Picks from my posts since the previous
'Best of'.
Previously on MoreLiver’s:
EUROPE
The Eurozone needs a grand
political bargain –
re-define
All in all,
if you look at the combination of the political, financial, economic and social
factors, the Eurozone remains in deep trouble. The optimism in the markets is
just not justified on the basis of these developments on the ground and in the
real economy so cannot continue without further political action, more measures
by the ECB and a long-overdue change in strategy.
The Saver’s Dilemma – Project Syndicate
Michael
Pettis: For nearly a decade prior to the eurozone crisis, capital from
high-savings countries like Germany flowed to low-savings countries
like Spain. If the rebalancing that is now necessary
occurs only in Spain and other low-savings countries,
the result, as John Maynard Keynes warned 80 years ago, must be much higher
unemployment.
The Collateral Damage of Europe’s
Rescue – Project
Syndicate
Hans-Werner
Sinn: Europe’s rescue policy has stabilized
government finances and delivered lower interest rates for the over-indebted
economies. But it has also led to currency appreciation, and thus to lower
competitiveness for all eurozone countries, which may yet turn into a debacle
for the southern eurozone and France – and for the euro itself.
The technical competence of
economic policymakers
– voxeu.org
The
appointments of Papademos in Greece and Monti in Italy in 2011 are examples of leadership
changes meant to bring more competent people into government. This column aims
at understanding why governments sometimes appoint economic policymakers with
economics training but often do not. It suggests that levels of economics
education among finance ministers are substantially higher in new democracies
than in old ones and that the appointment of an economics PhD as a central bank
president is 22% more likely during a banking crisis.
Why aren't more countries run
by economists? – Wonkblog
/ WP
Whatever It Takes – John Mauldin /
The Big Picture
Who’s Got
the Map? * Monetization – A Rose by Any Other Name * Super Mario: Whatever It Takes
* The New Policy Implications of the Irish Deal * Currency Skirmishes * Toxic
Debt Scare
Bulgaria succumbs to euro deflation curse – The Telegraph
Bulgarian
prime minister Boiko Borisov resigned this morning after days of mass protests
against austerity across the country. “I will not participate in a government
under which police are beating people. Every drop of blood is a shame for us,”
he said. “Our power was handed to us by the people, today we are handing it back
to them.”
AUSTERITY
No debate please, we're
Europeans – Not
The Treasury View
But of
course the really surprising thing is that Mr Rehn should be writing to Finance
Ministers, and the IMF Managing Director, complaining that an academic paper on
a very policy-relevant, but highly technical issue of empirical macroeconomics,
represented "debate which has not been helpful".
Panic-driven austerity in the Eurozone and its
implications – voxeu.org
Eurozone
policy seems driven by market sentiment. This column argues that fear and panic
led to excessive, and possibly self-defeating, austerity in the south while
failing to induce offsetting stimulus in the north. The resulting deflation
bias produced the double-dip recession and perhaps more dire consequences. As
it becomes obvious that austerity produces unnecessary suffering, millions may
seek liberation from ‘euro shackles’.
The EU's
self-defeating approach must end now – re-define
What we need at this point is a grand political bargain,
and that is one that only Mrs Merkel can offer. We will require a period of
five to ten years of adjustment in the European economies which needs to happen
both in deficit countries as well as surplus ones not suffering from the
immediate crisis. During the course of this adjustment, financial support needs
to be made available at reasonable cost to the economies to provide political
and economic space for structural reforms and medium-term fiscal adjustment.
Europe’s internal adjustment – The
Current Moment
Some countries within the Eurozone are achieving what
many thought they could not: an internal devaluation via wages and other
production costs.
Deficits:
good marketing in a time of austerity? – alphaville
/ FT
Let's take a moment for a high level overview of
public debt-to-GDP ratios in the
eurozone. If that's not your idea of fun, well, you probably wouldn't be
reading FT Alphaville. Courtesy of a note by Lasse Holboell W. Nielsen of the
Economics Research team at Goldman Sachs
ECB
Draghi dismisses talk of currency
war, but watching euro – Reuters
Draghi
sought to take the heat out of a debate about currency wars on Monday but said the
ECB would still have to assess the economic impact of the euro's strength.
PIIGS
Of fish, flowers, AKs,
offshore banking, and now horsemeat – Fistful
of Euros
Big depositors,
you say? And who might they be? I think it is fair to say that nobody is
particularly keen to bail out Viktor Bout or Horsemeat Guy. As a result, it’s
politically very possible that the whole idea of a bail-in might get tested.
And whether it does, and the exact terms, are increasingly linked to things
like “how far into the maze the journalists get” and “whether Richard Chichakli
starts singing in jail”.
Cyprus: new face, much the same problem – alphaville
/ FT
As JP
Morgan’s Alex White argues, Cyprus’ real problems lie in Berlin (and elsewhere in the European
north). While a change of Government in Nicosia removes a near-term excuse for
German inaction, it is unlikely to trigger an immediate resolution of the
problem.
Has Spain’s Economic Contraction Now Become Self Perpetuating? – Fistful
of Euros
Italian elections could bring
uncertainty back to the eurozone – Open
Europe
A eurozone safe against, or
is it safe for, sovereign holdouts? Part one – alphaville
/ FT
A eurozone safe against, or
is it safe for, sovereign holdouts? Part two – alphaville
/ FT
MACRO
NUMBERS
Ifo Business Climate Index
Rises Sharply – CESifo
Winter
forecast 2013 – European
Commission
The EU economy: gradually overcoming headwinds
Markit PMIs: Recession in Europe continues – TradingFloor
Juhani
Huopainen: The February Purchasing Manager Indices for Europe confirm that the recession is not
over. EURUSD news flow is now as bad as it can get, so time to go against the
tide?
