Europe's half-hearted banking union, Fed's QE-tapering, ECB playing tough for the political needs of Germany (the coming elections and the German Constitutional Court's hearings next week)
Previously on MoreLiver’s:
EUROPE
Brussels blog round-up for 1 – 7 June – Europp
/ LSE
IMF admits mistakes in
Greek bailout, Brussels vs Brussels, and a red card for EU legislation?
All is well in the euro land – Sober Look
It is remarkable just
how much faith the markets are placing in the Eurozone's stability these days… Enjoy
it while it lasts.
Investors hate Europe, and that has me licking my lips.
In a SPIEGEL interview, Chancellor Angela Merkel discusses Germany's power in the euro
crisis and explains why the country exports weapons to authoritarian regimes
like Saudi Arabia.
BANKING
UNION
Europe’s banking union: A la carte and
half-baked – The
Economist
Mr Draghi, the ECB’s
president, was mindful of “moral hazard”: the danger that debtor countries
would let discipline slip once the pressure was off. It turns out, though, that
moral hazard affects creditor countries as well.
Half-hearted banking
union raises more risks than it solves.
A Single Resolution ‘Nothaurity’ – Brussels
blog / FT
Recent comments from
the ECB, Germany and France raise questions over how decisions will be taken in
the euro zone's planned resolution mechanism.
ECB
In defense of OMT ahead of Karlsruhe – Bruegel
Next week, the German
constitutional court will debate and consider the legality of the European
Stability Mechanism (ESM) and the ECB’s Outright Monetary Transaction programme
(OMT)…In last consequence, the court could force the German government to bring
the ECB to the European Court of Justice or, even more dramatically, request
Germany to leave the eurozone as the former constitutional court judge Udo di
Fabio argued.
The European Central Bank’s deterrent: Bench
press – The
Economist
The legitimacy of the
doctrine that calmed panicky markets is challenged
Depressing Draghi – Krugman /
NYT
Now, I find it hard to
believe that Draghi is unaware of these issues; maybe he’s just playing to the
inflation hawks on his board.
Who Has Draghi’s Back? – Krugman
/ NYT
The moral is that the fiscal flaws of the euro run even deeper than
people realize.
IMF
& GREECE
Greece sacrificed to save euro – To
Vima / Presseurop
The IMF bailout of
Greece has above all allowed its creditors to dodge their responsibilities and
guard against contagion. The Greeks should revolt and renegotiate the terms of
the loan.
“Price is not destiny” – alphaville
/ FT
Like other
Europe-focused strategists, William Porter at Credit Suisse has had some fun
scrolling through the IMF’s mea culpa on Greece. He notes that the IMF now
admits that its actions were affected by a fear of market contagion, a
misunderstanding of how to do a restructuring within a currency union and, most
importantly perhaps, a dysfunctional dynamic within the Troika itself.
Rehn in war of words with IMF – euobserver
Greek GDP Plunges To Year 2000 Levels – ZH
UNITED STATES
How did we get here? A "map" of the
Fed's balance sheet's history –
Sober
Look
People have trouble
distinguishing between the liquidity facilities provided by the central bank
and the various monetary expansion activities.
Fed's Plosser says jobs report another reason
to trim QE3 – Reuters
The latest jobs report
on Friday showed that government spending cuts have so far not been as damaging
as some feared, Philadelphia Fed President Charles Plosser said, adding it only
entrenched his opinion that the Federal Reserve should reduce its bond buying
"now".
How Will the Fed Trim Bond Purchases? – WSJ
Why the Fed Hates the Word ‘Tapering’ – WSJ
BofAML: The Good, Bad, And Ugly
"Taper" Scenarios – ZH
Our new house-price indicators: Bubble-hunting – The
Economist
ASIA
Is Abenomics failing? – Daiwa
What Xi Wants – The
Foreign Affairs
As Obama and Xi meet
today, it is a good thing that they are apparently more interested in substance
than formalities. Both are aware of the need to develop a new type of
great-power relationship built on partnership, and the best way for them to do
so is to roll up their sleeves and get to work.
Richard Koo: "Honeymoon For Abenomics Is
Over" – ZH
Stocks had risen far
above the level justified by improvements in the real economy. It was overseas
investors (particularly US hedge funds) that responded to Abe's comments late
last year by closing out their positions in the euro (having been unable to profit
from the Euro's collapse) and redeploying those funds in Japan, where they
drove the yen lower and pushed stocks higher.
OTHER
Exit strategies: Time to think about them – voxeu.org
Charles Wyplosz: Central
banks on both sides of the Atlantic are pondering ways of unwinding their
bloated balance sheets and easing out of extraordinary post-crisis monetary
policy interventions. This column discusses the recent Geneva Conference on the
World Economy that focused on ‘exit strategies’. Where exactly do central banks
exit? And how?
