Best article links selected
from the ending week’s posts. Last week’s edition here.
EUROPE
Merkel's Europe - how her
men run Brussels – Reuters
Postwar humility "done with", as Germans seek EU
power
The ‘official’ cost of austerity – mainly
macro
What ended the EZ
crisis was not austerity but OMT: if that had been rolled out in 2010 rather
than 2012, other periphery countries could also have adjusted more gradually.
And of course fiscal consolidation in Germany and some other core countries was not
required at all. If instead we had seen fiscal expansion there, to counter the
problem of hitting the ZLB, then the overall impact of fiscal policy on EZ GDP
need not have been negative.
US BLAMES GERMANY
On International Economic
and Exchange Rate Policies –
US
Treasury
Germany’s anemic
pace of domestic demand growth and dependence on exports have hampered
rebalancing at a time when many other euro – area countries have been under
severe pressure to curb demand and compress imports in order to promote
adjustment. The net result has been a deflationary bias for the euro area, as
well as for the world economy.
Raw Nerve: Germany
Seethes at US Economic Criticism – Spiegel
German policymakers
are striking back at the United States, after a US Treasury report blasted the
country's massive trade surplus. Sensitivities in Berlin are still high over US spying on Chancellor
Angela Merkel.
US Blasts Germany's
Economic Model; Germany
Blasts Right Back... And May Use Snowden As Leverage – ZH
Charlemagne: Fawlty Europe – The
Economist
Will the European
Commission dare to utter the unmentionable to the Germans?
It’s Not Germany’s Fault Europe Is Turning Japanese – WSJ
STRENGTH OF EURO
Positive net capital inflows boost EUR – TradingFloor
Eurozone net capital
flows continue to provide a solid backdrop to the EUR at a time when
international investors are increasing their allocations to Europe.
Euro area Viewpoint: The
strong euro matters – Nordea
Since the summer of
last year, the euro has gained some 10% in value against the USD, and around 8%
in nominal and also real trade weighted terms. This is clearly reflected in
foreign trade data.
Euro Gains Seen as ECB Bank
Test Sparks Repatriation: Currencies – BB
The euro, which
reached a two-year high versus the dollar this month, is poised to extend its
gains as the ECB’s audit of the region’s financial system encourages lenders to
repatriate overseas assets.
This is your euro on AQR – FT
DEFLATION THREAT
‘Sharp euro zone inflation
drop, record joblessness add to ECB conundrum – Reuters
Euro zone inflation
dropped sharply to nearly four-year lows in October and unemployment stuck at
record highs in September, increasing pressure on the European Central Bank to
do more to protect economic recovery.
Europe
heads towards disinflation –
TradingFloor
There is a major a shift in European economic data
indicating that Europe is heading towards disinflation,
which from a policymaker's perspective is the worst of all evils in economics. Europe
now has less inflation than Japan.
Japanisation is ahead.
Lower oil prices and
stronger euro push inflation down to 0.7% - Nordea
Or read the summary
Draghi on the edge of deflation – FT
The Credit Suisse European economics team are growing concerned
about Mario Draghi’s disinflation problem:
EUROPEAN CENTRAL BANK
FI Viewpoint – LTRO update – Nordea
Last week, excess
liquidity fell below the EUR 200bn level for the first time since 2011. This is
around the levels below which the volatility in the overnight rate used to
increase and EONIA could start climbing towards the refi rate. With year-end
coming up, the LTROs approaching one year to maturity, and the Asset Quality Review
and stress test in focus ahead of next year, we could see continued large
repayments and front-end EONIAs moving higher.
Press release October 2013
euro area bank lending survey
– ECB
The euro area bank lending survey Q3 2013 – ECB
No more credit tightening in the Euro area – Nordea
This year in banking crises – voxeu.org
Much has happened
since VoxEU published an eBook on the banking union in Europe one year ago. In this column, the editor of
the eBook reviews the developments and plans of the past year. Many of the
issues flagged by eBook contributors are still relevant and have not yet been
addressed. While immediate pressures seemed to have receded, the crisis is
still very much with us and is still awaiting resolution.
