The best articles from the ending week. Plenty of Finnish articles. Last
week’s ‘Best of’ here.
Themes of the week: Federal Reserve continues to excite people, now that
the rot has spread to the emerging markets and all kinds of negative feedback
loops are discussed. Syria and European bright
data were also notable.
EUROPE
Europe’s Single Bank Rule
Book Falls Apart as North Races Ahead – BB
The goal of a single
rule book for Europe’s banks is splintering even before it’s
implemented as northern countries move ahead with tougher requirements to ward
off the next boom-to-bust cycle.
Angela Merkel: Greece
should never have been allowed in the euro – The Telegraph
Saving Europe’s Real Hegemon – Project Syndicate
Hans-Werner Sinn:
Thus, it is clear how the losses incurred by the ECB’s de facto regional fiscal
policy are to be avoided: the write-off costs will be transferred from the ECB
to the ESM. This makes no difference to taxpayers, who will have to pay for
both institutions’ losses in the same manner. But it has the advantage of
allowing the ECB to present itself as having a clean balance sheet, thereby
enabling it to maintain its current policy.
German elections: New momentum on EU issues – Danske Bank (pdf)
Both the current
coalitions and a possible broad CDU-SPD coalition are pro euro. Euro-sceptic Alternative
für Deutschland has only a round 3% of the votes in the polls. Nevertheless,
the elections are important, because sensitive European issues have de facto
been paused in order not to upset the German voters. Thus, we expect progress
on issues from the Banking Union to Greek debt forgiveness to gain renewed
momentum after the elections, no matter who wins.
Eurozone July stats ring credit crunch alarm
bells – TradingFloor
July's monetary
statistics from the Eurozone confirm that the credit crunch is not easing. The
European Central Bank is unlikely to step in now though in the hope that a
turnaround will come without intervention.
German Ifo index promises more growth – TradingFloor
The German Ifo
business climate index for August confirms the Germany's manufacturing-led recovery. Sectoral indices
suggest the growth is spreading to other sectors as well, which should support
growth in the coming months.
UNITED STATES
Why the Fed's
bond-buying may not have helped the economy – Wonkblog / WP
Reverse Repos and Fed
Intervention – Stephen Williamson
Will this be the
ZLB/repo/collateral-scarcity solution we’ve been waiting for? – alphaville / FT
According to the little-noticed
second paragraph in the FOMC minutes to the July meeting, Simon Potter of the
New York Fed discussed with the committee a possible addition to the Fed’s set
of tools for tightening policy when the time comes — a “fixed-rate,
full-allotment overnight reverse repurchase agreement facility”.
Fed Shouldn’t Ignore Emerging
Market Crisis – WSJ
Broadly, the thinking
seems to be that emerging market economies brought their problems on themselves.
The Fed and the Emerging
Markets Peril – View / BB
Mohamed A.
El-Erian: On the way in, the surge in
capital led to appreciating currencies, reduced export competitiveness and
fueled pockets of financial excesses. The reversal began in earnest in May amid
market perceptions that the Fed planned to taper its market interventions. On
the way out, the flows have caused sharp exchange-rate depreciations, spikes in
local interest rates, and fears of inflation and diminished growth.
Ahead of G20, China urges caution in Fed policy tapering –
Reuters
The U.S. Federal
Reserve must consider when and how fast it unwinds its economic stimulus to
avoid harming emerging markets, although the impact on China could be more limited compared with some other
countries, senior Chinese officials said on Tuesday.
ASIA
Monitor:
Chinese credit crunch – Danske Bank (pdf)
Credit expansion
stabilised in July with seasonally adjusted new credit expanding CNY1.0trn
after increasing CNY 0.8trn in June… The Chinese money market rate is not
affected by market stress anymore…Macroeconomic data for July and August have
so far been better than expected suggesting that the Chinese economy has
bottomed out and might have started to recover again…
Don’t Blame the Fed for Asia’s Problems – View / BB
A different kind of
smugness has afflicted Asia in recent years. After the 2008 global crash,
regional governments started believing their own press. They
were convinced they had decoupled from the West.