The fact is markets had gone up too far and too
fast – The
Telegraph
A number of different
factors have combined to create the impression of a co-ordinated slide, but the
causes of the various market wobbles are subtly different.
The Day The Big Fat Junk-Bond Bubble Blew Up – Testosterone
Pit
Weekend Sentiment Summary – The
Short Side of the Long
Book Bits | 6.8.13 – The
Capital Spectator
The Hunt for Steve Cohen – Vanity
Fair
With arrest after
arrest in a massive, seven-year insider-trading investigation, U.S. Attorney
Preet Bharara is getting closer to the biggest fish of them all: Steve Cohen,
founder of SAC Capital, the $14 billion hedge fund, who some regard as the most
successful stock picker of his time.
Corporate Profits-to-GDP: Why Doesn't Buffett
Care? – Brooklyn
Investor
Profit Margins Are Irrelevant – Stock Prices
Measure Liquidity, Not Profit Growth – The
Wall Street Examiner
The Absolute Return Letter June 2013: The Wisdom of Crowds – ARP
Occasionally, the
Wisdom of Crowds turns into the Madness of Mobs and all rational behaviour goes
out the window.
The zero-sum trade in people – Coppola
Comment
The problem of
internal devaluation where there are skills shortages, skills gluts, labour
market rigidities and a falling birth rate looks insoluble. But I don't think
it is.
Everything the IMF wanted to know about
financial regulation and wasn’t afraid to ask – voxeu.org
Does anybody have a
clear vision of the desirable financial system of the future? This column has
one. It gives simple answers to 12 simple questions panellists at a recent IMF
conference failed to answer.
Global banking
regulation is undergoing a massive reform, known as Basel III. This column
argues that the proposed reforms will fail to correct flaws in the old system. The
new rules are even more complicated, opaque and open to manipulation. What is
needed is a radical shift to prudential rule based on a straight capital ratio.
OFF-TOPIC
Why people online don’t read to the end – Slate
FINNISH
Target2-järjestelmän
käyttö eurokriisitoimien perusteluna on puhdasta huuhaata – Tyhmyri
Japanin
harrastukset: tuplaa tai kuittia ja flirttiä karhumarkkinoiden kanssa – Henri
Myllyniemi / Piksu
Puurot
ja vellit sekaisin eduskunnassa – Pauli
Vahtera
Kuinka
lopettaa Eurokriisi muutamassa kuukaudessa jos halua olisi – Abenomics edition – Tyhmyri
Pankki
laskee nyt riskinsä tarkkaan – HS
Pienet ja keskikokoiset yritykset maksavat nyt
hintaa siitä, että rahoituskriisit ovat ehkä vastaisuudessa harvinaisempia ja
pankit pysyvät tukevammin pystyssä.
Rehn
moittii IMF:ää: "Yrittää pestä kätensä" – HS
Kreikka
on konkurssissa – samalla miljardien maksut EKP:lle – TalSa
Euroopan keskuspankki perii romahduspisteessä
olevalta Kreikalta miljardien maksuja. Samalla se vaarantaa myös Suomen varoja
– täysin turhaan.
Ekonomistit:
Kreikan velkoja todennäköisesti leikataan – TalSa
Kansainvälinen valuuttarahasto arvioi eilen,
että Kreikka saattaa tarvita talousongelmista selvitäkseen uusia helpotuksia.
Suomalaispankkien pääekonomistit pitävät mahdollisena, että Kreikan velkoja
leikataan.
Turhaa
uhoa: Kreikka-huojennukset jo tosiasia – Jan
Hurri / TalSa
Valtiovarainministeriö vakuuttaa, että
Kreikka-vakuudet pitävät eikä Suomi tingi turvastaan. VM:n mukaan olisi outoa,
jos Suomi heikentäisi kovalla vaivalla hankkimaansa vakuusturvaa suostumalla
Kreikan tukiluottojen huojennuksiin. Vakuuttelu kuulostaa oudolta, sillä Suomi
on jo suostunut tuntuviin Kreikka-huojennuksiin.
IMF
myönsi virheensä – komissio ei – Henri Myllyniemi /
Perussuomalainen
Kreikka on joutunut maksamaan säästökuuristaan
järkyttävän hinnan. Talouden uudistuksia yritettiin runnoa läpi mahdottomassa
aikataulussa. Henri Myllyniemen analyysi valottaa IMF:n ja Euroopan komission
tekemiä virheitä.
Käänne
Euroopan sääntelyyn – Verkkouutiset
Iso joukko eurooppalaisia huippupäättäjiä,
lobbareita ja elinkinoelämän edustajia kokoontui torstaina ja perjantaina
Helsinkiin Centre for European Studiesin (CES) järjestämään Economic Ideas
Forumiin. Mitä jäi käteen?