8th Feb - W/E: Linkfest

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Friday: Monstrously good payroll data

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EUROPE

Syriza and the French indemnity of 1871-73 – Michael Pettis

Michael Pettis explains the euro crisis (and a lot of other things, too) – FT

Pettis On European Policymakers' "Terrifyingly Low Level Of Sophistication" – ZH

Greece: Greenspan predicts exit from euro inevitable – BBC

"The problem is that there there is no way that I can conceive of the euro of continuing, unless and until all of the members of eurozone become politically integrated - actually even just fiscally integrated won't do it." [audio]

Even sorting out Greece’s debts may not be enough to repair the euro – The Economist

There is little reason to think that exhortations for more understanding now have more chance of succeeding than in the past. Europe will find a way to muddle through, and the fissures will grow mossy again. Until the next earthquake.

Spain and Podemos: Can they? – The Economist

The Spanish answer to Syriza shows its strength ahead of November’s election

Welcome to Europe, where the bond market is upside down – Quarz

On the Size of the Government Spending Multiplier in the Euro Area – Bank of France

Bank of Italy Boosts GDP Growth Estimates on ECB Measures – BB

Shifts in euro area Beveridge curves and their determinants – Suomen Pankki

  NORDICS

Strategy Sweden: Riksbank call a risky business – Nordea

Riksbank: Monetary policy for yesterday's problems – Nordea

Danish central bank fiercely defends currency peg – FT

Denmark Pledges More to Come If Speculators Still Doubt Peg – BB

  UKRAINE / RUSSIA

Battle for Ukraine: How the west lost Putin – FT

The first of two articles examines how the west misread the Russian leader’s determination

Battle for Ukraine: How a diplomatic success unravelled – FT

Second part of the series looks at the fate of the Minsk accord

Ukraine Summit Is Unsuccessful; U.S. Contemplates Next Steps – BB

Europe and U.S. clash over how to confront Putin on Ukraine – Reuters

Merkel-Hollande mission ends with promise of more talks – FT

Merkel warns Ukraine peace plan may fail, but worth the effort – FT

Nato discusses arming Ukraine – FT

  SWITZERLAND

SNB's Jordan says will be active in FX market if needed – Reuters

SNB’s Jordan: economy could contract from cap decision – WSJ

Swiss National Bank Hints At Capital Controls – ZH

  GREECE

Can Greece Make a Deal with Europe?

Part 1: Why and When a Deal Must Be Struck – PIIE

Part 2: What Kind of Deal Can Greece Hope For? – PIIE

Eurogroup Gives Greece 10 Day Ultimatum: Apply For Bailout Or Grexit – ZH

Can Greece Make a Deal with Europe? Part 1: Why and When a Deal Must Be Struck – PIIE

Greece's Caa1 government bond rating on review for downgrade – Moody’s

S&P Downgrades Greece, Suggests Worst Case: Bank Runs And Capital Controls – ZH

Different delivery, one message to Greece's new leaders – Reuters

Greece Gambles On Armageddon, Warns It "Only Has Weeks Of Cash Left" – ZH

Yanis Varoufakis, Greek finance minister – FT

Defiance and Charm: A Measured First Week for New Greek Leader – Spiegel

The enforcer: How the ECB can dictate terms to the Greek government – The Economist

Rare growth-linked debt could work for Greece – Reuters

  EUROPEAN CENTRAL BANK

The ECB’s early adopter problem – FT

Money injections have (at least) temporary distributive effects: they increase inequality if a richer group gets the money first, and decrease it, if the newly created money goes to a group that was relatively poorer.

Should the ECB Helicopter Adjust Its Dropping Zone? – CEP

It may make sense for Draghi’s helicopter to review its dropping zone. Or, at least, the pilots should explain to us why they are targeting the top of the pyramid rather than its bottom. - See more at:

Cross-border lending on the mend in the euro zone – Reuters

UNITED STATES

U.S. Employment Situation – January 2015 – Global Macromonitor

The Macroeconomic Effects of the FED’s Unconventional Monetary Policies – FED

Did the Fed’s QE actually do anything for the real economy? – FT

February Macro Update: A Trend of Consistently Better Growth – Fat Pitch

OTHER

Technology and Finance: Drivers of a Profit Margin Explosion – Philosophical Economics

The profit margin expansion seen in the U.S. corporate sector over the last two decades has been driven largely by gains in the financial and technology sectors. I examine arguments for and against the sustainability of this shift.

