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The ECB's Leap into the Unknown
Jürgen Stark / Project Syndicate
The ECB's decision to double down on monetary stimulus should be regarded as an act of desperation. Indeed, despite the central bank's aggressive approach, monetary policy in the absence of structural economic reform risks being ineffective.
Related: Europe's €500 Billion Money Market Nightmare Is Coming True
Tomas Hirst / Business Insider
Money market funds in Europe are fighting to avoid "breaking the buck," which could trigger huge outflows from the sector. These funds typically invest in cash-equivalent assets, such as high quality short-term corporate debt or government debt. For investors, the advantage they have over stocks is that they're a safe ...
Related: Euro zone manufacturing slows, Germany contracts
CNBC
Factory activity in the euro zone slowed in September, as Germany's manufacturing sector contracted for the first time in 15 months.
Related: Solving Europe's Credibility Problem
Jean Pisani-Ferry / Project Syndicate
As the eurozone debates how to escape the stagnation trap in which it finds itself, one question has become increasingly important: Can governments credibly commit to trim public spending in the future while avoiding immediate cuts? Fortunately, the answer is yes: Fiscal accommodation now does not rule out consolidation later.
 
Why Italy Will Not Make It
Roberto Orsi / Euro Crisis in the Press
The EU political and financial leadership is as likely to publicly announce the end of the common currency as much as a pilot is likely to inform its passengers that he has no control of the aircraft: it will never happen. But gradually there may be a transition towards a ...
Related: Italy and France throw out fiscal compact
Eurointelligence
This is an exceptionally busy news day for the eurozone with a whole number of stories that would...
 
How will China respond to protests?
CNN
The massive street rallies that have swept Hong Kong since the weekend present a major dilemma for China's leadership.
Related: Understanding China's Hard Line on Hong Kong
Justin Fox / HBR
Hong Kong's protesters are unlikely to change any minds in Beijing.
Related: Hong Kong's status is being stress-tested
David Pilling
At issue is the result of collusion between local tycoons and their communist friends in Beijing
Related: Hong Kong is the gateway for capital into China
Leon Siciliano / Telegraph
Parry International Trading Managing Director Gavin Parry discusses the significance of the pro-democracy protests in Hong Kong's financial centre
Related: Hong Kong Businesses Worried
WSJ
The pro-democracy protests in Hong Kong are expected to cut the number of mainland tour groups heading to the city by nearly a third, which will take a toll on real-estate sales and retail outlets during a major holiday period.
Related: Some financial firms moving to back-up sites amid Hong Kong protest fears
CNBC
HONG KONG, Oct 1- Some banks and other financial firms have begun moving staff to back-up premises on the outskirts of Hong Kong to prevent growing unrest in the financial hub from disrupting trading and other critical functions, two business services firms said.
 
Economists React: Weak Domestic Demand Still Hurting China
WSJ China Real Time Report
Economists weighed in on whether Beijing needs to turn to more aggressive easing measures to spur domestic demand and boost business sentiment.
Related: Guest post: China's property is slowing, not crashing
FT
Andy Rothman on the 'scary stories' of bursting bubbles and ghost cities
Related: China PMI up a touch in September as economy gropes for momentum
South China Morning Post
Growth in China's manufacturing sector held up in September but remained subdued in a sign that the world's second-largest economy is still struggling to recover its growth momentum.
Related: What is the relevant bias when Westerners try to predict what Chinese leaders will do?
Tyler Cowen / Marginal Revolution
I see a whole bunch of candidates here, each backed by a broadly plausible psychological story: 1. They are more ruthless than we realize. 2. They are more like us than we realize. 2b. #1 and #2. 3. They have longer time horizons than we imagine. 4. Due to extreme ...
Related: China must resist cheap money temptation
FT
Lower borrowing costs are the last thing needed to rebalance economy
 
Global Central Banking in 2014, a Third Quarter Update for 25 Economies
WSJ Economics
Many central banks held interest rates steady in the third quarter, but a few made moves worth noting. The European Central bank and the central banks of Israel, South Korea and Turkey cut interest rates. New Zealand and South Africa raised rates. Central bankers in several countries focused on managing ...
 
