This
weekend’s edition of “The World” is heavy on Europe: Italy is about to have a change of
leadership, some good ones on TARGET2, Federalization of Europe-articles, Britain’s possible exit. Articles on China concentrate on the leadership
change and what this might mean for the future.
Previously on MoreLiver’s:
7- Dec US Close Payroll monster
EUROPE
Brussels blog round up for 1 – 7 December:
Romania heads to the polls, Spain’s Catalonia conundrum, and who will replace
Juncker? – europp
/ LSE
Who will succeed Juncker as eurogroup chief? – Brussels
blog / FT
Cartels, Europe’s shadowy offspring – Der
Tagesspiel / presseurop
They sell
cement, televisions or coffee. They drive up prices and cost consumers billions.
Cartels act illegally, and yet seemingly having nothing to fear. In Europe, it turns out, price-fixing by
cartels is a mere misdemeanour, like a traffic violation.
Gianni Pittella: “It’s time to turn the page on
austerity” – presseurop
On 29-Nov, the Commission on Economic and Monetary Affairs of the European
Parliament approved the assembly's position on the supervision of the European
banking system. This position will serve as the basis for negotiations with the
Member States over the text on the banking union to be adopted by the Council
of Finance Ministers on December 4th. It's an issue that the Vice-President of
the Parliament, Gianni Pittella, has followed closely.
Europe is now stuck in a fiscal trap, brought about by the failure of orthodox
economics to provide an effective strategy for economic growth – europp
/ LSE
FEDERAL
Eurozone
countries would lose the right to set their own budgets and end up surrendering
economic sovereignty to Brussels under a blueprint to “complete” the
European Union’s single currency.
http://www.telegraph.co.uk/finance/financialcrisis/9724690/Euro-blueprint-gives-Brussels-economic-sovereignty-over-members.html
The False Promise of
a Eurozone Budget – Project
Syndicate
The US monetary
union is frequently said to work much better than Europe's because
a large federal budget smooths the impact of shocks to individual states; so
the eurozone, it is claimed, should have its own budget to provide similarly
automatic insurance to its members. But this argument misreads the US
experience.
(audio) Political union and its discontents – LSE
The euro
crisis has dealt a powerful blow to the EU’s political system. Many European
leaders have been ousted, more radical parties are becoming more powerful, and
questions are increasingly being asked about the legitimacy of the European
Union. European leaders find themselves trapped between the need for a more integrated
Europe and the demands of voters: the
necessity and impossibility of "more Europe". (direct mp3)
A genuine monetary
union? – bruegel
Barroso last week proposed a roadmap setting out how
to transform Europe’s current set-up
into a better-functioning monetary union. The paper has two major weaknesses,
but it makes three very good and ambitious points.
Eurozone needs a 'shock absorption' fund – euobserver
A
eurozone-wide 'shock absorption' fund should be created to assist countries in
economic difficulty, according to a paper that will take centre stage at next
week's EU summit.
The euro hokey cokey – The
Economist
When European
Union leaders gather in Brussels on December 13th to ponder the
future of their club, they will have two problems uppermost in their minds. How
far do the 17 members of the euro zone, the euro “ins”, need to integrate to
overcome their existential crisis? And how should the ten “outs” accommodate
the emerging giant in their midst?
BRITAIN
A British
exit from the European Union looks increasingly possible. It would be a
reckless gamble
How Britain could fall out of the European
Union, and what it would mean
Europe has disturbed and divided British
politics for years. Now mainstream politicians from the governing party are
openly making the case for Britain leaving the European Union, or
radically changing its relationship with it – which may amount to the same
thing – with the sympathy of some of our nation’s leaders and far wider support
among the public.
ITALY
It is just
over a year since the technocratic Mario Monti took over from the clownish
Silvio Berlusconi as prime minister of Italy. He has accomplished much.
Monti’s medicine – The
Economist
Mario Monti
has restored Italy’s credibility but much more must be
done to restore its fortunes
Italian Bonds Decline as Berlusconi Threatens
Government – BB
Berlusconi's Senators fire warning shot across
Monti's bow – Open
Europe
Italy PM Monti says he will
resign when budget passed – Reuters
Italian
Prime Minister Mario Monti announced on Saturday that he intended to resign
once next year's budget is approved in parliament after Silvio Berlusconi's
party withdrew its support for his technocrat government this week.
Italy's Technocratic
Government Coming To An End: Goldman's Mark-To-Mario Gambit – ZH
ECB
Speech Mario Draghi: A central banker’s
perspective on European economic convergence – ECB
Majority of ECB Governing Council Said to Back
Rate Cut – BB
TARGET2
Interpreting TARGET2 balances – BIS
The
increase in the TARGET2 balance for the Bundesbank has led to a debate in Germany about the appropriate
interpretation and policy response, if any. In this paper we review the
evidence for the current account financing interpretation, and find it wanting
in explaining the data in 2012. BIS international banking data, by contrast, point
to the importance of TARGET2 balances as a symptom of a reduction by core
European banks of credit previously extended to borrowers in peripheral Europe. These same data suggest that banks
headquartered outside the euro area, particularly UK banks, boosted TARGET2 balances by
hedging redenomination risk. As such, TARGET2 balances reflect not only concern
regarding actual credit exposures but also potential currency exposures.
Understanding TARGET2 – OENB
(pdf)
What Drives Target2 Balances? Evidence From a
Panel Analysis – SNB
(pdf)
Platinum Coin Easing – PragCap
Trillion dollar platinum coin – Econbrowser
CHINA
From Bubble to Muddling Through? – NYT
New Leaders: New Attitude? – The
Diplomat
China’s leadership transition attracted
global attention in 2012, and deservedly so, given the country’s global
significance. But, more important, strategic transformations now underway seem
certain to influence its future pattern of growth.