While the weekend's
meetings hardly surprised and the statements were pretty much in line of what
was expected, two things stand out: Reinhart & Rogoff's debt/GDP 90% being
a watershed level was debunked and the important talking heads (Diesel-Boom)
stated that austerity has its limits and will be eased for e.g. Portugal. Secondly, the Germans were concerned about
the easy monetary policy.. It looks like the leaders are getting the picture
finally – the monetary policy is too easy for Germany and inflating housing bubbles in most core
countries, while too tight for the periphery. Now it is either up to fragmented
monetary policy (ECB next week?) or either more fiscal transfers or national
budget overdrafts to sort out the mess.
Previously on MoreLiver’s:
Current specials:
Special: IMF / G20 / WTO Meeting (updated)
Special: Reinhart & Rogoff
Debacle (updated)
EUROPE
Today, as southern
European countries experience high levels of unemployment, huge savings and
potential demand for consumer and capital goods remain locked up in northern Europe. It is time for northern European countries to
use their huge excess savings to support growth.
So what’s the plan, Mr Rehn? – El
País / Presseurop
Discipline and budget
cuts: The cure prescribed for the Eurozone no longer has unanimous support.
Unfortunately, voters can not settle this debate as it is between unelected
officials, foremost among them, is the Commissioner Rehn.
Barroso: Europe near
austerity limit – FT
What is the net of good and bad news from Brussels and Washington? – Bruegel
Two important
documents have been issued in the last few days: the In-depth reviews following
the so called AMR (Alert Mechanism Report) from the European Commission and the
World Economic Outlook from the IMF.
In or out? That’s the
question as Poland’s leaders send mixed messages about just how aggressively the country
plans to move towards adopting the euro.
GERMANY
Merkel says euro members must be prepared to
cede sovereignty – Reuters
Merkel said on Monday
that euro zone members must be prepared to cede control over certain policy
domains to European institutions if the bloc is truly to overcome its debt
crisis and win back foreign investors. (ZeroHedge comments)
Merkel has said there
is no German hegemony in Europe, but insisted that euro countries cede more
sovereignty to overcome the crisis.
While the broad nature
of its support base might prove problematic in the long term, it nevertheless
has the potential to be a ‘game changer’ in German and European politics.
GREECE
UNITED STATES
Everything you think you know about the Fed is
wrong – Behavioral
Macro
STOCKS
Earnings So Far: Just Three Charts – ZH
Finding the best four-year market forecaster – MarketWatch
A comprehensive analysis of 1,700 stocks tells
us abouth the market – Greenbackd
MACRO
Existing Home Sales in March down, prices rise – Calculated
Risk , Calculated
Risk II , Reuters
, BB
US Macro Data Plunges
To 5-Month Low – ZH
ASIA
It turns out that China's official statisticians might not have
adjusted for 2012 being a leap year in the Q1 accounts. Plus, there have been
big sampling changes that render the numbers even more subjective than we
thought...
Chanos has held a
negative view on China for a while now, largely focused on the property market. His presentation this time of course focuses
on that as well but also highlights rising wages and a wealth gap.
The current rally in
Japanese equities is just getting started and that there's a lot of room to run…
Yusko points out that there will be winners and losers in Japan and offers some ideas.
OTHER
FX Comment: in Europe we trust – Nordea
Growth trumps everything.
European PMIs this week is a "fingers crossed". More upside for EURUSD,
GBPUSD, USDJPY.
Fiscal Sustainability: A 21st Century Guide
for the Perplexed – IMF
This paper critically
reviews recent work regarding the sustainability of public debt. It argues that
Debt Sustainability Analyses (DSAs) should be more than mere mechanical
simulation exercises. Instead, a DSA should be linked to some objective
regarding the distribution of fiscal burdens and distortions over time (in the
tradition of Barro’s 1979 tax smoothing objective). The paper discusses
objective functions that yield simple and transparent fiscal policy rules.
Currency peace: G20 gives BOJ a pass for
deflation fight – MacroScope
/ Reuters
Breaking bad inflation expectations – alphaville
/ FT
QE/government
intervention is announced, people interpret this as inflationary, risk-on
mentality ensues, a good opportunity to lock-in yield is provided for anyone
who recognises the yield curve is mispriced — in the sense it is pricing in too
much inflation/higher interest rates — the expectations turn out to have been
misplaced, the curve corrects, confidence is lost until a new round of QE or
government intervention is announced. And so on.
Graphic of the day: Long-term sovereign debt
ratings – Thomson
Reuters
Fitch stripped Britain of its top-grade AAA rating on Friday, but
unlike rival Moody’s – which did the same in February – it gave the new rating
a stable outlook. Today’s graphic shows the long-term sovereign debt ratings
for Britain, the US, Japan and the rest of the euro zone.
IN FINNISH
Suomalaiset
tyrmäävät EU-talousliiton tiivistämisen – YLE
Puolet suomalaisista on sitä mieltä, että
heikkojen euromaiden pitäisi antaa romahtaa, vaikka se pahentaisi työttömyyttä
myös Suomessa, kertoo TNS Gallupin tuore kyselytutkimus.
Velan
vangit – Pertti
Haaparanta / Akateeminen Talousblogi
Meillä kaikilla lienee jokin käsitys
velkavankeudesta, mutta minusta on aika pohtia ainakin yhden blogikirjoituksen
verran ilmiötä, jossa velka on symboli jostakin muusta, velkaan, erityisesti
julkiseen velkaan on syntynyt erikoinen riippuvuus.
Mikä on
talouspolitiikan vaihtoehto? – Hannu
Visti
Uusklassisen
teorian raunioilla: Reinhart ja Rogoff – revalvaatio