Cross-Country Evidence on Transmission of Liquidity Risk through Global Banks
Liberty Street Economics
Over the past thirty years, the typical large bank has become a global entity with subsidiaries in many countries.
Expand sublinks   Also:  SMH | Austrailian | SMH | Traders Magazine
Related: US banks: stress reduction
FT
Wall Street banks say they have plenty of capital. The Fed might differ
 
Japanese market hit by £380bn 'fat finger' trade
Ben Martin / Telegraph
The accidental trade, thought to be the biggest ever, involved shares in 42 different companies
Related: What's Abe been crowing about?
Japan Times
Regarding the Sept. 25 article "20% of college dropouts cite financial difficulties as reason": It's a sad state of affairs when Prime Minister Shinzo Abe has fun globe-trotting and lauding himself over what he claims are his great economic achievements while the reality at home becomes more desperate. Japan has ...
Related: Yen hits six-year low after Tankan data
FT
Japan's Tankan survey of corporate sentiment shows service sector confidence falling sharply
Related: 5 Takeaways From BOJ Tankan Survey
Takashi Nakamichi / WSJ Economics
Five takeaways from a surprisingly positive Bank of Japan tankan survey of business sentiment that will likely lessen pressure on the central bank to take further action.
 
French budget planning overly optimistic for 2016-2017
Reuters
PARIS, Oct 1 (Reuters) - France's budget planning for the years ahead is based on overly optimistic assumptions even if it is more realistic than before, the country's public finances watchdog said...
Related: France to shrink deficit by 2017
BBC
The French government says it will reduce its budget deficit to below the EU threshold of 3% of GDP by 2017, two years later than promised.
Related: French budget to fire EU growth debate
Mike Peacock / MacroScope
France to go slow on budget trimming.
 
UK house prices fall for first time in 17 months, says Nationwide
Here Is The City
House prices have fallen for the first time in 17 months, dropping by 0.2% in September and providing new evidence that the property market is cooling, according to the latest update from the UK's biggest building society.
Related: UK retail has a torrid few years ahead
Leon Siciliano / Telegraph
BGC Brokers Market Strategist Michael Ingram discusses market themes and the outlook for UK's retail sector
Related: How many UK elections can a nasty party win?
Mainly Macro
This last month I wrote my most widely read post in this blog's nearly three years existence. Over 20,000 read this on Scottish independence. Yet I wrote that post with some regret, because I was acting as the typical economist killjoy. I had a lot of sympathy behind much of ...
 
Helicopter money: Today's best policy option
Biagio Bossone ... / VoxEU
High debt and deflation have afflicted Japan, the Eurozone, and the US. However, the implemented so far monetary and fiscal policies have been disappointing. This column discusses the importance of helicopter money in the form of overt monetary financing in addressing these problems. The overt money financing is the policy ...
Expand sublinks   Also:  OANDA
 
The rational complacency of financial markets
Nouriel Roubini / Guardian
From Hong Kong and the Middle East to the crisis in Ukraine - the markets seem to be taking political upheaval in their stride. Why? An increasingly obvious paradox has emerged in global financial markets this year. Though geopolitical risks the Russia-Ukraine conflict, the rise of the Islamic State and ...
 
Raise the Fed rate or not, Labor is still falling behind
Edward Lambert
Mark Thoma wrote today that the Fed should not raise rates too soon, because... "If the Fed raises rates too soon, it is working class households who will be hurt the most by the slower recovery of employment." His thinking is not deep enough. He just sees that a rise...
 
The Middle-Class Litmus Test for the Economy
WSJ Opinion
Inflation-adjusted median household incomes are 9% lower than they were in 1999.
Expand sublinks   Also:  BBC | Zero Hedge | Martin Wolf
 
Russia unlikely to introduce capital controls in near future - VTB CEO
Reuters
MOSCOW, Oct 1 (Reuters) - The introduction of capital controls in Russia cannot be ruled out, but the measure is unlikely to be introduced any time soon, Andrei Kostin, chief executive officer of...
Related: Russia Could Slip in the Oil Patch (excerpt)
Ed Yardeni
Yesterday, the Russian government submitted its budget to the Duma, the lower house of the parliament. Once approved, Vladimir Putin will sign it into law. A 9/30 post on The Economist website reported that "over the last few years the budget's reliance on oil revenues have increased. When excluding oil, ...
 
Explaining the Hegemony of New Classical Economics
David Glasner / Uneasy Money
Simon Wren-Lewis, Robert Waldmann, and Paul Krugman have all recently devoted additional space to explaining - ruefully, for the most part - how it came about that New Classical Economics came to take over mainstream macroeconomics just about half a century after the Keynesian Revolution. And Mark Thoma got them ...
 
Re-discovering the Phillips curve
László Andor / VoxEU
Negative real interest rates imply redistribution from savers to debtors. This column, by the EU Commissioner for Employment, Social Affairs and Inclusion, argues that such redistribution would benefit the whole economy. It would strengthen aggregate demand - including investment demand - at time when such a boost is clearly needed.
 
