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Euro area funding markets were severely disrupted by
adverse feedback effects between the weaknesses of sovereigns and banks…funding
structures that seem stable in normal times can turn highly unstable during
episodes of financial market stress. This applies in particular to financing
obtained from foreign sources, which may be especially sensitive to shocks in
recipient countries. Moreover, the strong link between sovereigns and banks has
underscored the importance of fiscal prudence and, in the European case, the
need for greater financial integration in the euro area.
100 Startling Facts
About the Economy – The
Motley Fool
Great Graphic: Global Gini – Marc
to Market
Inequality vs.
generational income mobility
CAPITAL CONTROLS,
LIQUIDITY
Capital Controls: A Normative Analysis – FED
Our results
suggest that restricting international capital flows through the use of these
taxes can be beneficial for individual countries, although it would limit
cross-border pooling of risk…possibility of costly "capital control
wars" and thus to significant gains from international policy
coordination.
Capital Flows: too much of a good thing? – qfinance
The damage
that "hot money", ie surges of incoming capital, can wreak on the
fiscal policies of a domestic economy has been proved time and
Understanding Global Liquidity – BIS (pdf)
The results
suggest that global liquidity conditions are largely driven by three common
factors and can therefore not be summarised by a single indicator. These three
factors can be identified as global monetary policy, global credit supply and
global credit demand.
Liquidity charted – alphaville / FT
CENTRAL
BANKING
Blogs review: The
Monetary Regime and the drawbacks of NGDP targeting – bruegel
After qualifying the idea as “powerful” and raising
expectations of a possible future adoption, the Bank of England
governor-designate Mark Carney reversed course and said that he was “far from
convinced” by the idea in front of the Treasury select committee yesterday.
While he didn’t lay out precisely the intellectual reasons for that change of
heart, we’ve tried to put together some of the reasons put forward against NGDP
targeting.
NGDParty-pooping – alphaville / FT
Whatever
the dangers of inflation expectations being permanently de-anchored by the
introduction of NGDP level targeting in general, there are two reasons to
believe that those dangers are particularly high for the UK:
Keeping bubbles in perspective – Free
exchange / The Economist
Mr Stein's
most recent speech focused on the problem of credit-market overheating…There is
no question that the central bank approach to financial stability in the
decades prior to the crisis was underdeveloped and unsatisfying. But while I
hope Mr Stein continues to push forward this discussion, I think it's critical
to keep the "bubble question" in perspective.
Should the Fed pop bubbles by raising interest
rates? – Wonkblog
/ WP
“While
monetary policy may not be quite the right tool for the job, it has one
important advantage relative to supervision and regulation–namely that it gets
in all of the cracks,” Stein said.
Global House Price Fluctuations:
Synchronization and Determinants – IMF
What is the attraction of helicopter money? – mainly
macro
As I have
said in the past, helicopter money is either a plea for fiscal expansion -
which is good, but why not call it that - or a policy for above target future
inflation, which may also be good but why not call it that too? However perhaps
I am being politically naive - maybe it is the only way we can get governments
at the moment to undertake fiscal expansion.
Monetary Shortcuts, Fiscal Challenges – EconoMonitor
Since 2008,
all major advanced economies have seized monetary policies to cope with
challenging debt crises. The massive monetary expansion is deferring vital
structural reforms in the advanced world and posing new risks to the emerging
world.
CURRENCY
WAR
Sanjeev Sanyal, Deutsche Bank's Global Strategist: In
the last 60 years, the US has
underpinned global growth by running persistent current-account deficits. Under
the Bretton Woods system, the US ran
deficits that enabled war-torn Europe and Japan to
rebuild. In return, Europe funded the US deficits.
The system broke down when European countries, particularly France, decided
to stop funding those deficits. But the economic model persisted, with Asian
economies stepping in to finance the US deficits,
while using the US market to
grow rapidly. China is the
latest and largest beneficiary of the economic model dubbed “Bretton Woods II.”
Currency Wars Over Before They Begin? – Tim
Duy’s Fed Watch
If Japanese
policymakers really intend the depreciation of the Yen be limited to 90, then
the supposed currency wars may already be near an end.
GROWTH
Is Economic Growth
Really Ending? – Worthwhile
A Post-Growth World? – Project
Syndicate
Long-term
growth considerations, while recognized as crucial, seem distant from the here
and now of financial repair and restoration of confidence. But a realistic
assessment of growth prospects is precisely what is needed right now to design
appropriate and feasible policies.
BANKING
& REGULATION
Why Do Banks Get Away With Murder? – The
Daily Beast
Big banks
have copped to heinous crimes that have cost citizens billions of dollars. And
it just keeps happening. Daniel Gross on why the madness never ends—and no one
goes to jail.
The Trouble with Wall Street The shocking news
that Goldman Sachs is greedy – New
Republic
Michael
Lewis reviews the book Why I Left Goldman Sachs: A Wall Street Story
Michael Lewis wants to break up the big banks.
So do a lot of other people. – Wonkblog
/ WP
Lewis isn’t
alone…so why senate resists?
Erkki Liikanen: The future of central banking -
proposed bank structures – BIS (pdf)
Speech by
Mr Erkki Liikanen, Governor of the Bank of Finland and Chairman of the
High-level Expert Group on the structure of the EU banking sector, at a
conference on "The future of central banking", Copenhagen, 30 January
2013.
Back to the futures? – Free
exchange / The Economist
Historically, futures exchanges have been very
effective at preventing the failings of individual traders from hurting others.
That is one reason why America’s
Dodd-Frank law introduced new rules for over-the-counter (OTC) swaps designed
to make them more like futures.
Too Big to Fail Too Hard to Fix Amid Calls to
Curb Banks – BB
British
banks that fail to shield their day-to-day banking from risky investment
activities could be broken up, finance minister George Osborne said on Monday,
bowing to political pressure to come down harder on reckless lenders.
The State of
Regulatory Reform in 2013 – Thomson
Reuters
MARKETS
2013 Earnings Are Now Forecast To Be Less Then
09 Projections In 2007 – ZH
Goldman’s
charts
Correction? Watch the cyclicals! – Humble
Student
Beware of the bias – Buttonwood
/ The Economist
Investors
may have developed too rosy a view of equity returns
Sharp reversal in EUR sentiment – Sober
Look
What We're Reading: Hedge Fund Links – Market
Folly
Improving Commodity
Strategies with Momentum and Term Structure – Turnkey
Analyst
With
significant annualized alphas of 10.14% and 12.66% respectively, the momentum
and term structure strategies appear profitable when implemented individually.
With an abnormal return of 21.02%, a novel double-sort strategy that exploits
both momentum and term structure signals clearly outperforms the single-sort
strategies
No One Remembers When
Bonds Went Truly Bad – Businessweek
Meet the 105-year-old stockbroker… – Daily
Mail
…who
started work a year before the Great Depression… and is STILL trading (Dec
2011)
Update: Recent Research Supporting the Value of
Technical Analysis
– Phil
Pearlman