EUROPE
Hollande’s struggles, welfare tourism, and does Europe need a reality check
on Russia?
Towards a Euro Union – Bruegel
Eleven German economists, political scientists and jurists – the
Glienicker Group – develop proposals for a deeper Europe.
Europe's
vision hits trouble – Reuters
Barely a year after European leaders set out an ambitious vision for the
euro zone's future, progress has all but stalled and pressure is building for
what may amount to a 'make or break' moment for the union.
Cut the EU red tape – Bruegel
The UK government recently
(October, 15) published a report from the Business Taskforce entitled Cut EU
red tape; 30 priority recommendations of EU regulations “to ensure that the
single market makes it easy for businesses in Europe to trade across
borders, and to ensure that the EU regulatory framework is, and remains,
competitive in the global market place”.
EZ crisis and
historical trilemmas – voxeu.org
The Eurozone’s tangle
of conflicting goals – a series of ‘trilemmas’ – is not without precedent. This
column argues that it is reminiscent of the interwar situation. The interwar
slump was so intractable not just due to financial issues, but also a crisis of
democracy, of social stability, and of the international political system. The
big difference in the EZ is that nations cannot go off the euro as they went
off the gold standard. That is why the initial EZ crisis may not have been so
acute as some of the gold standard sudden stops, but the recovery or bounce
back is painfully slow and protracted.
The yin and yang of
resolving the European sovereign debt crisis – BIS
Andreas Dombret, Member of the Executive Board of the Deutsche
Bundesbank, at the Peterson Institute, Washington DC, 17 October 2013.
BANKS
Deposits are growing
and lending set to recover but AQR looms large for Eurozone – EY
The return to growth in the Eurozone economy is fuelling a recovery in
key drivers of profitability for financial services, with companies looking to
borrow again and cash flow for households and businesses improving. But the
road ahead is not without obstacles. In particular, the upcoming Asset Quality
Review (AQR) and the insurance industry’s vulnerability to changes in interest
rates present challenges.
The banks are OK?
Debt issuance edition – alphaville
/ FT
Debt issuance by the Giips: banks across Greece, Italy, Ireland, Portugal and Spain. The good news is
that it is up a lot so far this year, $7bn or a hefty 16 per cent rise on the
same period last year. The bad news is that it is still down a lot compared to,
say, the same period in any of the preceding six years.
EUROPEAN
CENTRAL BANK
ECB Nowotny:
Unilateral Rate Rise Could Lead to Deflationary Pressures – WSJ
ECB published important data on its emergency liquidity assistance, or
ELA. Notable: EUR two billion upper limit before the governing council reviews
the situation.
PIIGS
Italian banks and single
European supervision – BIS
Ignazio Visco, Governor of the Bank of Italy, at the presentation of the
Rosselli Foundation's 18th Report on the Italian Financial System, Rome, 7 October 2013.
Spanish Bad Loans
Soar To New Record High – ZH
A growing trade surplus in the euro zone this year, aided by rising
exports and falling imports in southern Europe, suggests the
currency area is making strides in correcting an imbalance seen as crucial to
mending its broken economy.
The Periphery Six – Project
Syndicate
Cyprus, Greece, Ireland, Italy, Portugal, and Spain share a problem.
With massive debt, no control over monetary policy, and no leeway for fiscal
stimulus, they appear headed for a lost decade of high unemployment and low GDP
growth. Such a path would drain the political establishment of legitimacy and
prevent a real recovery in Europe.
UNITED STATES
Fed QE Taper Seen Delayed to March as Shutdown
Bites – BB
The Fed will delay the
first reduction in its bond purchases until March after the government shutdown
slowed fourth-quarter growth and interrupted the flow of data, economists said.
Policy makers will pare the monthly pace of asset buying to $70 billion from
$85 billion at their March 18-19 meeting. The 16-day budget impasse in Washington reduced growth by 0.3 percentage point this
quarter.
Fed's default crisis
tools back on the shelf - for now – Reuters
Fed sighed in relief after the U.S. government avoided a
default, relieving the central bank of the need to take yet more extraordinary
measures to stabilize the financial system.
Fed’s Williams:
Unconventional Policies Unlikely Be Permanent – WSJ
Some of the most
prominent parts of the current monetary policy tool kit will likely be retired
when the Fed is able to raise short term interest rates above their current
zero percent level.
