Latest articles on Europe, US and Asia, + some longer background reading I've come across during the ending week.
Previously on MoreLiver’s:
EUROPE
Brussels blog round up for 24 – 30 November: A bailout in everything but name
for Greece, Europe splits on Palestine and no EU job for Tony Blair – europp
/ LSE
Private Wealth and European Solidarity – Project
Syndicate
A
little-discussed but crucial factor in the debate over wealth transfers from
Europe’s more economically sound north to its troubled south is the
relationship between public debt, GDP, and private wealth (households’ financial and
non-financial assets, minus their financial liabilities) – in particular, the
ratio of private wealth to GDP in the eurozone countries.
The most important number – Free exchange
/ The Economist
All it
takes is one government to decide that it has had enough. The more places that
have chronically underemployed workers as a large plurality of the adult
workforce, the more likely such decisions become. If that were to occur, all
the hard work European leaders have gone to to save the single currency would
probably be for nought.
(audio) The Eurozone's Design Failures: can they be
corrected? – LSE
Professor
Paul De Grauwe: The eurozone experiences an existential crisis. What can we do
about it? (direct mp3)
The closer
you read Willem Buiter's imperial uber-blick of the world economy, the more
astonishing it becomes. Citigroup's end of year forecast – Prospects for
Economies and Financial Markets in 2013 and Beyond – is in essence a celebration
of American revival and ascendancy. It sentences Europe to slow economic death.
Angela Merkel's politics of priority: Personal
vs People – Saxo
Angela
Merkel has done a fine job of balancing the needs of greater Europe versus the priorities of Germany. Some observers think she has taken
too hard a stance with the Southern European layabouts, but I say “baby you
aint seen nothin’ yet!”
Banking reform: Do we know what has to be done? – voxeu.org
The crisis
has revealed the vulnerabilities of the Eurozone financial sector and the
critical role the sector plays in the real economy. It also made it clear that
the Eurozone banking system needs fixing. But what reforms should we implement?
It is critical that much better legislation be both discussed and implemented
if we wish to properly regulate the financial sector. T
EFSF Conveniently Downgraded – Dealbreaker
EFSF, European Stability Mechanism Ratings Cut
by Moody’s – BB
EU
BUDGET
Member
states have refused the European Commission’s request for extra contributions
to cover the shortfall, causing talks over next year’s budget to collapse.
The European Union budget: Too timid by half – The
Economist
These
changes would cut EU spending by more than a quarter, make its distribution
fairer and do a lot more than the current budget to promote growth. If Europe’s crisis-weary leaders want to show
the world that they are serious about reform, what better place to start?
ECB
Leave "fairy world" behind, Draghi
tells euro zone – Reuters
The euro
zone's crisis is far from over and its members must tighten budgets and forge a
banking union to leave behind the "fairy world" that allowed problems
to grow, European Central Bank President Mario Draghi said on Friday.
Benoît
Cœuré, 1-Dec 2012
Pulling the OMT Trigger – Project
Syndicate
The ECB’s
decision in September to proceed with its “outright monetary transactions”
program to purchase distressed eurozone members’ government bonds has restored
financial calm to Europe. But vulnerable countries like Italy and Spain would be well advised to request
OMT intervention before it is desperately needed.
SPAIN
Spanish banks: Bail-out tapas – The
Economist
The IMF
reckons that house prices, which have slumped 30% from their peak, may fall
further given the stock of unsold homes and weak growth in household incomes.
Unemployment, already at about 25%, may rise to almost 27%, the OECD warned in
a separate report this week. The main course of bank restructuring may have
been served, but a sour postre (dessert) may still be on the menu.
The Greek
bond buy back is the main talking point in Europe and upon it rest the hard won agreement to
fund Greece so it can keep its creditor whole. Spanish
banks may quickly take the spotlight… The restructuring plans are more severe
than many market observers seem to appreciate.
It is difficult to see how it won't serve to be another headwind for the
Spanish economy.
GREECE
Finance Minister Wolfgang
Schäuble insisted on Tuesday that the new deal aimed at slashing Greece's debt load won't cost German taxpayers. It will, however, deny Germany billions in expected revenues. And the feared debt cut may be just around
a not-too-distant corner.
More Greek myths: The need to speak truth to
weakness – The
Economist
The IMF’s
toughest struggle has been to convince Germany and others that Greece cannot repay the money it owes.
Reckoning debt sustainability is an inexact science…Ms Lagarde made plain that,
unless Greece’s debt was cut back, the IMF would lend no
more money. Germany retorted that any haircut would be
illegal.
For the third time, European finance
ministers this week have put together a package of aid measures for Greece and assured Europeans that the country is now back on track to financial
health. But is it really? German commentators certainly don't think so.
Great Graphic: Trajectory of Greek Debt – Marc
to Market
The Stiffs and the Players – Krugman
/ NYT
QE through the looking glass – Free
exchange / The Economist
Bernanke’s structuralist concession – MacroScope
/ Reuters
Fed chief
quietly downgrades U.S. economic potential
Revenge of the Reality-Based Community – The
American Conservative
My life on
the Republican right—and how I saw it all go wrong.
ASIA
The World According to Xi – Project
Syndicate
With the
notable exceptions of Mao Zedong and Deng Xiaoping, China’s leaders have seldom imposed their
own personalities upon Chinese diplomacy. And yet, while Xi’s leadership style
will most likely continue in the tradition of his predecessors, his outlook and
worldview with surely be different.
China will significantly increase the
amount of energy it generates from nuclear sources over the next few years
http://blogs.wsj.com/chinarealtime/2012/11/29/no-vpn-no-problem-a-new-way-around-chinas-great-firewall/?mod=WSJBlog
While China's oil dealings with countries like Iran and Sudan receive global attention, its
budding relationship with Iraq may turn out to be the most
important.
While no
one should be surprised by the recent recovery in China's economic growth, the true
challenges lie in the medium and long term. Indeed, the current economic
rebound is not an achievement worthy of celebration if it comes at the expense
of further reform and structural adjustment.