I have a simple personal policy. (Almost) always tell the truth and
sooner rather than later. By introducing myself as someone who always says what
I think and feel I differentiate myself from polite-clowns. This prepares them
for "surprises", and is a polite warning.
The pros are obvious: I never have to worry about what I should or should not say. I also do not have to remember a storyline. Often people tell different stories to different people. In groups, these differences create a nasty matrix to remember. Also, any ethical issues are wiped out of the equation: if you cannot tell what you are or were doing, it's not worth doing.
These pros are also cons. Stories and little lies lube the bureaucratic machineries, and people get what they expect and are happy with the expected results. Everybody kind of knows that the tenth theme stock fund of the company will not be useful or alpha-generating in any sense, but it is built nevertheless. Everyone just forgets that the past nine have not worked. Women have to be told they are beautiful. Companies have to be told how wonderful places they would be to work for etc.
* * *
This weekend's linkfest has several important themes. The monetary transmission problems, i.e. lack of lending at acceptable rates in the crisis countries is an important theme, as the ECB is preparing something, and understanding the implications of any plan is important. The Federal Reserve's plans for the QE programs is another issue, but there is little to go by currently - only the idea, that all this talk is preparing the markets for the QE to end at some point. Will it be ended is another question.
Hollande's demands for a federal framework with a president and all in two years' time is interesting, but lacks specifics. It is an important development, though, as reactions and attitudes from Germany can be used to decipher what the Germans will do after their elections. I would not trust anything coming out of Germany before the elections are coming, though. Cyprus papers from the IMF are also out.
The US consumer sentiment for May surprised positively on Friday. Given the newsflow, this is strange, but expected: the macro has been bad, and it is about time for the numbers to start surprising positively again. Remember, in a largely trendless environment with a small positive drift, the expectations tend to follow the recent numbers, and are currently probably a bit too negative. Market reaction to positive surprises should be now watched closely. If the risk markets are unable to rally on the good news, it is a sign that the recent bull trend has been relying a bit too much on QE and liquidity, instead of fundamentals.
And let's not forget Japan! Abenomics is all the rage and not a day goes by without an article. Today I have several. In addition, I revived my Off-Topic section with some Psych and Tech articles, and plenty of Finnish articles as well. The publication of the agreement on the Greek-Finnish collateral deal was the big news of the week, but there are other issues as well.
Previously on MoreLiver’s:
EUROPE
France in recession again, ‘Schwabylon’, and how to become a British
Eurosceptic.
Europeans expect bleak future, survey finds – euobserver
Europeans expect a
more difficult and uncertain economic future than their parent, according to an
opinion poll released Friday.
The EU is becoming a
corrupt church where Germany rules by a dogmatic economic orthodoxy. Politics
must take back control with a protestant schism coming from grassroots
initiatives, argues an Italian columnist.
Olli Rehn, the
European Union’s top economic policy maker and scourge of debt-fueled budget
deficits, is fed up with austerity. Or at least with being tarred by a term
that “is clearly used to label somebody as an unworthy person who is almost
eating children.”
That's a 'Depression' – The
Atlantic
The Old Continent has
that 1930s feeling: Europe's double-dip is officially longer than its great
recession
[audio] BizDaily: Which way for the eurozone? –
BBC
(mp3)
We learned this week
that Europe, or at least the eurozone, has been in
recession for eighteen months. The financial crisis continues to bear down on
economic prospects and many issues about the business environment continue to
worry executives. Andrew Walker has been hearing the views of senior business
people about what Europe needs to do. Plus, Helge Lund, chief executive of the
Norwegian oil and gas giant Statoil tells Andrew about the suspected
manipulation by Statoil and other companies of published oil prices that act as
important benchmarks across the industry.
Charlemagne: What is the alternative? – The
Economist
Europe waits as Angela Merkel faces a new
anti-establishment party
As a further sign that
all is not well in the Franco-German motor of Europe, the two countries will
not issue a joint statement ahead of the next EU summit as Berlin had hoped.
The development comes as France slips further into economic malaise.
The European common
currency zone has now been in recession for six straight quarters, with three
of the bloc's four largest economies now suffering persistent negative growth.
Could the Continent's pursuit of austerity be backfiring? German commentators
believe the answer is yes.
Possibility of Spanish downgrade looms over
euro zone – MacroScope
/ Reuters
A cut to
sub-investment grade would prompt Spanish sovereign debt to fall out of certain
indices tracked by bond funds, resulting in forced selling, which could drive
Spanish borrowing costs higher.
