News: 2013-12-31

By Edward Harrison On Dec 31, 2013

Macro

Three big macro questions for 2014 | Gavyn Davies

Reasons to be cheerful, despite the threat in the shadows – FT.com

Schneier on Security: Joseph Stiglitz on Trust

Fixing the Shiller CAPE: Accounting, Dividends, and the Permanently High Plateau | Philosophical Economics

Interesting view on accounting and the Shiller PE/CAPE. I am not really convinced here because I see the effort to alter the accounting as emblematic of a desire to justify stock prices.

Europe

Euro Zone Rode the Shock Waves in 2013 – WSJ.com

Latvia sees joining euro as extra protection against Russia – FT.com

Latvia’s Eurozone entry set to attract dirty money from Russia, Eastern Europe | Financial Post

Lägsta skatten på 37 år – DN.SE

Swedish taxes are at the lowest level since 1975 at 44.3%. This compares to record high of 51.5% in 1990, 1999, and 2000. Four countries now have higher taxes than Sweden: Denmark, Belgium, Italy (with record poverty) and France (with 75% tax coming online)

Poverty in Italy hits record levels | Reuters

6,7 procent Bulgaren wil geluk zoeken in ander EU-land – De Standaard

6.7% of Bulgarians want to emigrate when the EU allows them free labor mobility in 2014. I am seeing a decent number of stories on the coming free labor movement for Bulgaria and Romania in the EU. Some of these articles have a tinge of xenophobia. And note that both Bulgaria and Romania are on the EIU list of countries that have an elevated risk of social unrest.

Portugal no grupo de “Risco Elevado” de agitação social – Economia – DN

According to the Economist Intelligence Unit, Portugal is a part of the group of 46 countries with an “elevated risk” profile for social unrest in 2014. This group also includes Bulgaria, Cyprus, Croatia, Spain and Romania.

Bancos europeus têm mais de 10 mil ME de dívida pública portuguesa – Economia – DN

European banks have more than 10 billion euros of Portuguese sovereign debt

Bancos portugueses têm 26 mil ME em dívida soberana – Economia – DN

Portuguese banks own 26 billion euros in sovereign debt

Geo-Graphics » Beware of Greeks Bearing Primary Budget Surpluses

Econbrowser: All quiet on the southern front

Debt-laden Spain looks for savings with pensions overhaul – FT.com

“The new regime breaks the link between pension increases and inflation, in a move that seeks to balance Spain’s deficit-stricken social security system. Pensions will rise by a minimum of 0.25 per cent a year and can only rise further if the state pension fund is in surplus. Payment rises are capped at 0.5 per cent above inflation.”

Osborne joins a futile quest for the holy grail of economics – FT.com

“When I joined the Financial Times, Britain’s Treasury was convinced it had found the holy grail of economic policy. As long as it kept within strict bounds the growth rate of something called the monetary base, everything else would look after itself. The economy would rise effortlessly above the clouds. There have been half-a-dozen holy grails since. Now George Osborne, the chancellor, has put his faith in a balanced budget. Each time, the same mistake is repeated. Means are confused with ends.”

Schweden und die Zombie-Ökonomie | Never Mind the Markets

Good article in this Swiss paper on the differences between Sweden in the early 1990s and the periphery today. A big factor is the exchange rate. Sweden’s currency dropped a tremendous amount, whereas this is not happening for the periphery.

Netzausbau: Deutschland, Land der zwei Geschwindigkeiten | ZEIT ONLINE

Fast home internet has a much higher adoption rate in West Germany than in East Germany

Greece won’t need more loans, says Prime Minister Antonis Samaras – Telegraph

I am incredulous. I don’t see it happening at all. But if Samaras is saying it, there must be some negotiating tactic behind it or an actual chance of it happening. Be VERY sceptical.

Bitcoin

Bubbles, Banks And Bitcoin – Forbes

How and why Bitcoin will plummet in price

Worthwhile Canadian Initiative: BackedCoin vs UnbackedCoin

North America

Congress Letting 55 Tax Breaks Expire at Year End | TIME.com

Protecting JPMorgan from China’s corruption

Buffett in $1bn deal for oil flow business – FT.com

What Comes After the Evan’s Rule? – Tim Duy’s Fed Watch

For Many in Toronto, A Sixth Day in the Cold – Canada Real Time – WSJ

Here’s why Canada’s big banks keep on winning | Financial Post

U.S. Population Grows … But At A Snail’s Pace – Real Time Economics – WSJ

Health Care Spending — A Giant Slain or Sleeping? — NEJM

Gary Gensler defends record as he leaves CFTC – FT.com

Reading between the lines here, you should see banks pushing back on ANY regulation. That’s what the pushback is about. Banks do not want to be regulated and they resist for those reasons, first and foremost. Gensler’s leaving is an opportunity for the bank lobby to roll back regulation.

Mortgage Rates to Take Big Hit from Fee Hikes

“There are two parts to the fee increase. The first of which has already been seen on three occasions (2 from the FHFA and 1 to pay for the payroll tax extension) and involves a permanent increase of 0.1% to the RATE (on average) for all new loans. This is a known quantity for the mortgage market and similar increases are mandated every year until 2021. No surprises there. The added layer of complexity comes from the upfront portion of the fee increase. While the ongoing fees don’t vary based on strength of a loan file (borrower credit and loan details), the upfront fees, known as “Loan Level Price Adjustments” (LLPAs) can vary greatly.”

U.S. pending home sales end slide, hint at stabilization | Reuters

“contracts were 1.6 percent below last November’s levels.”

Wells Fargo Reaches $591 Million Repurchase Liability Settlement With Fannie Mae – WSJ.com

Student-Loan Debt Slows Recovery – Real Time Economics – WSJ