econbrowser
FED
The Man Who Occupied the Fed: How Charles Evans
Saved the Recovery –
The
Atlantic
Chicago Fed president Charles Evans has gone from dissenter to
intellectual leader in just a year. The future of the recovery might be at
stake.
How risky is the Fed's major move? – Fortune
Mohamed A.
El-Erian: A bold and necessary move? Yes, but the Fed's growing activism has
limits and is ultimately inconsistent with the proper efficient functioning of
a market economy.
The Fed specifies an
unemployment threshold for raising rates – The
Economist
Low inflation and full employment have been statutory
goals of the Federal Reserve since 1977, but its officials have always felt
more comfortable with the first than the second.
Over-optimistic Fed may backtrack again on
forecasts – Reuters
Has the
Federal Reserve watched the U.S. recession and painfully slow
recovery through rose-colored glasses?
Negotiations
over the fiscal cliff appear to have stalled.
Barack Obama must do more than avoid an economic
abyss. He has a chance to fix America’s
finances
The fiscal cliff: On
the edge – The
Economist
What the cliff means, and why America’s deficit
woes are so intractable
FISCAL POLICY
Fiscal tightening + monetary stimulus =
‘borderline insanity’? – MacroScope
/ Reuters
It’s a
curious pattern being repeated around the industrialized world. Governments are
trying frantically to tighten their belts even as the monetary authorities
loosen their purse strings.
Politics Makes a
Comeback in Business – NYT
That was one of the persistent themes at an
invitation-only high-powered international conference about systemic risk in
the financial services convened by the Global Risk Institute
Some Thoughts on Fiscal Rules – mainly
macro
CAPITAL CONTROLS
The IMF’s Half Step – Project
Syndicate
The IMF now
recognizes that capital flows also bring risk, particularly in the form of
inward surges and sudden stops, which can cause a great deal of financial
instability. Unfortunately, the Fund’s new position on capital controls does
not go far enough, in at least three ways.
Global Capital Rules – Project
Syndicate
The IMF has now put its stamp of approval on capital
controls, thereby legitimizing the use of taxes and other restrictions on
cross-border financial flows. Now the task is to devise the traffic rules
needed in a world where different sovereigns regulate finance in diverse ways.
The multilateral approach to capital controls – voxeu.org
The IMF
recently endorsed capital controls as useful policy responses to certain
circumstances. This column explains the logic and the research that underpins
the shift.
BANKING
December 2012 Quarterly Review – BIS
Policy
measures and reduced short-term risks buoyed markets (all the files here)
Reverse contagion – Free
exchange / The Economist
The latest
q-review of the BIS shows that the turmoil in Europe can be blamed for a significant contraction in
cross-border lending to emerging markets since the middle of 2011. The biggest
victims are the peoples of Eastern Europe. Call it a case of reverse contagion
HSBC to Pay $1.9 Billion Fine for Money
Laundering – naked
capitalism
OTHER
What have the Romans ever done for us? – alphaville
/ FT
Defending the Romans – alphaville
/ FT
Goldman Sachs on
natural disasters, climate change and Justin Bieber (really) – alphaville
/ FT
The most compelling piece of evidence in our work is
the steep increase in the number of weather-related events in contrast to the
very small increase in geophysical events. If climate change is playing a role,
then this is exactly the pattern you would expect
IMF Research Bulletin Dec-2012 – IMF (pdf)
Market
Failures and Macroprudential Policy * Measurement Matters for House Price Indices
* Seven Questions on Turning Points of the Global Business Cycle * IMF Working
Papers
What Drives Target2 Balances? Evidence From a
Panel Analysis – SNB
(pdf)
The robot economy and the new rentier class – alphaville
/ FT
The financial cycle and macroeconomics: What
have we learnt? – BIS
Consumer credit trend remains the same; guess
who is doing all the borrowing? – Sober
Look
Much of the
gain is once again tied to loans for students who, limited by the soft jobs
market, continue to stay in school.
Nonsense nonsense
crisis – Free
exchange / The Economist
America and Europe face a
troubling demographic future. Declining birth rates will probably result in an
older population and a smaller share of the population working to pay for their
retirement. Does this necessary spell doom and gloom?
Claudio Borio on
the financial cycle – Free
exchange / The Economist
What is this "financial cycle"? While
"there is no consensus on the definition," according to Mr Borio, it
can be understood as a sequence of "self-reinforcing interactions between
perceptions of value and risk...which translate into booms followed by busts."
Barclays’ charts compare the current business cycle
with four prior ones: the mild recession/recovery episodes of 1991 and 2001 and
the deep V-shaped cycles of 1973 and 1981.
Jobs, Productivity and the Great Decoupling – Opinion
/ NYT
Add all these factors up, and the condition of U.S.
manufacturing looks more ominous than the standard story of high productivity
and resulting job losses.
The economic understanding underlying the Government’s
economic priority on deficit reduction without regard for investment – public
or private – has proven wrong along every line.
Many of Britain’s current
economic problems are the result of economic conditions these excessive
austerity policies themselves have caused.
(audio) ITB: Troubles Ahead? – BBC
(mp3)
In the
Balance takes on looming economic threats and financial deadlines. Manuela
Saragosa's guests ride right up to the edge of America's fiscal cliff and peer down into
the abyss. What's at stake for the rest of us? And is this a deadline that will
just keep coming back? Plus could Italy push the eurozone's debt crisis
back into first gear - and why it matters from Nigeria to China. And Colm O'Regan reflects on
whether a deadline is always what it seems. 25 minutes
MARKETS & TRADING
Goldman Sachs: Top Ten Market Themes for 2013 – The
Reformed Broker
Morgan Stanley’s EPS comparison charts
"Momentum Ignition" - The Market's
Parasitic 'Stop Hunt' Phenomenon Explained – ZH
CitiFX's 12 Charts Of
Christmas – ZH
Market failure – Buttonwood’s
/ The Economist
One of the
most mysterious market phenomena is momentum - the tendency for fast-rising
stocks to keep going up. How come such an obvious market anomaly is not
arbitraged away?
Research Review: Dividend Yield & Equity
Returns – The
Capital Spectator
Where Hedge Fund Mogul Steve Cohen Learned to
Trade – Businessweek
A Warning About That Guy Who Is Beating the
Market – NYT
Book Bits – The
Capital Spectator
Don Yacktman: A fund
manager's faith produces results – Fortune
Don Yacktman has led two of the world's
fastest-growing stock funds while helping his daughter recover from a
devastating stroke.
Malkiel: Cheap Money
Advice For The Wired – Index
Universe
The legend of passive investing is now chief
investment advisor of Wealthfront, a Silicon Valley-based financial advisory
firm that is serving up a dirt-cheap online approach to money management.
'Fund managers are worse than investment
bankers' – The
Guardian
Banking risk and compliance: 'We should have
let more of the banks fail' – The
Guardian
Machine Learning, Big Data, Deep Learning, Data
Mining, Statistics, Decision & Risk Analysis, Probability, Fuzzy Logic FAQ – William M. Briggs