A busy week
– markets were dull, but we had a near-miss comet, an asteroid hitting Russia, North Korea’s nuclear test, pope resigning… by
virtue of mean reversion, one should now expect a highly volatile market week
while newsflow is zero? Next week will be about the Italian elections (no polls allowed anymore) and Cyprus (first their election, followed by the bailout-talks).
Previously on MoreLiver’s:
EUROPE
A reduced EU budget, the Anglo-German axis, and a
transatlantic trade pact?
MEPs copy-pasting
amendments from US lobbyists – euobserver
A handful of MEPs have allegedly copy-pasted
amendments written by giant US-based IT firms into the EU’s new data protection
law.
Three years later, the financial symptoms of the
crisis are thankfully receding with a new sense of optimism in markets. But the
underlying problems—lack of convergence of productivity and the structural
flaws in the architecture of the monetary union—have only been partially
addressed.
The latest statistics on the state of the eurozone economy
indicate that, contrary to what political leaders have recently been saying,
the crisis is far from over.
Contempt for Europe is rising
all across Britain, driven
by politicians and media who blame Brussels, often
absurdly, for everything from the declining economy to male impotence. A small
group of pro-Europeans are waging a bizarre campaign against the country's
agitated majority.
The dangers of German
wage growth – alphaville
/ FT
The European Union and United
States say they will soon
begin negotiations to create the world's largest free-trade zone. German
editorialists argue a deal is necessary if the West wants to help shape global
politics and address the challenge of a rising China.
Speech Mario Draghi:
G20 priorities under the Russian Presidency – ECB
Euro crisis 'not
solved,' German bank supervisor says – euobserver
Cheap ECB loans helped calm the euro crisis, but the
big problem - too much state debt - remains, Germany's bank
supervisor says.
Europe’s image and soft
power have undoubtedly continued to fade around the world (thought such a trend
is difficult to quantify), while member states continue to cut defense and
development budgets. The good news, however, is that European foreign policy
has not unraveled in the crisis. Indeed, it has even shown some signs of
progress.
Some countries within the Eurozone are achieving what
many thought they could not: an internal devaluation via wages and other
production costs.
Charlemagne: No to
EUsterity – The
Economist
Financial Transaction
Tax: Sand in the Wheels? – Marc
to Market
FRANCE
French economic
policy: Which way for Mr Hollande? – The
Economist
The Coming Push:
France – Marc to
Market
ITALY
Beppe Grillo:
Five-star menu – The
Economist
Italy's new
government faces the task of reforming the economy after more than a decade of
bad policies, neglect, and low or negative growth. Its policy agenda should
include labor-market reform, investment in human capital, fiscal adjustment,
and measures to attract more direct investment.
The Italian Patient:
Resisting Berlusconi's Charms – Spiegel
Silvio Berlusconi may be back with his customary
bombastic campaign promises. But will the Italians bite? If they do, it could
spell doom for the country. If they don't, Italy's
tradition of political instability might return anyway.
First Monte Paschi
Banker Arrested With $54mm Stash – ZH
ASIA
Tokyo should do
what it can to rebuild trust with Beijing – not by
giving ground on disputed East China Sea islands
but by agreeing to put the issue on the shelf. Better to focus on restoring a
relationship that can strengthen both economies – and, by extension, the
domestic credibility of both governments.
Building a Chinese
Rechtsstaat – Project
Syndicate
A consensus is rapidly emerging within China that the
rule of law is the single most important precondition for inclusive,
sustainable, and long-term peace and prosperity. But can China establish
the rule of law as it is understood and practiced in the West and elsewhere in Asia?
Few have seriously thought about the probability and
the various plausible scenarios of a regime transition in China -- until
now.
North Korea's recent
nuclear test presents an interesting problem for China -- with
no easy solutions.
The view that nuclear weapons are merely political
instruments -- suitable for sending signals, but not waging wars -- is now so
common in the United States that it
is hard to find anyone who disagrees. Yet that comforting assumption is not
shared by leaders everywhere. North
Korea, for example, does
not test nuclear weapons to send messages, but to make sure that its ultimate
deterrent will work. It would be tragic if the United
States let misguided
Kremlinology distract from the real challenges ahead.
Faced with sluggish external demand and weak domestic
consumption, China depends
on investment to drive economic growth – leading to overproduction, inflation,
soaring real-estate prices, and rising debt among enterprises and local
governments. To reach the next stage of development, China must
break its reliance on investment.
NORTH KOREA
Within hours of the North Korean nuclear test this
week, the UN security council was meeting in emergency session. But how
dangerous is this development, and what is likely to happen next? James Blitz,
diplomatic and defence editor, Christian Oliver, former Seoul correspondent,
and Simon Mundy, the current FT correspondent in Korea, join
Gideon Rachman.
http://thediplomat.com/the-pulse/2013/02/14/viewing-north-koreas-nuclear-test-through-a-south-asian-lens
The Interview:
Michael Pettis – The
Diplomat
Pacific Money's James Parker interviewed Professor
Michael Pettis following the publication of his new book: “The Great
Rebalancing: Trade, Conflict and the Perilous Road Ahead for the World Economy”.
North Korea’s third
nuclear test is a game changer not only for the US and Japan, but also
for the regime’s last ally, China. Simply
put, the conventional wisdom that North
Korea’s collapse would be
disastrous for China is
misconceived.
OTHER
The G20 is a sad sign
of our uncooperative world – The
A-list / FT
The reality is that, despite many commitments by
national leaders, the capacity of nation-states to coordinate their responses
has dwindled. Problems may have gone global but the politics of solving them
are as local as ever. It is hard for governments to devote resources to
problems beyond their national borders and to work with other nations to
address these challenges – while painful problems at home remain unsolved.