Mediobanca hints at Italian
euro exit unless Germany shifts on EMU policy – The
Telegraph
The exchange rate is
bringing Italy's worrying matters to a head.
An encouraging start for
the ECB’s Big Bank Review – Bruegel
Thus, the conflict
between the ECB and member states will escalate. It is likely to trigger
significantly more financial-market volatility in 2014 than Europe has witnessed (so far) in 2013, in spite of
sizeable internal shocks this year such as the February election in Italy and the March developments in Cyprus, and external ones such as the turmoil in
emerging markets and the recent US fiscal drama.
ECB expected to cut the refi rate in December – Danske
Bank
PIIGS
Pieces of good news from Spain, but don’t call it recovery yet – Nordea
UNITED STATES
FEDERAL RESERVE
Tapering is on hold, not
off – FOMC preview – Nordea
Three Takeaways on the Fed’s Policy Statement
– December Taper Not Off the Table – WSJ
Tapering is on hold, not off – FOMC statement – Nordea
OTHER
Quant finance blogs – Portfolio
Probe
Global FX Strategy: No more
EURUSD upside – Nordea
In the short term,
we expect the USD to gain ground. The market expectations of tapering have been
postponed to March – and even later – which can be changed by a few better
macro figures from the US. (Our economists still call for a January
taper.) The weaker payrolls in September may still be revised as they used to
in previous years. Various short-term indicator models suggest that the EURUSD
has overshot.
Forward Guidance: A new Vox
eBook – voxeu.org
Forward guidance is the practice of communicating the future
path of monetary policy instruments. This column introduces a new eBook on the
subject that collects the views of central bankers from the 7Fed, ECB, Bank of
Japan, and Bank of England together with those of scholars and market
participants. Forward guidance could be the key to unwinding massive
central-bank balance sheets without severe disruptions.
Fiscal Multipliers:
Liquidity Traps and Currency Unions – Economist’s
View
FINNISH
Näin pankkiunioni höynäyttää meitä kohti liittovaltiota – Jan
Hurri / TalSa
Pankkiunioni on välttämätön lisä rahaliittoon,
jotta velkakriisi ei toistu. Näin vakuuttavat europäättäjät. Heidän
perustelunsa ovat kuitenkin keskeisiltä osin kyseenalaisia. Pankkiunionin
sivuvaikutukset voivat jopa kärjistää velkakriisiä lisää – ja näin
"yllättäen" pakottaa euromaat ottamaan lisää askelia kohti
yhteisvastuuta ja liittovaltiota.
Navigaattori
29.10.2013 – Nordea
Yksityinen velkataakka ja pankkitestit hidastavat Euroopan kasvua * Ruotsin
kruunu vahvistuu, mutta maltillisemmin * Nytkö lyhyet korot lähtivät? * Kasvava
USA:n tuotanto painanut öljyn hintaa * Metsäyritykset ja Neste Oil tuloskauden
yllättäjiä * Mitä Fedin elvytyksen jatkuminen merkitsee eurolle? * Paineet
EKP:lle kasvavat * Kansainvälistä hajautusta sijoitusobligaatiolla
Rahoitusmarkkinaraportti
2/2013 – Suomen
Pankki
Suomalaiset yritykset laskeneet liikkeeseen poikkeuksellisen paljon
joukkolainoja * Asuntoyhteisöjen lainakanta yli kolmenkertaistunut kymmenessä
vuodessa * Euroalueen pankkien hoitamattomat luotot kovassa kasvussa * Monet
euromaat rajoittavat suuria käteismaksuja
Tuomas
Saarenheimo ja HeSarin haastattelu – kerrassaan jännittävää – Tyhmyri