EUROPE
Great
Graphic: The Euro and Commodity Prices – Marc
to Market
Jumpstarting
the Eurozone’s economy, French government resigns, and the Italian left at a
crossroads
Special
Report: The billion-dollar fall of the house of Espirito Santo – Reuters
When a $365
million bond investment by Venezuela's state oil company went south, it
portended doom for Ricardo Espirito Santo Salgado's 150-year-old financial
empire.
Scylla,
Charybdis, and the Euro – Krugman
/ NYT
Sweden’s economy has re-gained speed,
following supportive macroeconomic policies and strong household demand.
Employment has been rising, but the labor force expanded even more, resulting
in higher unemployment mostly among vulnerable groups. Inflation remains very
low, driven by external and domestic factors. At the same time, financial
stability risks are an increasing concern, reflecting high and rising household
debt, accelerating house prices, and Sweden’s very large banking system.
Untangling
the Mess of Austrian Bank Hypo – WSJ
Tracing the
Losses Behind a Lending Debacle That Has Cost Taxpayers Billions of Euros So
Far
DEPRESSION
That
sinking feeling (again) – The
Economist
If Germany, France and Italy cannot find a way to refloat Europe’s economy, the euro may yet be
doomed
The
combination of low inflation and low growth, which Japan has experienced for the best part
of two decades, is increasingly becoming a feature of the single currency bloc.
Lessons
of the Great Depression for the Eurozone – Mainly
Macro
Two of the
major lessons of the Great Depression are to use fiscal stimulus to get out of
a liquidity trap, and that it is far too painful to insist that uncompetitive
countries should bear all the costs of readjustment. The Eurozone has failed to
learn either lesson.
How
confused the Eurozone macroeconomic debate has become. The confusion arises
because talk of fiscal policy reminds people of Greece, the bailout and all that. That is
not what we are talking about here. We are talking about what happens when the
Eurozone’s monetary policy stops working.
EU
Leaders to Meet on Growth Amid Recovery Worries – WSJ
EU leaders
aim to meet in Italy in October and hold other
discussions on the economy in the coming months amid concerns about the
faltering recovery.
GERMANY
The
German economy: Clouds ahead – The
Economist
Recent
vigour hides underlying weaknesses in Europe’s leading economy
Fear the
fear – Coppola Comment
It was fear
of inflation, fear of debt and fear of extremism that enabled the Nazi party to
come to power.
Germany to Europe: Help Isn't on the Way – View
/ BB
Germany’s Sin – Krugman / NYT
CRISIS COUNTRIES
A
surprisingly strong recovery, largely export-driven
European
Inflation Lowest Since 2009
The Fall
of France – Krugman
/ NYT
Steen
Jakobsen: France´s new government lacks a true mandate for reform * The policy
of "dirigisme" is outmoded and ill-informed * Macro-level changes are
needed if the French economy is to recover
A more
coherent government is a condition for progress, not a guarantee
UKRAINE / RUSSIA
NATO’s
summit: Mr Putin’s wake-up call – The
Economist
The Western
alliance is responding better to Russian aggression in Ukraine. But there is more to do
Disconnecting
Russian banks from Swift?
The
conflict in Ukraine and the sanctions against Russia have already affected the Russian
financial markets. This column discusses the repercussions for the rest of Europe of possible disruptions in the
trade and financial flows with Russia. Eastern European countries could
be seriously affected by a slowdown in the Russian economy due to their close
links with Russia. Western countries – despite having
looser links with it – could also experience significant effects.
Ukraine says Russian tanks flatten town; EU
to threaten more sanctions – Reuters
EUROPEAN CENTRAL BANK
The ECB
and the Bundesbank –
Mainly
Macro
Do not
blame the Bundesbank for the flawed architecture of the ECB. The ECB abandoned
the critical aspect of Bundesbank policy, which was to target an aggregate
closely related to nominal GDP.
ECB
preview: ABSolutely interesting even without QE and rate cuts – Nordea
Rate cuts
don’t make much sense. QE would be premature. Watch out for any announcements
on ABS purchases.
UNITED STATES
When the economic record is broken
it is time for a new tune – TradingFloor
The Fed's stance on inflation is
being mired by too many views * The US CPI has been trending lower since a peak
in 2011 * Any sensible economist should check and recalibrate their stance
All you
need are 24 indicators to understand the labor market – WaPo
This is
why it feels like the recession never ended – WaPo
From the
start of the recession in 2007, for all but the top wage earners, real
(inflation-adjusted) earnings are actually down.
Something
really important is starting to happen in the US economy – Quartz
It’s
finally happening. American companies are spending again.
Merrill
and Goldman Forecasts for August Non-Farm Payrolls – Calculated
Risk
ASIA
China is about to take the leap that will
finally end the 19-year ban on direct debt issuance by provincial governments.
The development has been hailed as positive for reform and transparency. Yet
generating hardly any discussion is the crucial question of what would happen
to investor demand for local issues once they are stripped of the comfort of
implicit sovereign support.
Foreigners
in the firing line as Chinese regulators take aim – TradingFloor
Foreign
companies swept up in China’s anti-trust investigations may
soon find company in misery. The threat of rising defaults in wealth management
and other investment products is focusing regulatory attention on the
liabilities of fund management companies and that of their foreign partners.
Don’t
bet on a real appreciation of the renminbi – The
Market Monetarist