16th Oct - Still no US-deal, Europe's non-banking union

There is much about the US fiscal melodrama that is a farce. Unlike other debt crisis, this one is totally self-inflicted. It is a crisis of choice not necessity. The misconstructions have been repeated so many times that they have taken on a life of their own. October 17 most certainly does not represent the deadline on a US default. – Marc to Market

Starting last Monday, I am posting only once per day. I will also skip the “regular” link section, but you can access them from my Links-page. I want to have more time to read what I link to – and write as well.

Previously on MoreLiver’s:

Tuesday: Still no deal, Europe darkens

Tuesday: Almost a deal, almost the deadline

Monday: Another Shutdown Day

Random Charts / Käppyrää

Weekender: Weekly Support

Best of the Week

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EUROPE

  BANKS

Draghi Turns Judge on Europe Banks as ECB Studies Balance – BB

Policy makers at the Frankfurt-based ECB will this week try to agree on the ground rules of its three-pronged probe into the health of the 130 banks it will start supervising next year. The process will stress-test balance sheets for exposure to sovereign debt as well as push institutions to admit to more of their bad debt than they have before, according to three officials who spoke on condition of anonymity. The check-up due in early 2014 is the ECB’s precondition for assuming the burden of overseeing banks.

The banks are OK: survey edition – alphaville / FT

We don’t know exactly what next year’s Asset Quality Review will involve yet, but we are starting to get a picture of what investors think about the ECB’s forthcoming burrow through bank balance sheets. In short, given that it might not be all over until the end 0f 2014, everyone is feeling pretty good about the banks right now, and that might explain a surge of appreciation for European stocks.

Banking union: ‘Brussels passes the banking supervisor, but without bailout fund’ – Presseurop

Germany digs in heels as Europe moves towards banking union – Reuters

EU finance ministers agreed on Tuesday to give the European Central Bank sweeping supervisory powers in the euro zone but Germany dug in its heels on how to deal with failing banks, the second stage in building a banking union.

Germany warns that direct aid for banks would require law change – Reuters

German law would need to be changed before the euro zone's rescue fund could provide aid directly to banks, the country's finance minister said on Tuesday, raising another obstacle to joint support for dealing with failing lenders.

  PIIGS

An apology of sorts – Spain not bust after all – The Telegraph

But hold on a moment. The figures have changed dramatically in the latest update to the Fiscal Monitor, just published. Instead of a 5.7 per cent structural deficit in 2018, little changed from 2012, we have one of just 1.4 per cent. What is the cause of this miraculous transformation?

Italy's  Letta Presses Ahead – Marc to Market

Fresh from a victory over Berlusconi, Italian Prime Minister Letta is pressing ahead with a modest reform program that also tilts away from the path of his technocrat predecessor, without apparently abandoning fiscal discipline. In time to meet the EC deadline, the Italian cabinet approved the 2014 budget yesterday.  It must now pass the Italian parliament after a final debate. 

Portugal Plans 3.2 Billion Euros of Spending Cuts for Next Year – BB

Portugal: ‘Cuts beyond the troika’ – Presseurop

UNITED STATES
QE3 Critic Fisher Says Hard to Argue for October Taper Amid Washington Showdown – WSJ

Retail Sales Slow As Shopping Season Heats Up – ZH

  SHUTDOWN / DEBT CEILING

U.S. lawmakers begin last-ditch effort on debt ceiling – Reuters

The U.S. Senate prepared for a last ditch effort Wednesday to avoid a historic lapse in the government's borrowing authority, a breach that President Barack Obama has said could lead to default and deliver a damaging blow to the global economy.

Some are born solvent – alphaville / FT

The prospect of a US technical default is unfortunately becoming an ever greater reality. That said, there’s no reason to panic just yet. If there is a D-day it isn’t until November 15.

Debt, Default and Leadership – Worthwhile

Watch what China does with US debt, not what it says – The Telegraph
So much for the hot rhetoric from Beijing questioning the creditworthiness of US debt and consigning the US dollar to the dustbin of history. The latest data shows that China's foreign reserves soared by $163bn in the third quarter to $3.66 trillion, one of the biggest jumps ever.

US Research - The political situation and its consequences – Danske Bank (pdf)

OTHER
When did globalisation start? – The Economist

Columbus caused inflation and started globalization.

Emerging Markets Briefer – October 2013 – Danske Bank (pdf)

http://www.danskebank.com/en-uk/ci/Products-Services/Markets/Research/Documents/EM_Briefer_October_161013.pdf

FINNISH

Jyrki Katainen ja työpaikan haku – hakupaperit vain ovat suomalaiselle veronmaksajalle kalliit – Tyhmyri

Setä Samuli sotkeutui omatekoiseen velkasotkuun – TalSa

Yhdysvallat on maailman absoluuttisesti velkaisin valtio, mutta se ei ole Kreikka. Setä Samulilla ei olisi vaikeuksia hankkia tarvitsemaansa rahoitusta, ellei maan poliittinen kriisi panisi kapuloita rahoituksen rattaisiin. Toki Yhdysvallatkin luisuu kohti julkisen talouden todellista rahoituskriisiä, mutta sen aika ei ole vielä. Velkakatto on omatekoinen ongelma.