OTHER
Back from the beach – MacroScope / Reuters
September could be one
hell of a month and not just because of the U.S. central bank. Germany’s election on Sept. 22
is widely expected to return Merkel to power but the make-up of her coalition
will go a long way to dictate Berlin’s approach to the euro zone thereafter… September
could be crunch time for Italy too, the country labelled “too big to bail”.
Global FI Strategy – How much
higher can we go? – Nordea
Blogs
review: Takeaways from Jackson Hole – Bruegel
Although Jackson Hole was relatively
calmer this year in the absence of market moving speeches, it featured a number
of provocative research papers.
Emerging markets risk tipping
into a ‘negative feedback loop’
– The Tell / MarketWatch
Whatever the
terminology, fears are growing that the rising U.S. interest rates that struck
a blow to emerging markets could come full circle to land a retaliatory punch
on the developed world.
EM FX and Equities - Where Do
We Stand Now? – Marc to Market
Stephen S. Roach: The Global
QE Exit Crisis – Project Syndicate
Developing economies
are now feeling the full force of the Fed’s moment of reckoning. They are guilty
of failing to face up to their own rebalancing during the heady days of the QE
sugar high. And the Fed is just as guilty, if not more so, for orchestrating
this failed policy experiment in the first place.
The crisis is over.
The challenges for central bankers are only beginning. – Wonkblog / WP
What is shadow
banking? – voxeu.org
There is much confusion about what shadow banking is and why it might
create systemic risks. This column presents shadow banking as ‘all financial
activities, except traditional banking, which require a private or public
backstop to operate’. The idea that shadow banking is something that needs a
backstop changes how we think about regulation. Although it won’t be easy, regulation is
possible.
FINNISH
Suomen talouden tilannekuva
elokuussa 2013 – Suomen
Pankki
Suhdanne-ennuste Elokuu 2013: Pientä ja
hentoa kasvua – OP-Pohjola
(pdf)
Näinkö tässä kävi? – Tulli
EU-maiden
osuus Suomen ulkomaankaupasta pudonnut jäsenyyden aikana
Kaikkien toimialojen luottamus heikkeni
elokuussa – EK
Liian kallis asuminen
Suomen piilevä talousjarru – Jan
Hurri / TalSa
Talouspäättäjät
vaativat talouden rakenteisiin uudistuksia mutta vähät välittävät yhdestä
Suomen raskaimmista talousjarrusta: asumisen kalleudesta. Suurimmat kaupungit
ovat jo niin kalliita, että työn perässä muualta muuttaminen on mahdotonta –
tai sitoo nuorten aikuisten voimat ja varat jopa vuosikymmenten velkaliekaan.
Suomesta tulossa rikkaan Ruotsin köyhä
naapuri – YLE
Ruotsi menee
taloudellisesti aivan eri latuja kuin Suomi. Suomalaisten ja ruotsalaisten
elintasoero on repeämässä yhtä suureksi kuin se oli 1970-luvulla. Pellervon
taloustutkimus teki hämmästyttävän laskeman Euroopan komission keräämien
tietojen perusteella.
Ruotsi rikastuu ja Suomi köyhtyy – mutta niinhän me
sen olemme halunneet – Tyhmyri
Miksi euro - puolustuksen puheenvuoro – Juhani
Huopainen / US Puheenvuoro
(23.8.2013) Tässä oikea kauhuskenaario: 135 miljardin
eläkevaroista hukataan 100 miljardia 20 vuodessa – TE
Talousasiantuntijat tyytyväisiä uudistuksiin
– AAA-luokitus säilynee
– MTV3
Budjettiriihestä tuli odotetun vaikea – PolKom
/ SK
TE-analyysi: Rakenneohjelma vai
rakennekuppaus? - Soini seinää vasten – TE