The week's main event was supposedly the election in US. In reality, the main event was the decision to postpone decisions on Greece, lousy macro numbers from Europe, and the falling stock markets. Remember how we were told that any Grexit was kindly asked to be delayed until Obama got re-elected? He is now elected. Greece has voted 'yes' on austerity measures and will do so again on Monday. Troika's report has been read. What are they waiting for, and why they decided to delay the decision until 26-Nov? I think I'm onto something here - I'll try to figure this out.
This post's stylish feature music video is Tanzen by Tragic Error (1989). Hope you don't like it.
Previously on MoreLiver’s:
10-Nov Weekender: Weekly Support (updated!)
EUROPE
UK pushes for EU budget cut, nearly 5
million unemployed in Spain, and will Obama bring EU & US
closer together?
Twenty years after the completion of the EU’s
single market programme, member states have still not eliminated all barriers
to trade – europp
/ LSE
From measures of inflation to the failure of
European governance
– mainly
macro
The
Eurozone is in recession, and no one is doing anything about it. The ECB are
keeping interest rates at 0.75%, and there are no plans for Quantitative
Easing. It is possible to speculate on possible factors here, but there is one
obvious answer. Consumer price inflation is expected to be pretty close to 2%
this year and next in the Eurozone as a whole. So with inflation on target,
what is there to do?
Investors,
policy analysts, and even officials are quietly beginning to suggest that the
euro crisis might be over. But, investors are missing the real risk: the
collapse of public support for, or at least acquiescence to, the austerity
policies required to work down heavy debts, and for governments pursuing these
policies.
Macroeconomic
Imbalance Scoreboard – A Visual Ranking Among 11 EZ Countries – EconoMonitor
I use the annual dataset regarding the ten MIP
scoreboard indicators to map the relative distance from their indicative
thresholds for eleven EZ countries over time in order to determine the sources
of imbalances as well as their contribution to the overall ranking for each
country relative to EZ peers.
Olli Rehn, austere guardian of budgetary
discipline – Les
Echos / presseurop
Popular in
his home country of Finland and much feared elsewhere in Europe, the European Commissioner for
Economic and Monetary Affairs maintains a low profile. However, with the
introduction of new supervisory rules for budgets role, his emerging role as a
key player in Europe’s economic governance will make it
difficult for him to avoid the limelight.
Hedging macroeconomic
risk in the Eurozone: Fiscal union versus capital markets – voxeu.org
How do
members of existing monetary unions share risk? Drawing on a decade of
research, this
column
argues that fiscal transfers in fact make a limited contribution to economic
coherence. In the context of Europe’s current crisis, the evidence suggests that
unfinished capital market integration must be completed if we wish to see
adequate and effective risk sharing.
In its 49-year history of advising German governments,
the Council has never delved into policy proposals for other countries. And
yet, Schäuble asked them: Could they produce a reform concept for the troubled
French economy? The French, who are currently engaged in national
soul-searching and navel-gazing to halt their declining “competitiveness,” were
not amused.
German
Finance Minister Wolfgang Schaeuble has asked a panel of advisers to look into
reform proposals for France, concerned that weakness in the euro zone's second
largest economy could come back to haunt Germany and the broader currency bloc.
Swiss National Bank
under attack – voxeu.org
The Swiss National Bank (SNB) is again
the focus of much debate, accused as it is of currency manipulation. This
column outlines the effects of the SNB’s minimum
exchange rate. On balance, the authors argue that the move is a boon,
effectively enacting a much-needed relaxation of monetary policy within the
Eurozone.
GREECE
Greece will
remain a disaster until it gets the treatment given to heavily indebted poor
countries in the past
The government gets its latest austerity measures
through, but only just
There are no easy solutions for the Greek public debt
overhang: a small reduction in the interest rate on bilateral loans to Greece, the
exchange of European Central Bank Greek bond holdings, buy-back of
privately-held Greek debt, and frontloading of some privatisation receipts
would not be sufficient. Policymakers have to recognise that their three
refusals are inconsistent: no additional funding, no restructuring of official
loans, and no default and exit from the euro.
Reading Between The
Lines – Mark Grant
/ ZH
Every easy trick has now been exhausted when it comes
to Greece…It is going to be either “debt forgiveness” or “more money” or “brute
force” and there are quite serious consequences for many nations and many
governments whichever path is chosen.
BUDGET
Deal on brink after
talks collapse – euobserver
EU 2013 budget talks
end in failure – Reuters
Talks on the European Union's 2013 budget collapsed in
acrimony on Friday, denting hopes of a swift deal later this month on the
bigger issue of the bloc's long-term spending for 2014-2020.
London must be more willing to compromise, and Paris
needs to get on the economic reform bandwagon. At least, that is what top
European and German politicians are demanding as tough EU budget talks swiftly
approach. Two more influential voices have now blasted Britain and France.
Will British Prime Minister David
Cameron veto the EU budget plan? Chancellor Angela Merkel flew to London
on Wednesday night in an effort to convince him not to. It appears unlikely
that she succeeded, though, setting the stage for a showdown at the EU summit
later this month.
Talks collapse
following rows over funding increase – The
Telegraph
Talks to agree the European Union's budget for next
year broke down amid rows involving among member states including Britain –
sparking a new funding crisis.
Confidence at high levels, strong correlation with
consumption – probably helped by the higher stock- and housing prices and
employment.
Following Japanese
Models? – ZH
Nomura notes the similarities (demographics, monetary
and fiscal policy, investor allocation) between US and Japan,
suggesting that US is in danger of becoming the new Japan.
The budget deficit:
To the cliff, and beyond – The
Economist
Falling homeownership rate and the housing
market – Sober
Look
JPMorgan: -
There is no contradiction between increased demand for housing and reduced
homeownership rates. Demand for housing is mainly dependent on the increase in
the number of households, whether these households choose to own or to rent the
housing units they live in.
(audio) World
Weekly with Gideon Rachman – The World / FT
Global challenges facing Obama in his second term. What
does Barack Obama’s reelection mean for the Untied States’ relations with the
world? FT editor Lionel Barber and Washington bureau chief Richard McGregor
join Gideon Rachman to discuss the economic and geopolitical challenges facing
the president in his second term
ASIA
Although China's economy has grown robustly in the
past ten years, the presidency of Hu Jintao was not without its failures. The
gap between the rich and poor has widened, the environment has suffered, and
tensions have risen in the Pacific. The next Chinese president would be well
served to learn from Hu's errors.
While we
have little doubt that policy makers will gear up their monetary and fiscal
easing, focusing on short-term stimulus misses a far more important trend – a
swathe of co-ordinated reforms that will revolutionalise the country’s
financial system over the next three to five years.
How will China's new leaders tackle its economic
problems? Lesley Curwen talks to Raymond Li, head of the BBC's Chinese service and Dr. Liu Qian,
Deputy Director of the China Forecasting Service at the Economist Intelligence
Unit. And former BBC Beijing correspondent, Rupert Wingfield Hayes describes the changes in China since the last leadership switch
ten years ago.
The Asian Credit Bubble – the Next Blowup – HistorySquared