Modi, Obama target $500 billion India-US trade
Times of India
Targeting a five-fold jump in Indo-US trade to $500 billion, Prime Minister Narendra Modi and US President Barack Obama on Wednesday pledged to deepen economic cooperation and will set up a joint program to boost business investment.
Related: India to grow 5.6% this fiscal, 6.5% in FY16: Fitch
Times of India
Fitch expects GDP growth to pick up to 5.6 per cent in FY15 (ending in March) and 6.5 per cent in both FY16 and FY17, the agency said in its global economic outlook report.
Related: PM Narendra Modi to US Inc: Come soon to 'Make in India', before it's too late
Financial Express
PM Narendra Modi asserted that India is on the move and US businesses should move fast...
Related: Is Modi India's Gipper?
Dhiraj Nayyar / Bloomberg Views
India's Narendra Modi is often compared to America's Ronald Reagan. But the comparison is false, for reasons that should make investors worry.
 
Argentina defies U.S. court order by depositing debt payment
Reuters
BUENOS AIRES (Reuters) - Argentina deposited a $161 million bond interest payment with a newly appointed local trustee on Tuesday, the Economy Ministry said, defying a U.S. judge who held it in...
Expand sublinks   Also:  Reuters | Reuters
Related: Argentina's Contempt
WSJ Opinion
North America's leading deadbeat nation sets another precedent.
Related: NO Way Out for Argentina
Dian Chu / EconMatters Global
By Sober LookWith Argentina's private sector in disarray, Cristina Fernandez de Kirchner's government has been forced to increasingly bail out failing businesses, particularly importers that are critical to Argentina's stability. The nation's fiscal problems are escalating rapidly as it undertakes what amounts to a form of Goldman SachsA great deal ...
 
Did Lehman Need to Die?
Joshua M Brown / Reformed Broker
Six years ago, Lehman Brothers was allowed to become the largest bankruptcy in history. I say "allowed" because it definitely could've been stopped. The quote above comes from a very interesting piece at the New York Times that reconstructs what led to the decision. And yes, it was a decision. ...
Related: Illiquid, insolvent, what's the difference?
Matthew C Klein / FT Alphaville
Being illiquid means that you don't have resources available to meet your current obligations. Figuring this out is straightforward: either you can pay your bills or you can't. Being insolvent means that you owe more than you own. That too seems straightforward. But while solvency is often discussed as a ...
 
Size matters and Pimco's TRF was too big
FT
Disorderly outflows from the fund could create perverse market moves
Related: DealBook: Critical Time for Pimco, as Pensions Consider Removing Funds in Wake of Bill Gross Departure
MATTHEW GOLDSTEIN ... / NY Times
The next few days and weeks could be critical for the bond giant as it tries to stem a wave of money flowing out after the abrupt departure of its co-founder.
Related: Bill Gross's Investing Secret: A Rising Market and Extra Risk
Business Week
Gross's success also coincided with one of the best times in history to be a bond investor
 
Australia's "low" mortgage growth is still a big problem
Unconventional Economist / MacroBusiness
By Leith van Onselen Business Spectator's Alan Kohler has continued his schizophrenic take on Australia's housing market, today arguing that concerns about excessive speculative activity in the housing market are not warranted because credit growth is so low: There's talk of macroprudential policies to limit investment lending, but no one ...
Expand sublinks   Also:  OANDA | WSJ | SMH | FT
Related: Australia: land of the free ... and indebted
Alan Kohler / Business Spectator
With business borrowing still disappointingly low, monetary policy has to work via housing. The RBA has achieved its desired 'wealth effect' on consumption, but at what cost?
Related: Chart of the day: Alarm in Australia
South China Morning Post
The neat broadening top pattern - also known as a megaphone - that has built since February in the Australian All Ordinaries index is sounding a clear alarm.
 
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Japanese market hit by £380bn 'fat finger' trade
Telegraph
The ECB's Leap into the Unknown
Project Syndicate
How will China respond to protests?
CNN
Cross-Country Evidence on Transmission of Liquidity Risk through Global Banks
Liberty Street Economics
Global Central Banking in 2014, a Third Quarter Update for 25 Economies
WSJ Economics
Why Italy Will Not Make It
Roberto Orsi / Euro Crisis in the Press
The rational complacency of financial markets
Guardian
Economists React: Weak Domestic Demand Still Hurting China
WSJ China Real Time Report
French budget planning overly optimistic for 2016-2017
Reuters
Hong Kong is the gateway for capital into China
Telegraph
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