The
best articles from the ending week. Last week’s ‘best’ here.
Previously on MoreLiver’s:
EUROPE
Germany must start taking the lead if Europe’s
battered economies are to recover, but is unwilling, due to the weight of
history, the perception that the “laziness of southern Europeans” is the cause
of the eurozone crisis, and the strategic approach of guiding “from the rear”.
The FT has just posted
an interesting and lengthy interview with outgoing Bank of England Governor Mervyn King (pictured), conducted by
the FT’s Martin Wolf.
Juhani Huopainen:
While the Markit PMI for Europe improved even more than was expected, the
numbers are still in contractionary territory. The disappointing German
manufacturing sector suggests weakness is to continue.
BANKING
UNION
Comments on the future
direct recapitalization of banks by the ESM, the Single Supervisory Mechanism
for European banks, the German legislative process for the transfer of banking
supervision powers and the domestic political situation in Greece. He spoke after the
Thursday’s meetings.
Three issues will dominate
the agenda: 1) How to support lending to small and medium enterprises, 2) What
to do against youth unemployment, 3) Progress on banking union. In this note,
we focus on the banking union because whether it succeeds or fails will make a
difference for financial markets over time.
Euro zone banks are refusing
to lend to peers in other countries in the common currency bloc, signaling a
worrying fall in confidence that appears to have worsened since the Cyprus bailout earlier this year, data analyzed by
Reuters showed.
ECB
Paul De Grauwe, Yuemei
Ji: The monetary-fiscal policy connection is under scrutiny by the German Constitutional Court in the context of the ECB’s OMT bond-buying
programme. This column argues that most analyses are deeply flawed by the
misapplication of private-company default principles to the central bank. ECB
bond-buying transforms public bonds into monetary base, and sovereign-default
risk into inflation risk. The real question is: What is the non-inflationary
limit to money-base expansion? This depends upon the economic situation and is
much higher in the current liquidity-trap setting.
Germany regards European integration, of which the euro is the apotheosis, as a
crucial national interest. The judges in Karlsruhe are wary about reaching any judgment that
would conflict with this overriding foreign-policy objective.
PIIGS
Relationship between
the surging unemployment rate of the OMT-bound Spain and its delinquent loan growth is hard to
argue with.
The fund said it can't
say with high probability that Portugal's debt is sustainable over the long
term, and noted the country's finances are vulnerable to potential distress
such as a deteriorating growth outlook and higher borrowing rates.
UNITED STATES
All the articles on
the last week’s FOMC
The IMF lowered its
2014 growth outlook and suggested that the Fed should continue its $85 billion
a month bond buying until at least the end of 2013 and repeal government
spending cuts.
ASIA
JAPAN
Ayako Saiki: Abenomics
is all the rage. Japan’s GDP grew at an annual rate of 3.5% in the first
quarter, the stock market went up by almost 30% since December, and despite
some uncertainties, sentiments, consumption, and exports are all picking up. However
inflation is at -0.9% and survey-based inflation expectation has remained flat.
Is inflation going to happen at all? This column argues the answer crucially
hinges upon the implementation of structural reforms, especially in the labour
market.
CHINA
China's shadow banking
system is out of control and under mounting stress as borrowers struggle to
roll over short-term debts, Fitch Ratings has warned.
China's central bank continues its own snugging operation, keeping the money
market rates at lofty levels.
Repo and Shibor
Skyrocket, Could Trigger Bigger Unraveling – naked capitalism
Chinese Bank Bailed
Out Through PBOC "Targeted Liquidity Operation"– ZH
The popular
explanation for the rise in Chinese repo rates is being linked to the
government’s desire to rein in the shadow banking sector. That is to say the
tightness is intentional. But what if it isn’t. What if it has more to do with
the unwind of yet another carry trade?
But when the banks
then come begging for the funding they need to support their hidden balance
sheets, they are once again at Mr Zhou's mercy. And so
far, he has shown little.
Stephen King: Before
the onset of the global financial crisis, China could be relied upon to export its way out of
trouble. Year after year, its exports grew at an annual rate well in excess of
20 per cent. As its current account surplus rose, its economy expanded with a
swagger that became the envy of the world. Now, however, China’s export growth has faded, its current account
surplus has almost disappeared and Beijing has had to search for alternative sources of
rapid economic expansion.
China’s financial system is in the throes of a cash squeeze as the government
tries to restructure the economy and punish speculators, with interbank lending
rates spiking on Thursday and bank-to-bank borrowing nearly stalled.
