Daily: Europe’s political struggle over ECB monetisation
The big news today is based on a report by Bild, a German tabloid, which reported that Jens Weidmann, the head of Germany’s central bank, offered to resign on multiple occasions due to his opposition to the ECB’s plans to monetize euro zone sovereign debt. Previously, Germany’s central bank head Axel Weber resigned after the ECB began buying sovereign debt. Weidmann is his replacement. Juergen Stark, the ECB’s chief economist also resigned in opposition. But now the ECB wants to take things one step further and make unlimited purchases without mopping up the liquidity by selling other assets to offset its purchases.
Politics is THE key variable in the ECB’s plans. As I wrote when outlining the variables which will influence the ECB’s coming monetisation, “the ECB is explicitly rejecting the Bundesbank’s wishes in favour of a more activist ECB monetary policy. This is significant for those who believed that the ECB would be an extension of the Bundesbank forever. The Bundesbank is trying to force the ECB to bend to its will. I doubt it will be successful because if it is, the euro and European economy will collapse. Only if the German government backs the Bundesbank line would the Bundesbank have any hopes of success. But they can certainly try to influence outcomes. And that’s what they are doing.
“German central bank chief Jens Weidmann’s reported threat to resign has piled pressure on European Central Bank President Mario Draghi to assuage his opposition to a new bond-buying plan without tying it up in so many knots it is rendered ineffec
“Bundesbank chief Jens Weidmann considered resigning several times because of his opposition to a new bond-buying plan by the European Central Bank but was persuaded by the German government to stay, according to reports.”
“You could say that human folly and wickedness debauched the beautiful Gold Standard in the interwar years, but to concede that is to concede the argument. It is to admit that gold does not in fact prevent politicians running amok. It is just another monetary Maginot Line.”
“Apple Inc. lost a patent lawsuit in Japan as a Tokyo judge ruled that Samsung Electronics Co. (005930) smartphones and a tablet computer didn’t infringe on an Apple invention for synchronizing music and video data with servers.
Apple was ordered by Tokyo District Judge Tamotsu Shoji today to pay costs of the lawsuit after his verdict, the latest decision in a global dispute between the technology giants over patents used in mobile devices. Samsung shares rose, erasing earlier losses.”
This is the foreman of the Apple-Samsung jury in California. Does he have bias from his own dealings with patents that changed the outcome? Could be. I certainly think so. I don’t know how Samsung eer allowed him on the jury, especially given how at odds this decision is with other patent cases elsewhere.
“This is the full text of the BBC’s interview with Velvin Hogan, foreman of the jury in the recent Apple versus Samsung patent lawsuit.”
“Google Inc Chief Executive Larry Page and Apple CEO Tim Cook have been conducting behind-the-scenes talks about a range of intellectual property matters, including the mobile patent disputes between the companies, people familiar with the matter said.”
“The catch: In order for a company to track a Facebook user using any of that data, the Facebook user has to have already given the company that data on their own.”
“Samsung confirmed that it will immediately sue Apple if the latter releases products using advanced long-term evolution (LTE) mobile technology. LTE has been emerging as the top standard in the global mobile industry.
According to data from Thomson-Reuters, Nokia ranked top with 18.9 percent in terms of the number of LTE patents, followed by Qualcomm with 12.5 percent, Samsung Electronics with 12.2 percent and Ericsson with 11.6 percent.”
“The crux of why people are upset with Twitter is pretty simple: Twitter is changing its Application Programming Interface (API) and closing off how third-party apps communicate with Twitter. “
“Two-factor authentication is one of the best things you can do to make sure your accounts don’t get hacked. We’ve talked about it a bit before, but here’s a list of all the popular services that offer it, and where you should go to turn it on right now.”
“even if bought Amazon at its 1999 peak of $113 per share and held on, you would have more than doubled your money 13 years later. The S&P 500, by contrast, is still down.”
“According to Trip Chowdhry, the managing director of equity research at Global Equities Research, customers “rushed” to buy Samsung’s flagship phone after the verdict was announced.
Chowdhry investigated multiple retail outlets — including Costco (NASDAQ: COST), AT&T (NYSE: T), Sprint (NYSE: S), and Verizon (NYSE: VZ) — to get an update on how the Galaxy S III performed this weekend.
Two out of three Costco stores were completely sold out of the T-Mobile and AT&T versions of the phone. The third location had the T-Mobile version in stock, but was sold out of the AT&T version.”
“Samsung today unveiled the Samsung Galaxy Note II smartphone, the successor to last year’s six-inch-by-three-inch, stylus-equipped, “positively gargantuan” Galaxy Note phone, also affectionately known (by AllThingsD) as the “phablet.””
“Nokia and Microsoft have scheduled a Sept. 5 event in New York, but Samsung beat its Finnish rival to the punch on Wednesday. At its Unpacked event in Germany, Samsung showed off the ATIV S.”
“Japan’s industrial output unexpectedly fell as factories cut output to key Chinese and European markets while a leading indicator for manufacturing hovered at its lowest in 16 months, in a sign that the economy could contract in the third quarter.”
“Japan’s government is planning to suspend some state spending as it could run out of cash by October, with a deficit financing bill blocked by opposition parties trying to force Prime Minister Yoshihiko Noda into an early election.”