Not kicking the habit: The world is still addicted to debt – The Economist

What Central Bank Defeat Would Look Like, In Charts – ZH

Why the future's bright for passive investing – TradingFloor

Peter Garnry: Passive investing may make up over 30% of the market * Tackling the active vs. passive debate * Ray Dalio's 'all-weather approach' works

ECONOMICS

Government spending multipliers: Evidence from US historical data – voxeu

There is no consensus among economists about the size of the multiplier of government purchases. It is not clear either how multipliers vary with the state of the economy. This column presents new evidence on this issue using large historical data set from the US. The findings suggest that there is no evidence that fiscal multipliers differ by the amount of unemployment or the degree of monetary accommodation.

Explaining the Boom-Bust Cycle in the U.S. Housing Market – FED

Shifting lending standards (as measured by a loan-to-equity limit) were an important driver of the episode while movements in the mortgage interest rate were not…the U.S. housing boom was a classic credit-fueled bubble involving over-optimistic projections about future housing values, relaxed lending standards, and ineffective mortgage regulation.

Debt and fiscal adjustment: Historical evidence – voxeu

Fiscal consolidation is back at the top of the policy agenda. This column provides historical context by examining 91 episodes of fiscal consolidation in advanced and developing economies between 1945 and 2012. By focusing on cases in which the adjustment was necessary and desired in order to stabilise the debt-to-GDP ratio, the authors find larger average fiscal adjustments than previous studies. Most consolidation episodes resulted in stabilisation of the debt-to-GDP ratio, but at a new, higher level.

The illusion of monetary policy independence under flexible exchange rates – voxeu

The conventional ‘trilemma’ view is that countries that allow free capital flows can still pursue independent monetary policies as long as they allow flexible exchange rates. This column examines the pass-through of Federal Reserve interest rates to policy rates in Chile, Colombia, and Mexico. The author concludes that, to the extent that central banks take into account other central banks’ policies, there will be ‘policy contagion’ and that, even under flexible rates, monetary policy will not be fully independent.

Globalisation everywhere but in the growth numbers – voxeu

Understating the relationship between trade and growth is still at the core of the economics profession. This column seeks to identify the pathways by which globalisation affects economic growth looking at the case of Belgium in the decades preceding the First World War. It argues that the collapse in fixed export costs promoted the entry of uncompetitive firms into export markets and as the trade component of GDP rose, the share of high performing firms contracted, slowing growth.

Persistent Overoptimism about Economic Growth – FED

Possible explanations for this pattern include missed warning signals about the buildup of imbalances before the crisis, overestimation of the efficacy of monetary policy following a balance-sheet recession, and the natural tendency of forecasters to extrapolate from recent data.

How to choose a ”good” monetary regime – Lars Christenssen

When central bank losses matter – Simon Wren-Lewis

This is a post about why the taboo against helicopter money or money financed fiscal stimulus is irrational once we have Quantitative Easing, but might nevertheless be in the interest of some groups.

  PETRODOLLARS AND FLOWS

Box: Oil and debt (February 2015) – BIS

BIS says financial flows partly to blame for oil collapse – FT

Unravelling the petrodollar liquidity enigma – FT

About that $9 trillion global non-bank credit exposure… - FT

Busting currency pegs, Saudi Arabia edition – FT

BIS: There’s an the oil-debt-dealer nexus – FT

  NEGATIVE YIELDS / INFLATION / BONDS

Negative Yields Send a Gloomy Message – WSJ

The message being sent by Europe’s long-dated negative yields is that deflation and low growth are embedded economic prospects.

The Treasury Market's Legendary Liquidity Has Been Drying Up – BB

A year ago, you could trade about $280 million of Treasuries without causing prices to move, according to JPMorgan Chase & Co. Now, it’s $80 million.

Gavyn Davies: How negative can interest rates go? – FT

Early indications suggest that the effective lower bound on rates, at least for short periods, may be lower than economists have previously supposed.

Scarcity of Safe Assets, Inflation, and the Policy Trap – FED

We construct a model in which all consolidated government debt is used in transactions, with money being more widely acceptable. When asset market constraints bind, the model can deliver low real interest rates and positive rates of inflation at the zero lower bound. Optimal monetary policy in the face of a financial crisis shock implies a positive nominal interest rate. The model reveals some novel perils of Taylor rules.

