Here
are the ”best” from my posts of the ending week. Last week’s edition here.
EUROPE: The divergence between France and Germany becoming smaller, expectations remain positive but inflation remains very low and looks weakish. ECB has gone extra-dovish in its comments, but Germans are sending fiscally tight messages and promising further integration - more iron maidens and "one size fits all"-policies, I guess. The IMF agreed on a big bailout of Ukraine, but the geopolitical situation remains open to further trouble.
US: Fed continues sounding hawkish, and no serious attempt to downplay the "six months after QE is over"-line that Yellen presented at the last FOMC meeting. The Fed is also being tight against the big banks, and probably thinks or at least is scared that the easy money has created an opportunity for another leverage-fest to build within the big banks.
ASIA: China's bad news continue, in fact the newsflow has been so bad that there have been speculation that easier monetary and/or fiscal policy would soon be announced to ease the pressures.
FINLAND: New austerity measures were launched to keep the country within the Maastricht criteria. The far left party Vasemmistoliitto left the government as a result.
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EUROPE
Fritz W. Scharpf : No
Exit from the Euro-Rescuing Trap? – Max Planck Institute
The euro is a
democratic disaster – WaPo
Scharpf describes Europe’s single currency as
a “non-military attempt at imperial unification,” and suggests that there is a
“disturbing continuity of Nazi visions of European unity and the ideas of some
prominent promoters of European integration in postwar Germany.” These are very
strong words for a German political scientist of Scharpf’s stature (he is an
extremely well-known public intellectual).
Deconstructing the
Euro
– Project Syndicate
The eurozone’s current travails stem from the fact that the euro’s
exchange rate does not align with member countries' economic positions – a
problem that cannot be resolved within the currency union. The only way to
restore balance to Europe is to pursue a controlled segmentation of the
eurozone, led by Germany and France.
German Finance
Minister: EU Treaty changes back on table after European elections – Reuters
Schäuble
revives push for eurozone integration – FT
UK and Germany say EU reform must be fair to non-euro members – Reuters
Get
your finances in order and stop blaming Germany – FT
Otmar Issing: The countries now in trouble have caused their own problems
Peripheral countries: A scorecard after six
years of crisis – Natixis
Production capacity
has decreased by 25% in Spain, by nearly 17% in Greece and Italy and by around 13% in Portugal
EUROPEAN CENTRAL BANK
The ECB should do QE
via forex intervention – voxeu.org
The ECB should buy US treasury securities, lowering the foreign exchange
value of the euro. That would be the best way to restore the export sector of
the periphery countries.
Euro
falls as ECB steps up rhetoric about currency's strength – Reuters
Jens Weidmann said negative interest rates were an option the bank could
use to counter strong gains in the single currency. Weidmann also said it was
not out of the question for the ECB to buy assets from banks to fight
deflation, marking a radical softening of the German central bank's strict
stance on
quantitative easing.
More Thoughts about
Potential for QE from the ECB – Marc to Market
There seems to be a stepped effort by ECB officials to talk the euro
down.
ECB
Talk Not Making Predicting Policy Moves Easier – WSJ
April’s meeting will be the third straight with dovish expectations and
the marginal impact of the dovish comments is decreasing.
The
Message from the Bundesbank – Marc to Market
Officials may be more relaxed than Draghi's recent comments or the spin
put on Weidmann's comments would seem to have suggested.
Partiam,
partiamo or the ECB communication – Money Matters
The new pitch of the choir is creating some market expectations. If
these expectations will be, again, disappointed, whatever calming effect was
obtained on the exchange rate will be lost and we could see further
strengthening of the €, with the ensuing, undesired result of downward pressure
on inflation.
MACRO NUMBERS
Special: March Markit PMI – MoreLiver’s
Euro area deflation monitor – Danske Bank
Spanish CPI shock flags euro deflation risks – Reuters
Threat of Deflation sends Euro to Three Week Lows – Marc to Market
German CPI data brings no relief for ECB – Merkelnomics
UKRAINE / RUSSIA
Gazprom: The Most
Important Company In Europe – ZH
Can Europe
survive without Russian gas? – Bruegel
Replacing 130 bcm of natural gas imports from Russia within a year would
be a significant challenge, but not impossible
IMF Reaches Deal to
Provide up to $18 Billion to Ukraine – WSJ
Too Much, Too Soon – Foreign Policy
The IMF is giving billions of dollars to Ukraine's cash-strapped
government. Will that
make the country's new rulers even weaker?
