News Links: Goldman says an unlimited ECB commitment would be cheaper
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GOLDMAN SACHS: The ECB Should Take A Leaf Out Of The Swiss Book
credible commitments backed up with the threat of unlimited action are likely in general to be much more effective, and cheaper, than vaguer intervention strategies. This lesson is one that is familiar from economic theory (a fully credible commitment will not in fact be tested) but the recent Swiss experience is a clean reminder.
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Italian Bonds Advance as ECB Buys Debt, Maximum Bills Sold at Debt Auction – Bloomberg
Italian government bonds rose as the European Central Bank was said to purchase the securities and after the nation sold the maximum amount of one-year bills on offer at an auction. The advance pushed yields on Italian debt lower after they reached euro-era records yesterday. Italy’s senate is set to vote tomorrow on a package of austerity measures to clear the way for a new government and restore confidence in Europe’s biggest debt market. Yields on five- and 10-year securities stayed near 7 percent amid a clash between Germany and France over Europe’s permanent rescue fund and ECB comments that its intervention in the market is temporary.
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AppleInsider | Amazon ramps up Kindle Fire production to 5 million units in 2011
Faced with greater than expected demand, Amazon has increased orders for its Kindle Fire tablet to a total of five million by the end of the year, according to a new report out of the Far East.
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Why Italy’s days in the eurozone may be numbered | The A-List | FT.com
Until recently the argument was being made that Italy and Spain, unlike the clearly insolvent Greece, were illiquid but solvent given austerity and reforms. But once a country that is illiquid loses its market credibility, it takes time – usually a year or so – to restore such credibility with appropriate policy actions. Therefore unless there is a lender of last resort that can buy the sovereign debt while credibility is not yet restored, an illiquid but solvent sovereign may turn out insolvent. In this scenario sceptical investors will push the sovereign spreads to a level where it either loses access to the markets or where the debt dynamic becomes unsustainable. So Italy and other illiquid, but solvent, sovereigns need a “big bazooka” to prevent the self-fulfilling bad equilibrium of a run on the public debt. The trouble is, however, that there is no credible lender of last resort in the eurozone.
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Greeks pull savings from banks as crisis deepens | Reuters
Fearful Greeks have withdrawn savings from banks over the past week because of a deepening political crisis and fear of an exit from the euro, banking sources said on Wednesday.
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Italy pushed to the brink by ECB fiscal orthodoxy | Mark Weisbrot | Comment is free | guardian.co.uk
The European Central Bank’s insistence on budget-tightening in a recession has forced Italy’s finances into a deadly spiral
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Jefferson County, Alabama, Votes to Declare Biggest Municipal Bankruptcy – Bloomberg
Jefferson County, Alabama, commissioners voted 4-1 to file the largest U.S. municipal bankruptcy after reaching an impasse over concessions with holders of $3.14 billion of bonds.
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How’s the Argentina recovery coming along? — Marginal Revolution
As Greece and Italy go to hell in a hand basket, down here in the Banana Republic of Argentina we’re seeing a déjà vu of the 2001 collapse. The government imposed a “green” corralito by which through one excuse or another the American currency is being unofficially but effectively banned.
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U.K. Trade Deficit Widens to Record as Imports Surge 3.8% – Bloomberg
The U.K. trade deficit on goods widened to a record in September as imports of chemicals and oil increased and exports barely rose.
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Fannie Mae asks for $7.8bn as losses widen – FT.com
Fannie Mae, the US-controlled mortgage financier, will request an additional $7.8bn from taxpayers after soured derivatives bets caused the company to record a $5.1bn quarterly loss.
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Euro-Krise: Deutsche Wirtschaft im Crashtest – Konjunktur – Politik – Handelsblatt
Die Euro-Krise stellt die deutsche Wirtschaft auf eine harte Probe: Die fünf Wirtschaftsweisen rechnen für 2012 nur noch mit einem mageren Wachstum. Verschärft sich die Krise, drohe Deutschland sogar eine Rezession.
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CGTP e UGT entregaram pré-aviso de greve-geral – JN
Os líderes das duas centrais sindicais portuguesas, CGTP e UGT, afirmaram, esta quarta-feira, que a greve geral de 24 de Novembro representa "um claríssimo descontentamento" perante a actual situação económica e social.
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Der in Zerschlagung befindliche belgisch-französische Staatsfinanzierer Dexia hat heute statt Quartalszahlen ein Statement zur Geschäftsentwicklung nach neun Monaten vorgelegt. Der Verlust der Bank ist gewaltig.
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US-Großbank: Goldman verkauft weitere ICBC-Anteile – Banken – Unternehmen – Handelsblatt
Goldman Sachs versilbert seinen Anteil an chinesischer Bank ICBC weiter. Die US-Großbank will sich von einem Teil seiner ICBC-Papieren trennen, es ist von 1,54 Milliarden Dollar die Rede.
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New Economic Perspectives: To Those Who Got it Right, We Salute You!
The central idea of the Maastricht Treaty is that the EC countries should move towards an economic and monetary union, with a single currency managed by an independent central bank. But how is the rest of economic policy to be run? As the treaty proposes no new institutions other than a European bank, its sponsors must suppose that nothing more is needed. But this could only be correct if modern economies were self-adjusting systems that didn’t need any management at all.
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This Is The Way The Euro Ends – NYTimes.com
I still find it hard to believe that the euro will fail; but it seems equally hard to believe that Europe will do what’s needed to avoid that failure. Irresistible force, meet immovable object — and watch the explosion.
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Heard on the Street: Don’t Bank on ECB Rescuing Italy – WSJ.com
But investors shouldn’t bank on the ECB doing the market’s bidding. First, the central bank has repeatedly said it has no mandate to act as lender of last resort to countries. To do so would breach European law. New ECB President Mario Draghi said so again last week, stressing the ECB’s bond buying is limited and temporary. The European treaty is unequivocal: Article 101 prohibits the ECB from lending to governments, while Article 103 says the euro zone shouldn’t become liable for the debts of member states. It would be odd for Mr. Draghi to do something he has said is illegal.
The Iberian peninsula is in a pretty mess. I really wonder how the things are going to pan out in the mid-long term (2 – 5 years). Staggering numbers of young people are unemployed, social tensions are rising and many companies are going bust. Real estate and construction sector (which were real drivers of the economy) in depression. Now they call for a general strike in Portugal. Human nature is human nature and I do not see these people being able to bear austerity for much longer.
“Steve Keen: Credit Created Out of Thin Air” https://ineteconomics.org/blog/inet/steve-keen-credit-created-out-thin-air
Steve Keen explaining why private sector debt (and it’s size) matters and why neoclassical economists still don’t get it.
“Some Things You Should Know About China” https://charleshughsmith.blogspot.com/2011/11/some-things-you-should-know-about-china.html
“If all you know about China comes from PBoC and Central Government reports and analysts’ financial statements, then you know very little about China or how it actually works.”