Here are
the best picks from my ending week’s posts. Bottom line & summary: Ukrainian crisis not going anywhere, growth outlook in Europe remains terrible, ECB's QE doubted.
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EUROPE
Germany’s Economic Mirage – Project
Syndicate
Philippe
Legrain: For 60 years, successive German governments sought a more European Germany. But now, Chancellor Angela
Merkel’s administration wants to reshape Europe’s economies in Germany’s image. This is politically unwise
and economically dangerous.
BANKS
Europe’s Single Supervisory Mechanism – Bruegel
A closer
look at the ECB’s list shows that the smaller banks are concentrated in a
limited number of countries, much more so than larger ones. Most small banks
are German (and Austrian and Italian).
Who’s
afraid of the AQR?
– Bruegel
Banks have
incentives to recapitalize in socially undesirable ways and to hide losses on their
balance sheets. Will the comprehensive assessment solve these issues by forcing
significant European banks to recognize losses and to recapitalize by issuing
new equity instead of deleveraging?
ECB's test may not be final word on health of Europe's banks – Reuters
It has been
billed as a make or break moment for Europe's banks: the publication of
rigorous industry-wide health checks next month after three previous tests
failed to spot problem lenders.
EUROPEAN CENTRAL BANK
ECB:
Market exerting pressure through inflation expectations – Nordea
Medium term
inflation expectations in the form of the 5Y5Y HICPxT EUR inflation swap level
are now just marginally above its all-time low (in oct 2010), and puts the ECB
in an awkward position not made any better by the TLTROs getting off to a bad
start yesterday. The Draghi-induced rebound in the measure after Jackson Hole has disappeared and we’re now below
the late August values. Will this combination eventually and inevitably lead to
QE?
Why Europe needs to give up on QE – TradingFloor
In our
view, there are two factors behind the euro's continued weakness. Firstly, it
is not really all that weak...the dollar is just on a tear. Secondly, markets
have been pricing in expectations of an ECB-led QE programme for a long time,
but this does not look ready to materialize. In light of all this, could the
euro have finally hit bottom?
Europe should fear German retreat:
Ambrose Evans-Pritchard – TradingFloor
European
hopes for central bank-led quantitative easing have retreated even further with
the success of Germany's anti-euro Alternative für
Deutschland party.
Weidmann
Says Governments Must Take Lead Amid ECB Policy Limits – BB
TLTRO
effect is the ECB’s Waiting for Godot – Reuters
European QE
is Not a Given — BlackRock – WSJ
Germany's Schaeuble unhappy at debate on
ECB buying ABS, bonds – Reuters
Former German top judge says ECB could face more legal challenges – Reuters
ASIA
China Getting Used to the ‘New Normal’ of Slower Growth – WSJ
The years
of double-digit economic growth are over in China, say government officials who are
starting to use a phrase familiar to Americans and Europeans: “the new normal.”
Xi
Jinping’s Pure Party
– Project
Syndicate
George
Magnus: While the Chinese authorities' efforts to root out corruption within
the Communist Party are a welcome development, the Party itself is part of the
problem.
Australia’s
Central Bank Makes Pre-Emptive Move on House Prices - WSJ
RBA
Discussing Measures to Cool ‘Unbalanced’ Housing Market - BB
Australia’s central bank said investors are
starting to distort the nation’s housing market and is discussing possible
measures with other regulators to strengthen lending practices.
FINNISH
Millä eväillä Saksan populistipuolue kasvaa? – TalSa
Uusi saksalainen populistipuolue AfD riemuitsee pärjättyään Brandenburgin
ja Thüringenin osavaltiovaaleissa. AfD esiintyi vaaleissa pullistelevana
protestipuolueena, mutta sitä on vaikea sijoittaa poliittiselle kartalle.
EK:lta Kasvun manifesti: Tekoja teollisuuden ja
työpaikkojen turvaamiseksi – EK
1: Verotuksen ja sääntelyn liipaisinsormi saatava vihdoin
kuriin * 2: Kannustetaan uusia ideoita sekä osaavia ja innostuneita tekijöitä:
investoidaan tutkimukseen, koulutukseen ja kansainvälistymiseen. 3: Otetaan
kaikki tehot irti tuotantopanoksista – antaa energian, rahoituksen ja datan
virrata. Eikä logistiikkaverkosta ole varaa tinkiä. 4: Uudistetaan työmarkkinat
kasvun esteestä sen mahdollistajaksi.