Links: 2013-11-08

Monetary Policy

Monetary policy: On escaping the zero lower bound | The Economist

“the most aggressive policy adjustments that seem to be under consideration and assuming a very long expansion the odds of falling back to the zero lower bound in the next recession are quite high. Even if the Fed were to augment its forward guidance by changing target, to a 3% inflation target or a nominal income target. And what would happen then?”

2017? – Tim Duy’s Fed Watch

“Be wary of assuming that a change in the unemployment threshold to 5.5% implies the Federal Reserve intends to keep rates near zero into 2017. The results of the English et al. (2013) paper suggests a much smaller change in expectations for the timing of the first rate hike from such a policy shift.”

ECB adds to bubbly markets’ risky lack of fear | Considered View | Breakingviews

ECB rate cut is only a first step –

“The best way to repair the eurozone’s monetary transmission mechanism, however, would be to ensure that the banks were properly capitalised so that they were in a position to extend new loans. This is why the ECB’s forthcoming audit of the eurozone banking system is so important. “

Zinstief: Sparer befürchten Enteignung durch die EZB – manager magazin

German savers are concerned that the ECB is ruining their savings. This is important as Germans have traditionally been risk-averse and the Sparbuch has been a great source of savings for retirement. The initial German retail foray into equities ended in the Internet bubble disaster

EZB-Geldpolitik: Zinssenkung schürt Ängste vor Preisblasen | ZEIT ONLINE

One big worry in Germany now that the ECB has cut rates again is a housing bubble. Already, house prices in big German cities are rising at an astonishing clip. Likely this will continue and lead to overheating.



High home ownership linked to high unemployment: study – Chicago Tribune

“High levels of home ownership are strongly linked to subsequent rises in unemployment because labor mobility becomes reduced, according to new research.”



TABLE-Greek October consumer prices mark biggest deflation in 50 yrs | Reuters

France’s ‘AA’ Hollande pays price for kowtowing to EMU deflation madness – Telegraph Blogs

Ideological Ratings –

This post totally disregards the lack of monetary sovereignty in France. That is the key difference between the UK and France and Krugman knows this.

Immo-Blasenindex der UBS steigt noch höher – News Wirtschaft: Unternehmen –

Germany is not the only country concerned with about a potential bubble in residential property. Switzerland also has the same concern because of low interest rates.

France rating downgrade heaps pressure on François Hollande –

““The downgrade reflects our view that the French government’s current approach to budgetary and structural reforms to taxation, as well as to product, services, and labour markets, is unlikely to substantially raise France’s medium-term growth prospects,” S&P said in a statement on Friday.

“Moreover, we see France’s fiscal flexibility as constrained by successive governments’ moves to increase already-high tax levels, and what we see as the government’s inability to significantly reduce total government spending.”

Separately, France’s industrial output unexpectedly fell in September by 0.5 per cent from the previous month while the trade deficit worsened, raising concerns that growth in the third quarter was going to be slower than expected.”

Arbeitslosenquote steigt im Oktober auf 3,1 Prozent – News Wirtschaft: Konjunktur –

The unemployment rate in Switzerland is only 3.1% and the youth unemployment rate in 3.4%

ECB on crash course with Germany on banking union –

““A single mechanism is better placed to guarantee optimal resolution action, including adequate burden-sharing, than a network of national resolution authorities,” the ECB wrote. “Co-ordination between national resolution systems has not proved sufficient to achieve the most timely and cost-effective resolution decisions, particularly in a cross-border context.”

The stance puts the bank in direct conflict with Wolfgang Schäuble, the German finance minister, who has repeatedly said the EU’s new bank bailout system should start as a “network” of national authorities because EU treaties do not allow for a single decision maker for all of Europe.”

Germany’s export surplus hits record high –


North America

Denial-of-service tool targeting site discovered | Ars Technica

U.S. consumer credit up, credit card use falls again | Reuters

“Total consumer credit increased by $13.74 billion to $3.05 trillion, the Federal Reserve said on Thursday.

Economists polled by Reuters had expected consumer credit to rise $12 billion in September after a previously reported $13.63 billion increase in August. This was revised up to a gain of $14.15 billion.

Revolving credit, which mostly measures credit-card use, dropped $2.06 billion, falling for a fourth consecutive month. The sustained drop could help explain the pullback in consumer spending in the third quarter.”

