Links: 2013-04-10
I am still in the process of composing a very long weekly and should be finished soon
News links for 10 Apr 2013
Buy Signal: Facebook Widens Data Targeting – WSJ.com
“Gunning to win more advertising dollars, Facebook Inc. is using new ways to cull personal information from outside the social network and match it with data submitted by its billion-plus users.”
Google sold Frommer’s Travel — but kept all the social media data — paidContent
“People wondered why Google sold Frommer’s Travel barely nine months after acquiring it in the first place. The answer is that it’s keeping a huge number social media followers from sites like Facebook.”
Die wunderbare Welt der Wirtschaft!: Sind wir Deutschen jetzt arm? Oder nicht?
German blogger egghat makes a good point here in not drawing too many conclusions from the ECB’s recent wealth survey that found Spaniards and Italians wealthier than Germans. For example, 90% of Spanish wealth is tied up in their houses and the price of these is falling. I agree that it is of limited value. What it does point out is that public indebtedness is often the flipside of private wealth, as it is in Italy, which is their problem now that Italy is a part of the euro zone.
Japanese Rush to Sell Gold as Price in Yen Jumps – WSJ.com
“The weak yen has triggered a gold rush, literally, among Japanese households, reflecting how bold new economic policies are shaking up long-entrenched deflationary attitudes, freeing up dormant assets, and sparking new economic activity.
While gold prices have softened globally, the declining value of the yen against the dollar makes the precious metal worth a lot more in Japan. Japanese families are now scrambling to dig out gold objects from closets and jewelry boxes, and selling it to metals dealers, converting their passive assets into cash that some say they plan to put to work on everything from vacations to children’s allowances.
Long lines have formed this week outside jewelers from Tokyo to Osaka, with the price of gold in Japan jumping 4.8% this week as the dollar came close to hitting ¥100, up from about ¥80 late last year.”
Quarter of Germans ‘want to drop the euro’ – Telegraph
“A poll by the Forsa institute for German business newspaper, Handelsblatt, found that – despite the lingering debt crisis – almost 70pc of Germans now back the euro. A year ago, only half of respondents supported the single currency.
When the euro was introduced, Germany was dubbed the “sick man of Europe”, with low growth rates and high unemployment. However, it is now enjoying a relatively low jobless rate of 7.2pc and has escaped recession unlike much of the eurozone.”
The Use and Abuse of Monetary History by Barry Eichengreen – Project Syndicate
“For the Fed, it is important to ask whether the 1930’s, when its premature policy tightening precipitated a double-dip recession, really is the best historical analogy to consider when contemplating how to time the exit from its current accommodating stance. Certainly, the Great Depression is not the only alternative on offer.
The Fed might also consider policy in 1924-1927, when low interest rates fueled stock-market and real-estate bubbles, or 2003-2005, when interest rates were held down in the face of serious financial imbalances. At a minimum, the Fed might develop a “portfolio” of analogies, test them for fitness, and distill their lessons, as President John F. Kennedy famously did when weighing his options during the Cuban missile crisis in 1962.
Similarly, the ECB might consider not only how monetary accommodation allowed governments to run large budget deficits in the 1920’s, but also how central bankers’ failure to respond to the financial crisis of the 1930’s fed political extremism and undermined support for responsible government. Again, rigorous analysis requires testing these historical analogies for fitness with current circumstances.”
Handicapping Labor Data – Tim Duy’s Fed Watch
“We know the Fed intends to taper off quantitative easing. We know the timing is dependent on progress in achieving a stronger and sustainable recovery in the labor market. Courtesy of San Francisco President John Williams, we have also know the time they expect to be confident of that recovery – this summer, which could be as early as the June FOMC meeting. Thus June is the earliest we could expect the Fed will begin scaling back the pace of asset purchases, with the expectation that quantitative easing will draw to a close by the end of this year.”
Goldman advises to short gold | FT Alphaville
“Last week it was SocGen that declared the gold era was over. Now the precious metals team at Goldman is taking a similar view.”
ekathimerini.com | Thousands withdrew money from Cyprus before haircut, says report
“Six thousand individuals and legal entities withdrew tens of millions of euros in cash from Cypriot banks and sent it abroad in the period from March 1-15, just days before Cyprus clinched a deal with foreign creditors demanding that banks contribute to the country’s bailout with a hefty haircut on deposits.
The data was sent by the Cypriot Central Bank to Parliament’s Ethics Committee on Tuesday.”
Greek industrial output falls 3.9 pct y/y in February | Reuters
“Greek industrial output fell 3.9
percent year-on-year in February after an upwardly revised 4.2
percent drop in the previous month, the country’s statistics
service said on Tuesday.”
ekathimerini.com | Consumer price index stages a coup
“For the first time in almost 45 years, the annual rate of inflation posted a 0.2 percent decline in March 2013, according to data released on Tuesday by the Hellenic Statistical Authority (ELSTAT).
The last time prices dropped on a yearly basis was in May 1968, after the military junta took control of the country.