ECB
Blogs review: Dealing with an impaired
monetary transmission mechanism
– Bruegel
Dealing with the
fragmentation of capital markets along national borders and the resulting lack
of funding for SMEs in the countries of the periphery has been a central issue
for the ECB for some time already. But the prospect of a prolonged double-dip
has rendered it even more urgent. In this review, I document the extent to
which the transmission mechanism of monetary policy within the eurozone is
broken and discuss several proposals – such as a negative lending deposit rate
and the creation of a new program targeted to SMEs – designed to increase the
flow of credit in the periphery.
Does the eurozone have a monetary policy transmission
mechanism? Or rather a liquidity leak? – Marginal
Revolution
Liquidity trap
approaches will encourage you to think in terms of raising expectations of
inflation (which is indeed the correct question in many settings), but here the
geographic distribution of credit and economic activity is instead the crux of
the matter.
“Built to Last”: The New Euro Area Framework – ECB
Speech by Yves Mersch,
Member of the Executive Board of the ECB, Barclays Research Conference, London, 17 May 2013
Only the ECB can improve bank credit supply – Free
exchange / The Economist
The ECB must overcome
any obstacles to introducing a version of the Funding for Lending Scheme.
Without it, there seems little prospect of a recovery in bank credit supply in
the Eurozone.
The periphery's problem is an incomplete
internal devaluation – Free
exchange / The Economist
A direct result of the
failure to recognise the “stock” implications of an internal devaluation. A
self-fueling negative equilibrium results, and the only question is how it
resolves itself.
BANKING
How Safe Should Bank Deposits Be? – WSJ
A new EU law designed
to force states to build up deposit-guarantee funds has been stuck in the
bloc’s decision-making process for almost three years. And even in the
countries whether they exist, the funds remain way too small to credibly cover
the €100,000 per bank account they are supposed to guarantee.
Battling the Crisis: Disunity Plagues EU
Banking Union Talks – Spiegel
European leaders had
hoped to quickly finalize plans for an EU banking union to regulate bank
bailouts and provide a roadmap for unwinding insolvent financial institutions.
But with the German election looming, Berlin is wary of moving forward. The result could be
a lengthy delay.
Spot The Odd Continent Out: Total Bank Assets
As % Of GDP – ZH
HOLLANDE’S
CLOSER EUROPE
Euro-visions – Presseurop
It might be worth
paying attention to what is going on in London, Paris and Berlin, where different visions of Europe, which we ought to be debating, are
developing.
Europe can
survive without Britain,
says François Hollande – The
Telegraph
François Hollande
launched a three-pronged attack on Britain saying that Europe would survive without the UK, while claiming David Cameron risked splintering
the EU and that his austerity policies were failing.
France's
Hollande urges euro zone government – Reuters
French President
Francois Hollande called on Thursday for an economic government for the euro
zone with its own budget, the right to borrow, a harmonized tax system and a
full-time president.
Another reminder of
how distant France and Germany are in the debate over the way ahead for the
eurozone - with Paris sticking to its 'solidarity/integration first and
supervision/discipline later' line, and Berlin insisting that things should
evolve the other way around.
Political union: Hollande takes up Merkel’s
challenge – Le
Monde / Presseurop
CYPRUS
Cyprus:
Letter of Intent, Memorandum of Economic and Financial Policies, and Technical
Memorandum of Understanding – IMF (pdf)
UNITED STATES
Weekend Sentiment Summary – The
Short Side of the Long
Confidence Boom? – Tim
Duy’s Fed Watch
S&P 500 P/E Ratio – Bespoke
Five takeaways from the CBO's analysis of
Obama's budget – Wonkblog
/ WP
FED
Economic Prospects for the Long Run – FED
Chairman Ben S.
Bernanke At Bard College at Simon's Rock, Great Barrington, Massachusetts, May 18, 2013
Ben Bernanke on robots, lasers and the Great
Stagnation – Wonkblog
/ WP
Bernanke Isn't Neutral on the Long-Run – Twenty-Cent
Paradigms
Fed Officials Looking Closely at Student Debt – WSJ
Kocherlakota on Fed stimulus: Don’t stop ‘til
you get enough – MacroScope
/ Reuters
ASIA
Japan's prime minister
speaks openly about the mistakes he made in his first term, Abenomics, Japan's
wartime record (and his own controversial statements on that history), and the
bitter Senkaku/Diaoyu Island dispute with China.
Bird, plane, Abe – alphaville
/ FT
Abe’s master plan – The
Economist
Abenomics and the Supply of Safe Assets – Macro
and market musings
Better figures, but…Bond
yields spike…Yen decline is good for Europe?...When
does retaliation begin in earnest?
OTHER
Open-Access Economics – Project
Syndicate
Barry Eichengreen: The
brouhaha over Carmen Reinhart’s and Kenneth Rogoff’s article “Growth in a Time
of Debt” has raised troubling questions not only about the efficacy of
austerity, but also about the reliability of economic analysis. If a flawed
study could appear in a prestigious working-paper series, why should anyone
trust economic research?