Rob Ford is out of control and a real danger to himself | Toronto Star

Unemployment rate still at 6.9 per cent: Statistics Canada | Toronto Star

Fannie, Freddie Close to Paying Back Taxpayers –

“Fannie Mae and Freddie Mac will pay $39 billion to the U.S. Treasury by the end of the year, the companies said Thursday, putting the firms close to having paid as much as the government injected in the mortgage-finance giants—nearly $188 billion—to keep them afloat through the housing bust.”

U.S. Consumer Spending Remains Tepid –

“U.S. consumers spent cautiously in September ahead of the government shutdown, the latest sign that the economic recovery remains stuck in low gear.

Separately, a new consumer-confidence reading Friday showed Americans continuing to downgrade their expectations for the economy into November, a bad omen for spending going forward. The Thomson-Reuters/University of Michigan index of consumer sentiment fell to a two-year low of 72 in November from 73.2 in October.

Personal income rose 0.5% in September, beating economists’ forecast of a 0.3% increase. Commerce said income was buoyed by a rise government wages, which had been depressed in prior months because of employee furloughs.

September was the third consecutive month that income gains outpaced spending, another sign of consumer caution. The savings rate increased to 4.9% in September from 4.7% in the prior month.”

US massive jobs growth defies weak forecasts –

“The big surprise of the report was the lack of any apparent impact from the nearly three-week government shutdown that began at the start of October. Federal workers on furlough were counted as employed for the payrolls report and the government sector shed only 8,000 positions.

Jobs growth was strong across the board with an extra 11,000 positions in construction, 19,000 in manufacturing, 44,400 in retail, 44,000 in business services, 23,000 in education and 53,000 in leisure.

There was more of a shutdown effect in the separate household survey where the unemployment rate rose slightly from 7.2 to 7.3 per cent. “

U.S. Treasury to Introduce Floating-Rate Notes –

I would expect these floating-rate notes to be a lower price/yield than traditional fixed-rate notes.

For Americans Abroad, Taxes Just Got More Complicated –

“the new demand from the U.S. Internal Revenue Service: Form 8938, the Statement of Specified Foreign Financial Assets. “It compels every taxpayer to try to find a way that they’re guilty of some kind of omission.”

The new requirement comes courtesy of the Foreign Account Tax Compliance Act, or Fatca, an effort to crack down on offshore tax evasion by U.S. citizens. The impetus for Fatca was the revelation that the Swiss bank UBS had been helping thousands of Americans — many of them U.S. residents — to cheat the Internal Revenue Service, an offense for which it paid a $780 million penalty and handed over details on thousands of clients to end prosecution. “

Another Stunning Reversal In President Obama’s Talking Points On Obamacare |



The Bitcoin Bubble | TechCrunch

Microsoft CEO Candidate Elop Said to Mull Windows Shift – Bloomberg

Amazon Kindle Fire HDX review (8.9-inch) | The Verge

iPad Air review | PC Pro

“With Apple now throwing in free copies of the iWork and iLife suites – incorporating Page, Numbers, Keynote, GarageBand, iPhoto and iMovie – not only is the Air the best iPad yet in terms of hardware, it’s also the best-value.”


Civil Liberties

Almost a quarter of German companies now see the cloud as very risky, after NSA leaks — Tech News and Analysis

Exclusive: Snowden persuaded other NSA workers to give up passwords – sources | Reuters

“Former U.S. National Security Agency contractor Edward Snowden used login credentials and passwords provided unwittingly by colleagues at a spy base in Hawaii to access some of the classified material he leaked to the media, sources said.

A handful of agency employees who gave their login details to Snowden were identified, questioned and removed from their assignments, said a source close to several U.S. government investigations into the damage caused by the leaks.”

NSA Spying Fallout: Majority of Germans Mistrust United States – SPIEGEL ONLINE

“The survey, commissioned by public broadcaster ARD and daily newspaper Die Welt, found that only 35 percent of Germans considered the US government trustworthy — numbers not seen since the times of highly unpopular President George W. Bush. Forty-three percent said they were satisfied with the work of US President Barack Obama. Just a year ago, he enjoyed the backing of 75 percent of Germans.”

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