Chinese cash rates
spiked as high as 25 percent for a second day on Friday as banks scrambled to
secure cash, but fears of a broader banking crisis eased on speculation the
central bank had quietly added funds to the market.
OTHER
EURUSD has of late
also been supported by higher peripheral bond yields, which attracts investors
to EUR assets, hence supporting long EURUSD, – but is this correlation
sustainable? History strongly suggests NO. This begs the question what will
drive a change and how big will the impact be… The new paradigm could well be
relative growth.
Inflation is quickly
becoming a topic again – not because of concerns the huge stimulus measures pursued
by central banks would be creating inflation, but because the falling inflation
rates are raising questions of whether central banks are doing enough. Bonds should thrive in an environment of falling inflation.
Most journalists dream
of uncovering government corruption, landing a big interview or winning a
Pulitzer Prize. But those are not the goals that Thomas F. Secunda, who
co-founded Bloomberg L.P. in 1982 with Michael R. Bloomberg, has in mind: “The
only journalism that matters is the kind that moves markets,” Mr. Secunda told
the senior staff of Bloomberg News
FINNISH
Suomi
lisää löylyä, vaikka taju uhkaa lähteä – Jan
Hurri / TalSa
Kun talouden kaikki keskeiset osat supistuvat,
kokonaistuotanto ei voi muuta kuin supistua. Siksi kansalliset säästötalkoot
ovat päätön yritys, joka ei voi onnistua ilman taantuman pahenemista. Tätä
Suomen hallitus kuitenkin yrittää. Hallitus lyö lisää löylyä, vaikka löylykisa
uhkaa viedä tajun.
Björn
Wahlroos: EU:n liittovaltio on pahin uhka Suomelle – Aamulehti
Wahlroos:
Tärkeimmästä asiasta vaiettiin Kultarannassa – HS
Nordean hallituksen puheenjohtaja Björn
Wahlroosin mielestä presidentin järjestämässä keskustelussa pitäisi keskittyä
Euroopan talouteen ja sen rahapolitiikkaan, mutta niihin ei avauskeskustelussa
kajottu.
Unioni
ei kaadu kertarysäyksellä – HS
Pääkirjoitus
Ensimmäisessä vaihtoehdossa EU voittaa
vaikeutensa ja siitä tulee liittovaltio, Euroopan Yhdysvallat. Tämä vie toki
vuosikymmeniä. Toinen vaihtoehto on, että unionia ryhdytään rauhassa purkamaan.
Sekin kestää kymmeniä vuosia.
Miksi
euro vahvistuu dollariin nähden – selitys yhdellä kuvalla – tyhmyri
Puheen
Iltapäivä: Mielipiteitä Suomen nykytilaan ja tulevaisuuteen – YLE
Kirjailija ja kolumnisti Kalle Isokallio
kertoi Puheen iltapäivässä totuuksia Suomen tilasta. Toimittaja Miia Krause
Heikki
Koskenkylän analyysi EU:n ja IMF:n väittelystä - kumpi on oikeassa? – PS
Onko Kreikalla velkasaneeraus edessä? Suomen
Pankin osastopäällikkönä toiminut valtiotieteiden tohtori Heikki Koskenkylä
arvioi EU:n ja IMF:n kriisinhoitomenetelmiä ja kertoo kantansa Suomen asemasta
mahdollisessa velkasaneeraustilanteessa.
Haluammeko kieltäytyä lisälaskuista? – Peter
Nyberg
Analyysi:
Laittaako Saksan perustuslakituomioistuin suitset EKP:lle? – Perussuomalaiset
Pitkän
linjan talousvaikuttajat rummuttavat eurokritiikkiä – TalSa
Eurokriisi on kestänyt kohta neljä vuotta.
Kriisi on saanut Suomessakin useat eläköityneet virkamiehet kritisoimaan
eurokriisin ratkaisutoimia ja koko rahaliittoa.
Pääkirjoitus:
Kultarannan pöydästä löytyi jokaiselle jotakin – IL
Eliitin aiempi eurohype on muuttunut
vähättelyksi ja synkistelyksi.
Ulkolinja:
Stora Enson tuplakirjanpito? – YLE Areena
Vuonna 2000 Stora Enso teki historiansa
huonoimmat kaupat ostamalla yhdysvaltalaisen Consolidated Papers -yrityksen.
Syntyi miljarditappiot, jotka Stora Enso pimitti kirjanpitoonsa, paljastaa
yrityksen entinen työntekijä