US debt ceiling & the platinum coin solution, Japan's macropolitical turnaround. Europe seems a strange case of muddle through: bailout of Cyprus, Italian elections, Spain's bailout - they're all still ahead - but somehow markets are thinking that "the tide has turned". Based on what?
Previously on MoreLiver’s:
Czechs go to the polls, France’s
changing foreign policy, and is Romania a
democratic inspiration?
Is Shinzo Abe the Great Keynesian Hope?
Awww, Mario, You
Don’t Say … – View
/ BB
The message coming from the ECB seems to be that the
debt crisis has passed and the time for austerity is finally over. It’s not at
all evident that this was ever the right approach.
The Euro-model scare
tactics – Fatasmihov
Regularly The Wall Street Journal writes an opinion
article about the failure of the European economic model.
Confidence in
European Banks Is Returning – Spiegel
There is cause for hope in Southern Europe.
New numbers indicate that trust is returning to banks located in countries that
have been hit hardest by the euro crisis. But even as discrepencies in the
Continent's Target2 payment system shrink, danger still lurks.
The urgently needed bailout of the Cypriot banking
industry is in danger of being vetoed by the German parliament. The opposition
Social Democrats say they are leaning towards voting no, according to a media
report. With Chancellor Merkel unable to rely on her own majority, that could
be bad news for Cyprus and for
the euro.
Awww, Mario, You
Don’t Say … – View
/ BB
The message coming from the ECB seems to be that the
debt crisis has passed and the time for austerity is finally over. It’s not at
all evident that this was ever the right approach.
German Foreign
Minister Urges Britain to Stay in EU – Spiegel
European politicians are nervously awaiting a speech
by British Prime Minister David Cameron that they hope will clarify his stance
on the country's position in the European Union. Germany's foreign
minister is already warning against efforts by the euroskeptic wing of his
party to make an exit.
Poverty gap widens between member states – euobserver
The
economic crisis is contributing to a widening poverty gap between member
states, the European Commission has said.
Establishing a genuine single market for
services could generate significant growth across the EU – europp
/ LSE
EU-funds: Spending still hard to control – De
Standaard / presseurop
Despite all the promises of
transparency, European funds are still being used improperly by companies and
member states, while fraud and misuse remain difficult to detect and rarely
punished.
Banking union for non-EA countries – bruegel
European separatism is not a 2013 risk – The
A-list / FT
As the
redesign of Europe churns along in 2013, some still
fear that one or more eurozone states will take its leave. Others warn that
individual European states will soon crack from within, as less familiar flags
appear in places such as Catalonia, Scotland and Flanders. There are separatist pressures
building within Spain and the UK, and Belgium’s unity remains fragile as well.
But, at least for 2013, there is less to these warning signs than meets the
eye. In fact, European separatism is one of 2013’s most important red herrings.
UNITED STATES
DEBT CEILING
Goldman On The Debt
Ceiling: "It's Different This Time" – ZH
The platinum-coin option – The Economist
A crackpot idea to circumvent America’s debt
ceiling gains currency
How the platinum coin
could work (or backfire) – CNNMoney
Mohamed El-Erian: The unusual move of minting a large
platinum coin might shock politicians
into cleaning up the fiscal mess. But the rest of the
world may see it as inflationary.
On The Disruptiveness of the Platinum Coin – Tim
Duy’s Fed Watch
The
platinum coin idea was ultimately doomed to failure because neither the Federal
Reserve nor the Treasury could allow for even the remote possibility it might
be successful. Its success would not
just alter the political dynamic by removing thedebt ceiling as a threat. The success of a platinum coin would
fundamentally alter the conventional wisdom about the proper separation of
fiscal and monetary policy and the need to control the debt immediately.
Credibility – Krugman / NYT
Ah. Charles Plosser of the Philadelphia Fed is against
the platinum coin, which he says “doesn’t solve any real problem” and would
hurt our credibility.
Meet the Genius
Behind the Trillion-Dollar Coin and the Plot to Breach the Debt Ceiling – Wired
It was a December 2009 Wall Street Journal
article that ultimately inspired the Georgia lawyer
known online as “Beowulf” to invent the trillion-dollar coin.
FED
Fed Officials Present
Dueling Views of Policy – WSJ
Two regional central bank presidents offered dueling
views about whether the Federal Reserve is doing too little or too much.
Fed’s Plosser:
Platinum Coin Not Worth Risk to Credibility – WSJ
The “mint the coin” gang doesn’t have a friend in
Philadelphia Fed chief Charles Plosser.
Question #1 for 2013:
US Fiscal Policy – Calculated
Risk
If we just stay on the current path - and the
"debt ceiling" is raised, and a reasonable agreement is reached on
the "sequester", and the “continuing resolution" is passed - I
think the deficit will decline faster than most people expect over the next few
years.
Can a fiscal and monetary splurge reboot Japan’s
recessionary economy?
Worthwhile Japanese
Initiative – Krugman
/ NYT
Shinzo Abe has taken Japan off in a
surprisingly Keynesian direction. Noah Smith points out, again, that he’s
probably doing it for disreputable reasons, mainly old-fashioned LDP
pork-barrel (katsu barrel? tofu barrel?) politics. But this may not matter.