UNITED STATES
FAQ: Washington’s Battle Over the IMF – WSJ
FEDERAL RESERVE
Post-FOMC Fedspeak – Tim Duy’s Fed Speak
The Fed is
pushing back on the dots because they don't want quantitative guidance, and
they forgot they were giving it. Expectations that Yellen will push for a
more dovish reaction function are being disappointed.
Fed:
Big banks do get all the breaks – WaPo
“This insensitivity of financing costs to risk will encourage
too-big-to-fail banks to take on greater risk,” Joao Santos, a vice president
at the New York Fed, wrote in the study. It “will drive the smaller banks that
compete with them to also take on additional risk.” Why should banks whose
risky behavior helped cripple the economy be given any advantages, especially
ones that could encourage more risk taking?
Fed Stresses Over
Foreign Banks – WSJ
The Federal Reserve began flexing its muscle as the de facto global
financial regulator on Wednesday, rejecting the capital plans for the U.S. units of three
foreign banks.
ASIA
China's Economy Under Mounting Stress – WSJ
Bad news is piling up for China’s economy, raising
fears Beijing’s financial power
may not be sufficient this time around to keep the economic engine ticking over
and stave off market instability. Signs of economic stress are mounting as
companies report disappointing profits and state-owned banks take large debt
write-offs.
OTHER
Random Charts &
Comments – MoreLiver’s
Global summary:
post-crisis recovery firming in 2014 – Berenberg
Presentation –
Outlook 2014: The sweet spot of the cycle – Berenberg
US: Underlying strength * China: Resilient * Japan: Abenomics fading * UK: Strong recovery *
Eurozone: Firmer growth * Germany: Powering on * France: Reform laggard * Italy: Politics matter * Spain: Reform success * Portugal: Turn-around
New Financial
Forecasts – Nordea
12 March we released a
new Economic Outlook with updated real-economic forecasts for 2014 and 2015. We
also updated our longer-term financial forecasts for central banks, rates, FX
and commodities. We have made no changes since then, but this slide set is
intended to give a quick overview of our main financial forecasts.
Did Hyman Minsky find
the secret behind financial crashes? – BBC
American economist Hyman Minsky, who died in 1996, grew up during the
Great Depression, an event which shaped his views and set him on a crusade to
explain how it happened and how a repeat could be prevented, writes Duncan
Weldon.
EM FX Monocle – Differentiation – Nordea
Emerging Market FX
remains vulnerable to bouts of risk aversion as global financial conditions
tighten and fears of a hard landing in China resurface. However, vulnerabilities differ
across the EM universe.
FINNISH
Euro & talous 1/2014: Rahapolitiikka ja
kansainvälinen talous
– Suomen
Pankki
Special: Suomi / Kehysriihi -. MoreLiver’s
Suomella outo hinku maksaa
muiden velkoja – Jan
Hurri / TalSa
Suomen sanavalta
euroalueen pankkiunionissa jäänee luultua pienemmäksi ja velvoite yhteisen
kassan kartuttamiseksi voi koittaa luultua aiemmin. Suomi päätynee maksamaan
muiden velkoja ja kantamaan muiden pankkiriskejä. Jostakin syystä kiire on
silti kova, vaikka kaavailtu pankkiunioni ei lopeta tätä kriisiä eikä estä
seuraavaa.
EURO
Euro on politiikkaa ja taloutta – The
Ulkopolitist.
Tietoisuus talous- ja
rahaliiton riskeistä 2014 – VM
VM:n selvitys: Tässä ovat
kaikki euron 28 virhettä – TE
Valuuttakurssiregiimi, ennakointivaikutukset
ja finanssipolitiikan tehokkuus pienessä avotaloudessa – ETLA
TALOUSENNUSTEET
Talousennuste 2014–2015: Euroopassa vihdoin
käänne ylöspäin – PT
Euroalueen taantuma ohi, Suomen BKT tänä
vuonna +0.7% – ETLA