Book Bits | 5.18.13 – The
Capital Spectator
Global property markets: Boom and gloom – The
Economist
Our latest round-up of
house prices reveals some sharp contrasts
Bloomberg Billionaires – BB
OFF-TOPIC
PSYCH
What Rational Really Means – SciAm
The word rational is
widely misused. Scientists often apply it unnaturally, in ways that conflict
with our biology.
Psychiatry: Shrink wrapping – The
Economist
A single book has come
to dominate psychiatry. That is dangerous
DSM-5: By the book – The
Economist
The American
Psychiatric Association’s latest diagnostic manual remains a flawed attempt to
categorise mental illness
This Is Your Brain, On – Book forum
Two books seek to
explain how our minds work their way through the maze of consciousness
The Possibilian – The
New Yorker
What a brush with
death taught David Eagleman about the mysteries of time and the brain.
Why Rituals Work – SciAm
There are real
benefits to rituals, religious or otherwise
The Cherry Coke Effect? – The Psy-Fi
Blog
Framing – Above
the market
TECH
Jaron Lanier: The Internet destroyed the middle
class – Salon
Kodak employed 140,000
people. Instagram, 13. A digital visionary says the Web kills jobs, wealth --
even democracy
Welcome to the Programmable World – Wired
In our houses, cars,
and factories, we’re surrounded by tiny, intelligent devices that capture data
about how we live and what we do. Now they are beginning to talk to one
another. Soon we’ll be able to choreograph them to respond to our needs, solve
our problems, even save our lives.
Social networks as evolutionary game theory – alphaville
/ FT
http://ftalphaville.ft.com/2013/05/14/1499332/social-networks-as-evolutionary-game-theory/
Living by the Numbers: Big Data Knows What Your
Future Holds – Spiegel – Spiegel
Forget Big Brother.
Companies and countries are discovering that algorithms programmed to scour
vast quantities of data can be much more powerful. They can predict your next
purchase, forecast car thefts and maybe even help cure cancer. But there is a
down side.
FINNISH
Ranskan
inhokki patistaa liittovaltioon – Henri
Myllyniemi / Piksu
Vakuusrahojen
alkuperä – Henri
Myllyniemi / US Puheenvuoro
Ministerinvaihdoksia
ding dong –tyyliin – Jyrki
Virolainen
Pankki: Asuntojen hinnat voivat romahtaa Suomessa – TalSa
Ostovoimasta ja sisäisestä devalvaatiosta – Juha
Remes / US Puheenvuoro
EKP on suurin syyllinen Euroalueen velkakriisin – Tyhmyri
Pienten maiden
kuten Suomen kannalta kriisinhoidon jäljet pelottavat
Suomi arvostaa tappioita – Risto
Pennanen / TalSa
Rahan tuhlaaminen
on Suomessa hyväksyttävämpää kuin voiton tavoittelu.
Pääkirjoitus: Ministerien kierrätys ei riitä Sdp:n
nousuun – HS
Kansanäänestys EU-jäsenyydestä on perusteltu Suomessakin – Sampo Terho
Vakoilijatädin sukulaiset – Kemppinen
Kerran hän
kysyi, miten se sellainen pitkä poika on pärjännyt, jonka he kustansivat
aikoinaan ties mihin ja jonka järjestelyihin hän oli osallistunut. Nimi oli
Paavo Lipponen. Kerroin. Pari päivää sitten sain kuulla, että vakoilijatäti
elää täyttä häkää vanhainkodissa ja on vasta 98-vuotias. Hänen puolisonsa,
vakoilijasetä, sitä vastoin kuoli kymmenkunta vuotta sitten.
VTV:n Pöysti: Ministeriön osattava tehdä
julkisuuspäätökset itse
– HS
Valtion
taloudenpitoa valvovan valtiontalouden tarkastusviraston pääjohtaja Tuomas
Pöysti kritisoi ulkopuolisen avun ostamista valtiovarainministeriön
vakuuspapereista tekemiin salaamispäätöksiin.
Kreikan vakuudet
Vihreiden Brax syyttää hallitusta EU-politiikan
kaunistelusta – HS
"Työeläkejärjestelmä on ristiriidassa
perustuslain kanssa" – TalSa
Eläkevaikuttaja
Tarmo Pukkila kehottaa Helsingin Sanomien mielipidekirjoituksessaan
Finanssivalvontaa tarkistamaan, onko eläkevakuutusyhtiöiden vallankäyttö
perustuslain mukaista. Toimistopäällikkö Vesa Hänninen kertoi Fivan näkemyksen
asiasta Taloussanomille.