Best article links selected from the ending week’s
posts. Last week’s edition here.
EUROPE
Paper by EU Economist
Backs Austerity’s Critics – WSJ
The
mystery of EU economic study criticising Berlin – Brussels blog / FT
Did tight-fisted budget policies in Germany help make the
eurozone crisis deeper and more difficult for struggling bailout countries like
Greece and Portugal? That appears to be
the conclusions of a study by a top European Commission economist that was
published online Monday – but then quickly taken down by EU officials.
GERMANY
Germany's SPD leaders list key demands of Merkel for
coalition – Reuters
A nationwide minimum wage of 8.50 euros, equal pay for men and women, a
financial transaction tax, greater investment in infrastructure and education,
and a strategy to boost growth and employment in the euro zone. No mention of
the tax increases for Germany's wealthiest which
the SPD had campaigned for during the election but which the chancellor has
absolutely ruled out.
Possible
overvaluation of residential property in German cities – Bundesbank
Blogs
review: The structural balance controversy – Bruegel
The implausible results of the European Commission's production function
method to estimate potential output and structural deficits
“EURO-VISION”
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.
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.
Europe Breakup Forces Mount as Union
Relevance Fades – BB
What the EU’s founders in the 1950s intended as “ever closer union” now
risks going in the opposite direction: Britain is threatening to secede; the
euro, battered by the four-year debt crisis, remains at risk of splintering;
anti-euro forces are advancing in France, the EU’s heartland; separatists are
pushing to burst the U.K., Belgium and Spain.
BANKS
Banking Nationalism
and the European Crisis – Bruegel
Explaining both the build-up of risk in European banks in the run-up to
the crisis, and the difficulty to resolve the crisis and restore trust since
the inception of market turmoil in mid-2007. It concludes by identifying
banking union as a potential game-changer, even though whether this will result
in a positive outcome for Europe remains to be seen.
The
Man Who’ll Do Triage on Europe’s
Banks
– NYT
Ignazio Angeloni, a
top ECB official, has a leading role in reviewing euro zone banks to determine which
are sound and which are not.
ECB,
on new mission, sets out tougher bank health tests – Reuters
Highlights:
ECB's financial stability chief on bank health tests – Reuters
Factbox:
Details of health check of euro zone banks – Reuters
Eurozone bank shares
fall after ECB outlines health check plan – FT
ECB
Says Bank Review to Be More Credible Than Before – BB
Can Europe's
Banks Handle Draghi's Exams? – View / BB
How Europe Can
Save Its Banks – View / BB
EUROPEAN
CENTRAL BANK
ECB
Sheds Light on Emergency Lending Program – WSJ
Europe’s not so secret liquidity. Not any
more.
– alphaville / FT
ECB published important data on its emergency liquidity assistance, or
ELA. Notable: EUR two billion upper limit before the governing council reviews
the situation.
German
Court
Decision Looms as Next Potential Global Crisis – WSJ
Verdict looms on
legality of ECB bond purchase programme – TradingFloor
UNITED STATES
SHUTDOWN / DEBT CEILING
SHUTDOWN / DEBT CEILING
Economic
activity during the shutdown and brinkmanship – CEA
…consistent with a 0.25 percentage point reduction in the annualized GDP
growth rate in the fourth quarter and a reduction of about 120,000
private-sector jobs in the first two weeks of October…could understate the full
economic effects of the episode to the degree it continues to have an effect
past October 12th.
Q&As
on next episodes of the US fiscal soap opera – Nordea
Once again Congress has merely kicked the can down the road for a few
months. However, despite the recent reckless behaviour in Congress we believe
that the next episodes of the US fiscal saga will
prove much less disruptive than the drama that just ended (summary).
FEDERAL RESERVE
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.
Worth The Wait? – Tim Duy’s Fed Watch
Incoming data are not
exactly consistent with the definition of "stronger and
sustainable." And even if the data shift
upward in the next few months, it will take another three months to confirm
that it is sustainable. That pushes any
decision on asset purchases out to March at the earliest.
How Much Has the Fed
Opened Up? – WSJ
It’s no secret the Federal Reserve has gotten a lot chattier in recent
years.
OTHER
The
IMF revisits sovereign bankruptcy – Felix Salmon / Reuters
Historical
Global Yields & Defaults, 1800 – Present – The Big Picture
FINNISH
HeSarin mukaan kriisimaat
ovat jatkossa kilttejä – mutta ei ymmärrä mistä kehitys johtuu – Tyhmyri
Harmaa valta – Suomi 2017
Saksalaisten makromiesten
laskelma – Juhani
Huopainen
Korkman: Toiveajattelulle
rakennettu euro oli rohkea hyppy tuntemattomaan – Verkkouutiset
Wahlroos: Euroopan talous elpyisi EKP:n
valtion velkakirjaostoilla – YLE
Korkman: Vain pankkiunioni pelastaa Euroopan – TalSa
Korkman Wahlroosin EKP-analyysistä: Ei osu
asian ytimeen – Verkkouutiset
Tämän takia myös EKP:n
stressitestit lässähtävät – TalSa
Jan Hurri:
Eurovaltiot eivät hevin pääse sopuun, kuka vastaa suurpankkien tappioista ja
kenen on pantava uutta pääomaa pankkien taseiden tilkkeeksi. Niin kauan kuin
maksajasta ei ole tietoa, tuskin edes EKP uskaltaa toteuttaa pankeille niin
tiukkaa kuntotestiä kuin näiden todellisen tilan selvittämiseksi olisi tarvis.
Niinpä seuraavakin pankkitesti lässähtää.