Something economists thought was impossible is happening in Europe – VOX

Negative Interest Rates: Capital's Reproduction Problem – Marc to Market

The Fed's Stunning Primer For Life In A Negative Interest Rate World – ZH

  DEBATE 1

Battle of the Economics Bloggers – View / BB

Noah Smith gets market monetarism wrong – Scott Sumner

  DEBATE 2

Saying the obvious – Simon Wren-Lewis

Is democratic Keynesianism possible? – Chris Dillow

'Is Democratic Keynesianism Possible?' – Mark Thoma

OFF-TOPIC

The Billionaires at Burning Man – BB

Move over, Google Bus. There's a new symbolic fight over tech money, class, and privilege

Where Is Germany's Gold? – BB

Almost half of Germany’s gold is stored in vaults under the streets of Manhattan. Or is it?

FINNISH

Jan Hurri: Näin Suomen Pankin tuki karkaa ulkomaille – TalSa

Euroalueen keskuspankin vasta päättämissä valtionlainaostoissa on outo pohjoinen ulottuvuus. Elvytykseen tarkoitettu raha valuu eri euromaihin vaihtelevalla teholla. Viro jää miltei ilman, ja Suomenkin osuudesta suurin osa karkaa ulkomaille. Esimerkiksi Venäjälle.

Pieni piiri päättää ylimmän  johdon palkkioista – HS

HS selvitti, ketkä päättävät toimitusjohtajien ja hallitusten jäsenten palkkioista. Esiin nousivat työeläkeyhtiöt, yritysjohtajat ja suuromistajat.

"Venäjän rahat riittävät vain vuoden tai kaksi" – TE

Lyhennysvapaa: Ei mörkö eikä pelastus – Roger Wessman

Roger Wessman: kannattaako pitää lyhennysvapaata? – MarketNoze

  KREIKKA

Kreikan tie ulos eurosta: "Jos EKP ei anna jatkaa ELA-ohjelmaa..." – TE

Korsikalainen äänestys – Henri Myllyniemi / US

Pureeko kreikkalaisten teatteri saksalaisiin? – TalSa

Varman Murto: "Kreikan poistuminen eurosta on vaihtoehto C" – TE

Nordea: Suomen Kreikka-lainat lähes arvottomia – tappiot jopa 2,5 miljardia euroa – IS

  1992 ”Toiminta valtion kassakriisissä”-raportti

Tässä ovat Koiviston tilaaman salaisen raportin tylyt esitykset – TalSa

Suomelta loppuivat rahat täysin yllättäen 1992 – Koivisto hermostui – IS

Raimo Sailaksen kauhea syksy – TalSa

IS: Suomessa valmisteltiin kassakriisissä poikkeustoimia 1992 – Verkkouutiset

Rajun raportin kirjoittaja vahtii valtion rahoja – TalSa

  POLITIIKKA

Turvattomat ajat suosivat vallassa olevia, mutta Sipilä on jo tavoittamattomissa – IL

Miksi joku saa vaaleissa valtavasti ääniä ja joku toinen taas ei ollenkaan? – HS

Keskustan nousu ja kokoomuksen alamäki pysähtyivät – IL

SS: Kyselyn mukaan kansa säästäisi maahanmuutosta – Verkkouutiset

Professori Virén: Lopettakaa hölynpöly elvytyksestä, se on moraalitonta – Verkkouutiset

Taloustieteen professorin mukaan elvytys nykytilanteessa ei ole vain väärää politiikkaa vaan myös moraalinen ongelma.

Keskusta ei halua veronkorotuksia – menoleikkauksia kahdella miljardilla – YLE

Keskustan puheenjohtajan Juha Sipilän mukaan keskustan veromallissa on sekä veronkevennyksiä että veronkiristyksiä, mutta kokonaisveroaste ei saa nousta.

Sipilä kokoomuksen kosiskelusta: Erojakin on – YLE

Keskustan Juha Sipilä kehuu kokoomuksen ulostuloa hallitustavoitteidensa kanssa, mutta toppuuttelee puolueiden samankaltaisuuksia. Demarit ja perussuomalaiset moittivat kokoomuksen piilottelevan, kenen taskulle se vaalien jälkeen käy.

Alexander Stubb: Näpertely ei riitä – Verkkouutiset

Kokoomusjohtaja tulkitsee Evan selvityksen perusteella, että suomalaiset haluavat järjestää hyvinvointivaltion uudelleen.

Sipilä: Natosta ei kirjausta hallitusohjelmaan – YLE

Sipilä kannattaa kuitenkin Nato-selvityksen teettämistä, mitä pääministeri Alexander Stubb myös on ehdottanut.