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EUROPE
EP elections, Farage
vs Le Pen, and what now for Donetsk and Luhansk?
The former US Treasury
Secretary says that EU officials approached him in the white heat of the EMU
crisis in November 2011 with a plan to overthrow Silvio Berlusconi, Italy’s elected leader.
Keynesian economics works: Eurozone edition – mainly
macro
HOW THE
EURO WAS SAVED: FT SPECIAL
‘It was the point where the eurozone could have
exploded’ – FT
In the first part of a
series on the year that forever changed Europe, Peter Spiegel recreates three bitter days in
November when the eurozone crisis hit its lowest moment
In the second
instalment of a series on the year that changed Europe, Peter Spiegel reveals how a secret strategy
was developed to contain the firestorm from a Greek exit.
In the third part of a
series, Peter Spiegel examines Angela Merkel’s deft political moves that led to
the end of the crisis
EUROPE’S
JAPANIFICATION / DEFLATION
Charting Europe’s
Japanification – FT
Credit Suisse: The
lessons from Japan suggest that policy action in coming months may be critical for a
recovery in inflation.
Secular Stagnation in the Euro Area – Krugman
/ NYT
Europe is extremely likely to have a significantly
lower natural real rate of interest heading forward than it had in the past.
This in turn suggests that it’s a really really bad idea to let inflation drift
down, whether or not it turns into outright deflation.
Does the Euro Zone Need Deflation? – WSJ
Ultimately, euro-zone
governments are likely to backslide on their treaty obligations if, as seems
likely, the ECB fails to trigger significant growth. In which case, they’ll be
glad if deflation allows them to sell vast quantities of debt.
EUROPEAN
CENTRAL BANK
DBW: ECB negative deposit rate edition – FT
The most discernible
impact of a negative deposit rate in the broader financial markets may well be
an intensification in the hunt for yield.
The ECB should do QE – voxeu.org
As banks repay their
loans from the Long-Term Refinancing Operation, the ECB’s balance sheet is
shrinking. This column argues that, given the slow recovery and sustained low
inflation, the ECB should replace its bank lending programme with quantitative
easing. Buying short-term government debt would be consistent with the ECB’s
inflation target, would keep the ECB’s monetary policy separate from its role
in bank supervision, and would create a built-in exit strategy from
unconventional policy.
Japanese officials are
privately voicing their frustration at Europe’s attempts to talk the euro down against other
currencies, a move some of them see as hypocritical.
UNITED STATES
Fed’s Bullard Says First Rate Increase Could
Come Late in 1Q 2015 – WSJ
Fed’s Yellen: Small Businesses Deserve
‘Considerable’ Credit for Recovery – WSJ
MACRO
NUMBERS
Inflation Measures
Show Increase, but still Low year-over-year in April – Calculated
Risk
UMich Confidence
Tumbles, Misses By Most In 8 Years – ZH
Preliminary May
Consumer Sentiment decreases to 81.8 – Calculated
Risk
Housing Starts at
1.072 Million Annual Rate in April – Calculated
Risk
A few comments on
Housing Starts – Calculated
Risk
ASIA
Australia’s Central Bank Not Interested in
Targeted Steps to Cool Housing
– WSJ
OTHER
Macro Horizons: More Data to Back the ECB
Doves’ Case – WSJ
Grand Central – WSJ
Hilsenrath’s Take:
Rosengren Sizes up a Disappointing First Half * Soft Economies Have Policy
Makers Groping for What to Do Next * Kuroda Keeps BOJ Easing Hopes Alive * Japan
Questioning ECB’s Currency Rhetoric * Former Bush Economic Adviser to Join BOE
Rate-setting Committee