Despite this encouraging sign of deflation, the prices of a number of goods have continued to rise. These include potatoes (up 27.9 percent), heating oil (26.9 percent) and electricity rates (12.9 percent). Cigarettes have also gone up by 5.9 percent.”
BBC News – Luxembourg to ease the secrecy surrounding its banks
“It said it would implement rules on the automatic exchange of bank account information with its European Union partners from 2015.
Calls for this have been increasing, as governments seek to raise more taxes to support their finances.
Prime Minister Jean-Claude Juncker said Luxembourg would introduce the reforms in two years.”
BBC News – Spain’s industrial output falls further
“The rate of decline in industrial output in Spain increased in February, according to official figures.
Output dropped by 6.5% compared with the same month a year earlier. It followed a 4.9% decline in January.
Industrial production in the country has been falling constantly since August 2011.”
CHART OF THE DAY: Japanese 30-Year Bonds – Business Insider
“There’s one camp that would argue that this is the natural result of stimulus and an increase in inflation expectations.
Another camp argues that this is the beginning of a much more disorderly collapse in the market, that threatens Japan’s sovereign finances.”
YPF nationalisation: a not so happy 1st anniversary | beyondbrics
“PF, Argentina’s nationalised energy company, will import at least 50 per cent more fuel for the foreseeable future after a freak storm last week caused fire and flood damage at its La Plata refinery that sent its share price falling by more than 3 per cent during trading on Monday.”
Sentences about household wealth (Cyprus fact of the day)
“As I’ve said many times in the past, much about the future will depend on whether wealth taxation turns out to be politically feasible to a greater degree than at present.”
Slovenia’s prime minister tries to quell eurozone bailout rumours | World news | The Guardian
“Slovenia’s prime minister has attempted to quash speculation that she will become the next eurozone leader to seek a bailout, after an influential report warned that the country faces the threat of a “severe banking crisis”.
On an official trip to Brussels on Tuesday, Alenka Bratusek insisted that her government was committed to fixing Slovenia’s banks, which are struggling with bad debts as a double-dip recession continues.
Bratusek admitted that Slovenia did not face an easy task, but denied that it would be forced to seek international help.”
Japan At Currency War – Business Insider
“I see the big losers as Korea, China and the rest of SE Asia. America is going to get hit fairly hard as both tourism and trade react to the cheaper currency. Europe is so screwed up today the consequences of the Yen devaluation will be masked, but the German car exporters will get beat to pieces as the exchange rate adjustment flows through on car prices. Places like Brazil will feel the consequences as well, liquidity out of Japan will leak into local capital markets, it will be the source of unwanted inflation.”
“Young graduates from Greece, Spain and Portugal head north as home employment prospects remain bleak”
James Crosby to give up knighthood and 30% of pension | Business | The Guardian
“He said he was “deeply sorry” for his role in HBOS’s failure and asked for his knighthood to be removed. He is believed to be the first person to have voluntarily offered to hand back a knighthood. The 57-year-old chose to give up the honour, granted in 2006, rather than face the prospect of being stripped of it – as Fred Goodwin, the former boss of RBS was last year.
Crosby also offered to hand back 30% of his £580,000-a-year pension. He will still collect £406,000 annually in pension payments – 80 times as much as the average private sector worker. On Tuesday he also quit his £125,000-a-year role on the board of catering company Compass.”
The rise and fall of James Crosby | Business | guardian.co.uk
“When James Crosby became a knight of the realm in 2006 for services to finance, it seemed to be the cap on a glittering City career.
Crosby, a Yorkshireman who once claimed he didn’t like City life, wanted to shake up the UK banking industry when he took charge of the Halifax building society in 1999. The Oxford-educated actuary was the mastermind behind Halifax’s merger with Bank of Scotland to create HBOS. As HBOS chief executive between 2001 and 2006, Crosby launched the bank on a path of aggressive expansion, doling out loans to corporate clients – a strategy that was deemed a triumph, as the underdog bank took on the UK’s “big four”.
Former chancellor Gordon Brown feted Crosby as an individual “with a wealth of experience in banking” and appointed him to the board of the city watchdog, the Financial Services Authority, in 2003. Brown later backed Crosby’s appointment as FSA deputy chair in 2006.”
Germany to be in recession by September, Soros warns | Economy | News | Financial Post
““Germany itself remains relatively unaffected by the deepening depression that is enveloping the eurozone,” Soros said in a speech at the Johann Wolfgang Goethe-University in Frankfurt Tuesday. “I expect, however, that by the time of the elections, Germany will also be in recession.””
“There is now a real danger that the euro crisis may end up destroying the European Union”
George Soros urges Angela Merkel to consider quitting euro | Business | guardian.co.uk
“Billionaire speculator says single currency’s prospects would be better without Germany, the eurozone’s most dominant member”
U.S. official: North Korea could fire at any time – CNN.com
“North Korea actions called ‘clear and direct threat’ to U.S. security
The top U.S. commander in the Pacific called repeated North Korean violations of U.N. Security Council resolutions forbidding the “building and testing” of long-range ballistic missiles and nuclear weapons “a clear and direct threat to U.S. national security and regional peace and stability.”