UNITED STATES
Three Ways Out of the
Sequester – CFR
FOMC
MINUTES
FOMC Minutes: Fear of quantitative easing – TradingFloor
The minutes
from the Federal Reserve’s Open Market Committee’s January meeting suggest that
the it is preparing itself and the markets for decreasing asset purchases.
Lots of talk on bond-buying,
no firm conclusions on what's next – Wonkblog
/ WP
Message muddied – alphaville
/ FT
ECONOMICS & MARKETS
Monthly Macro Update:
Eurozone still a global headache – Nordea
(pdf)
China: Overheating concerns resurfacing.
Eurozone: No room for ECB rate hikes before 2016-17. US: Fed to hike in mid-2014, not in
mid-2015 as it states. Sweden: Rebound expected after marked drop
in Q4 GDP
The Chicago Plan - are you ready for the real helicopter money? – TradingFloor
Steen
Jakobsen: Here's what you need to know about The Chicago Plan - which is likely
to be the next monetary experiment once QE to infinity fails to do the trick
and in the absence of structural reform.
Blogs
review: Asset prices and monetary policy redux – bruegel
Federal Reserve Governor Jeremy Stein gave serious
consideration to the idea that monetary policy has a role to play in managing
financial stability (read asset prices) in a speech titled “Overheating in
Credit Markets: Origins, Measurement, and Policy Responses” given last week at
a conference hosted by the St. Louis Fed. Governor Stein provided evidence that
risk was building in certain segments of financial markets and discussed policy
tools that go beyond countercyclical macroprudential regulation or the simple
use of the Federal Funds rate to address these risks.
A
monetary policy target can only be defeated by a better monetary policy target – Worthwhile
A monetary policy is not just the central bank doing
something right now. A monetary policy is some sort of rule that tells the
central bank the different things it should be doing under all sorts of
different circumstances in the past, present, and future.
Monetary Policy: From
There to Here to Where? – The
Big Picture
Drawing from his long experience participating in the policymaking
process at the Federal Reserve, chief policy officer Mark Sniderman shares his
views on how the Federal Reserve’s framework for conducting monetary policy has
evolved over the past decade. He explains how changes in economic theory have
helped shaped this new framework and how lessons learned from the Great
Depression and Japan’s recent
struggle with deflation have contributed.
G20 Communiqué Translated – Macro
Man
Food
and Finance – Magic,
Maths and Money
In the past, investors did the equivalent of buying
tomatoes, onions, meat and pasta. Today
financial engineers sell investors ready made lasagne. Risk managers make sure it is correctly
labelled (the traffic lights/no horsemeat instead of beef) while financial
mathematicians put a price on the lasagne. This got me thinking about the
failures of food regulation and financial regulation.
Thorp
and Buffett on beating the market, from Quantitative Value – Abnormal
Returns
Q&A
with Wesley Gray, co-author of Quantitative Value – Abnormal
Returns
OFF-TOPIC
Happy
Birthday, Galileo – brain
pickings
In 1615, as the Roman Inquisition was beginning to investigate
his heretical heliocentric model of the universe, Galileo — who knew how to
flatter his way to support — wrote to Christina of Lorraine, the Grand Duchess
Christina of Tuscany.
Is This Where The Secret JP
Morgan London Gold Vault Is Located? – ZH
In
the Picture: comets, craters and crash landings – The
World / FT
The
Man Who Killed Osama bin Laden... Is Screwed – Esquire
For the first time, the Navy SEAL who killed Osama bin
Laden tells his story — speaking not just about the raid and the three shots
that changed history, but about the personal aftermath for himself and his
family. And the startling failure of the United
States government to help
its most experienced and skilled warriors carry on with their lives.
Our
Man in Iran – reason
How the CIA and MI6
installed the Shah.
Cinema
Tarantino: The making of Pulp Fiction – Vanity
Fair
IN FINNISH
Näin EU höynäyttää hyväuskoisia hölmöläisiä – Jan
Hurri / TalSa
Suomen EU-maksut
kasvavat, vaikka koko EU:n menot hieman supistuvat. Tämä on kuitenkin pieni
tappio sen rinnalla, että koko EU-budjetti perustuu suurelta osin
tilastovääristelyyn ja hyväuskoisten höynäytykseen. Suomi kuuluu EU:n
hyväuskoisiin – ja maksaa roppakaupalla muiden viuluja.
Minne Suomea viedään? – Kalle
Isokallio / IL
Sisäpiiriläinen kertoo: Miljoonien rahavirrat
puolueille – IL
Vaalirahoituksen salat tulivat tutuiksi Jorma Heikkiselle jo
1970-luvulla.
Säästöt uhkaavat kilpailukykyä – Risto
Pennanen / TalSa
Vyön kiristäminen
syö kilpailukyvyn, jos uuden kehittäminen pysähtyy.
Urpilainen ja Euroopan sosiaalinen kriisi – Hannu
Visti
Pampaksen nero Jutta Urpilainen on kiinnittänyt huomiota
siihen, että Euroopassa saattaa “syntyä” sosiaalinen kriisi kun velkakriisi ei
helpota. Ei se tietenkään helpota, koska mitään oleellista ei ole tehty,
ainoastaan vääriä asioita.
Paul Krugman lyttää
tylysti Olli Rehnin – Juha
Lehtinen / US Puheenvuoro
Komissaari Rehnin
erehdys? – Akateeminen talousblogi
Lukekaa se Rehnin paperi ennen kuin väitätte siitä
kummallisuuksia – Mikko
Nummelin / US Puheenvuoro
Tätä Olli Rehn pelkää – Juha
Lehtinen / US Puheenvuoro