Regulators' efforts to
deal with the failure of a big bank remain a work in progress, but the Federal
Reserve will move "in the next few months" to require large financial
institutions to hold minimum amounts of long-term debt.
Fed’s Evans: Bad Idea
to Use Monetary Policy to Burst Bubbles – WSJ
Evans: those who would prefer to tighten monetary policy to reduce the
threat of new financial bubbles are barking up the wrong tree.
A debt ceiling hiccup on the way to a
21st-century American world order – The
Telegraph
Unless the US Congress
does something really stupid, the debt antics of 2013 will most likely fade
away as fleeting trivia, and we will all wonder what the fuss was about.
Actively Passive – Greycourt
Evidence in support of
passive investing as the core of long-only equity exposure is compelling…selecting
the appropriate index is not trivial.
In the aftermath of
the global financial crisis, few would dispute the risks of excessive
borrowing. But which debts should one worry about – public or private? This
column presents new research on the interplay of public and private debts since
1870 in 17 advanced economies. History demonstrates that excessive
private-sector borrowing plays a greater role than fiscal profligacy in
generating financial instability. However, when the credit boom collapses, the
government’s capacity to alleviate the downturn is limited by the prevailing
level of public debt.
Unemployment, labour
market flexibility and IMF advice – voxeu.org
The state of labour
markets in advanced economies remains dismal despite recent signs of growth.
This column explains the IMF’s logic behind the advice it provided on labour
markets during the Great Recession. It argues that flexibility is crucial both
at the micro level, i.e. on worker reallocation, and at the macro level, e.g.
on collective agreements. It suggests that the IMF approach is close to the
consensus among labour-market researchers.
Is Nominal GDP
Targeting a Rule Policymakers Could Accept? – FED
The economy is too complex to be summarized by a single rule. Economies
are constantly changing in ways difficult to explain after the fact and nearly
impossible to predict. Consequently, policymakers seem destined to rely on
discretion rather than rules.
Purpose and mechanism
of quantitative and qualitative monetary easing – BIS
Kikuo Iwata, Deputy Governor of the Bank of Japan, commemorating the
50th Anniversary of the Institute of Economic Research, Chuo University, Chuo, 18 October 2013.
Regulating
international banks – BIS
Andrew Bailey, Deputy
Governor of Prudential Regulation and Chief Executive Officer of the Prudential
Regulation Authority at the Bank of England, at the British Bankers Association
Annual International Banking Conference, London, 17 October 2013.
Economic uncertainty
and the effectiveness of monetary policy – voxeu.org
Many analysts blame
uncertainty for at least part of advance nations’ poor economic performance
since the crisis. This column discusses new research showing that the economic
impact of monetary policy is dampened when uncertainty is high. This means that
high uncertainty forces monetary policymakers into a trade-off between acting
decisively and acting correctly as policy must be more aggressive than
otherwise in order to stabilise economic activity. The finding is particularly
stark when uncertainty measures from financial markets are utilised.
The Nobel committee is
muddled on the nature of economics – John
Kay
The Inefficiency of the Market Isn’t an Open Question – The
New Yorker
Beating the Market: Yes, it can be done – The Economist
Dusting off an old article – The
Economist
Eugene Fama explained. Kind of. Part 1: Corporate governance – Noahpinion
Eugene Fama explained. Kind of. Part 2: Asset pricing – Noahpinion
FINNISH
"EU kaatuu kuin Neuvostoliitto" – TE
Katainen kilpailee ehdokkuudesta EU:n
pääkomissaariksi – KU
Esko
Seppänen: Euroopan Unionissa on käynnistynyt kaikkien aikojen valtapeli. Jo nyt
jaetaan herran paikkoja vaalien jälkeiseen aikaan. Kamppailu komission
puheenjohtajan paikasta käy kiivaana.
Saksan
energiakäänne on myös vientivaltti – TalSa
Saksan päätöksellä luopua ydinvoimasta on
ollut kaksi paljon puhuttua seurausta viime aikoina. Auringosta, tuulesta ja
biomassasta saatavan uusiutuvan energian kasvu on johtanut sähkön
kuluttajahintojen nousuun. Samalla "energiakäänne" on johtanut
tietotaidon ja ylimääräisen sähkön vientiin.