“A major conflict in Korea could have unpredictable, long term, and far reaching impacts due to the central location of the Korean peninsula in Northeast Asia and the vital importance of Northeast Asian trade to the global economy,” said Adm. Samuel J. Locklear, commander of the U.S. Pacific Command.”
North Korea lacks means for nuclear strike on U.S., experts say | Reuters
“North Korea’s explicit threats this week to strike the United States with nuclear weapons are rhetorical bluster, as the isolated nation does not yet have the means to make good on them, Western officials and security experts say.”
Greek bank merger delay stokes deposit seizure fears – Business – CBC News
“Both have said they are unable to raise the cash, suggesting they may face nationalization. NBG needs 9.76 billion euros ($12.63 billion) and Eurobank needs 5.84 billion euros ($7.56 billion) in total to meet solvency criteria set by the central bank.
German magazine Der Spiegel reported late Monday that part of that recapitalization plan could consist of a Cyprus-style seizure of deposits.
But Greek Finance Minister moved quickly to dispel that notion Tuesday, telling local Greek media “deposits are absolutely secure.””
Fed keeps its foot on stimulus pedal – FT.com
“The rate-setting Federal Open Market Committee (FOMC) “could vary the pace of purchases as progress is made towards its economic objectives or if its assessment of the efficacy and costs of the programme changes,” said Mr Bernanke at a Washington press conference.
But the committee made only slight upgrades to its assessment of the economy on Wednesday and said that it would keep buying assets for now.”
I’d Be Willing to Scale Back QE, Fed’s Bullard Says
“St. Louis Federal Reserve Bank President James Bullard told CNBC on Tuesday that he’d be willing to reduce the central bank’s massive bond-buying program in “small increments.”
Bullard said in a “Squawk Box” interview that he’d be in favor, as the economy improves, of altering the pace of quantitative easing, which has been running at $85 billion a month of Treasury and mortgage-backed securities purchases by the Fed.”
Fed member hints at summer slowing of QE3 – FT.com
“A leading dove at the Federal Reserve said it could start tapering off its QE3 programme of quantitative easing this summer, in a sign of how debate at the US central bank has shifted on the issue.
John Williams, president of the San Francisco Fed, led the push for more asset purchases in the summer of 2012 and his willingness to consider slowing the rate of buying suggests the central bank is nearing its goal.”
Spain says ECB should help periphery firms get funding | Reuters
“Spain’s economy minister said on Tuesday the European Central Bank should do more to help firms on the euro zone periphery obtain funding, keeping up pressure from Madrid for the bank to extend its crisis-fighting mandate.”
Peripheral euro zone household wealth trumps core – ECB study | Reuters
“Average net wealth in Spain was 291,400 euros (247,910 pounds) and in Italy 275,200 euros, significantly higher than in triple-A rated Germany (195,200 euros), the Netherlands (170,200 euros) and Finland (161,500 euros).
Median net wealth is the lowest in the bloc’s paymaster, Germany (51,400 euros), less than a third of that in Italy (173,500 euros) or Spain (182,700 euros), due to the relatively low level of home ownership in Germany.”
“Rick Rieder, who oversees $763 billion in fixed income investments for BlackRock, spoke out as the Fed debates how long to persist with the unorthodox measures it has used to stimulate the U.S. economy. His comments add BlackRock to the growing list of Fed critics who are warning of trouble ahead for the bond market.
Mr. Rieder favors government debt that matures within five years, corporate and emerging market debt, and bank loans that offer floating interest rates.
“Fed policy has had a distorting effect on capital allocation decisions of all kinds at virtually every level of the economy,” he told the Financial Times. “It is a very large and dull hammer for markets.”
The Fed buys $85 billion of Treasurys and mortgage-backed securities every month, about two-thirds of the net issuance of such bonds.”
More bond investors bet on US rate rise – FT.com
“More US bond investors are seeking new ways to hedge against the risk of a sharp rise in interest rates in case growth in the world’s largest economy picks up and the Federal Reserve starts to wind up its current stimulus policies.
The US central bank is expected on Wednesday to maintain its current level of bond purchases, which have pushed up bond prices and kept rates low. However, some investors are taking positions in exchange traded funds and leveraged loans that are designed to profit if market interest rates spike higher.”
Slovenia may have misread bank clean-up cost -OECD | Reuters
“Slovenia, trying to avoid becoming the euro zone’s next bailout victim, may have “significantly” misread the cost of fixing its troubled banks, the OECD said on Tuesday.
Following last month’s messy rescue of Cyprus, the country of 2 million perched on Italy’s northeast border is facing intensifying market pressure while seeking funds to heal its state-owned financial sector.”
Evacuate, North Korea urges foreigners in latest ‘thermo-nuclear war’ threat – Telegraph
“The warning followed a similar evacuation advisory the North gave Friday to foreign embassies in Pyongyang, saying it could not ensure the safety of their personnel if war broke out.”
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