“Poland’s output growth slowed sharply in the second quarter as troubles in the neighboring euro zone and declining domestic demand weighed on an economy that has been one of Europe’s most resilient.
Gross domestic product expanded 2.4% in the quarter compared with a year earlier, the national statistics office said on Thursday.
That is substantially slower than the 3.5% GDP growth recorded in the first quarter, and well below the government’s forecast of 2.9%.”
“Economic growth, which came in at 2.7% in 2011, is expected to slow to a rate of 1% in 2012 and 2013. The government plans to run a general deficit of around 1% of gross domestic product, narrowed from the expected deficit in 2012 because of a combination of cost cuts and tax increases.”
“House prices jumped a “surprising” 1.3% in August, the Nationwide building society has said.
It was the biggest monthly rise since January 2010 and left the average UK house price at £164,729.
It means prices are only 0.7% lower than a year ago, despite the recession and continued mortgage rationing.”
“Global food prices have leapt by 10% in the month of July, raising fears of soaring prices for the planet’s poorest, the World Bank has warned.
The bank said that a US heatwave and drought in parts of Eastern Europe were partly to blame for the rising costs.”
“Unemployment across the 17-nation eurozone hit a record 18 million in July, the EU statistics agency says.”
“Former ANC youth leader calls for ‘revolution in the mining sector’ after charges brought under obscure apartheid-era law”
Euribor fell below 1%, cheapening mortgages for thousands across Europe. Just one year ago, Euribor was 2.097%. So the rate has halved since then.
“Bank of Spain data showing sudden drop in amount on deposit comes as recession revealed to be deeper than thought”
“Bankia, Spain’s fourth largest bank by assets, recorded a net loss of €4.3bn in the first half of the year, topping the loss it suffered in all of 2011, according to reports.”
Valencia joins Catalonia in requesting a billion euro bailout from the central government in Spain. The amount is more than 4.5 billion euros
Just as in the US and Europe, Chinese banks are prettying up results by under-reserving.
“Residential property prices nationally fell by 13.6 per cent in the year to July but rose by 0.2 per cent in the month, new figures show.
This compares with an annual rate of decline of 14.4 per cent in June and a decline of 12. 5 per cent in the 12 months to July of last year.”
“it was not much of a surprise – all economists had expected a rate cut and most had guessed it would be 50 basis points.
However, the central bank’s next meeting in October is likely to be a little more exciting. Depending on the pace of the country’s expected economic recovery in the second half of the year, the central bank could choose to only cut by 25 basis points or end the easing cycle altogether.”
“Futures jumped yesterday in New York as Isaac forced closures of Gulf Coast refineries and reduced rates at others. That market is also reeling from an Aug. 25 explosion in Venezuela that killed at least 48 people and closed the country’s largest fuel-making plant. Futures are up 23 percent since their 2012 settlement low of $2.5501 a gallon on June 21. Prices at the pump will be the highest ever for the U.S. Labor Day holiday, AAA said yesterday.”
“Gross domestic product contracted 0.5 percent from the first quarter and 0.9 percent from a year earlier, the Copenhagen-based statistics office said in a statement on its website today. Output was seen shrinking 0.2 percent, both on the quarter and on the year, according to a Bloomberg survey of five economists. Private spending shrank a quarterly 0.9 percent while fixed investments dropped 4.2 percent, it said.”
“Mark Mazzetti’s emails with the CIA expose the degradation of journalism that has lost the imperative to be a check to power”
“Citigroup Inc agreed to pay $590 million to settle a shareholder lawsuit accusing it of hiding tens of billions of dollars of toxic mortgage assets, one of the largest settlements stemming from the global financial crisis.”
“She spotted a Best Buy a block away and was seized by an instinct to walk in. Inside the store there happened to be a woman with an Urban Outfitters shopping bag, who was buying a cell phone. Could it be? Was it she? The woman got closer and saw her own name on the credit card being handed to the cashier. Boom.
“I started yelling at her,” said the woman. “At first she denied that the card was mine, but then she started yelling at me. She started running away towards the back of the store, but I ran after her, calling for security. She started throwing the merchandise from Urban Outfitters at me, then some cash, then my wallet, screaming ‘here is your stuff back, it is just a mix-up.’ ””
“a record Arctic ice melt had just been announced by the scientists studying the region. The 2012 figure has not only beaten the previous record, established in 2007. It has beaten it three weeks before the sea ice is likely to reach its minimum extent. It reveals that global climate breakdown is proceeding more rapidly than most climate scientists expected. But you could be forgiven for missing it, as it scarcely made the news at all.”
“The newspaper said that Zhu Jun, who led the campaign to bring Drogba over, holds only 28.5 per cent of the club despite being its biggest investor and wants to increase his stake to about 70 per cent. A collection of five state-owned enterprises, all of which are companies based in Shanghai, are the club’s other owners but are reported to provide little, if any, funding for it.
Oriental Sports Daily said that Zhu would cover only his portion of the club’s expenses if his ownership stake is not increased. With Drogba believed to be earning about £200,000 ($316,000) a week, the bulk of his salary would probably go unpaid if that happened.
Nicolas Anelka, Drogba’s former Chelsea teammate and Shenhua’s other big-name foreign player, is also expected to meet a similar fate, the newspaper added.”