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The Fed, the fiscal cliff and coming recession in 2013
I wrote a piece in the New York Times that appeared yesterday along with Mark Thoma and John Cochrane. The question was "Should the Fed Risk Inflation to Spur Growth?" My answer was that the Fed should always keep an eye on inflation as…
Daily: Dutch house price declines steepest on record
The accelerating decline of Dutch house prices puts the Netherlands into a group with the US, the UK, Spain, Ireland and the Baltics that have seen housing bubbles pop as a result of the Great Financial Crisis. Dutch house prices are now at…
Austrian and German Foreign Ministers back explicit euro expulsion mechanisms
Last year I predicted that the route that Europe would go would be fiscal integration coupled with explicit mechanisms for allowing an exit from the euro zone. For example, in November during the Italian crisis I wrote:
I continue to…
Decline in steel and iron ore price indicates poor Chinese industrial demand
By Sober Look
With all the conflicting economic indicators coming out of China, it is difficult to gauge whether economic growth has stabilized after recent declines. One indicator that clearly points to potential ongoing slowdown in…
Daily: The ECB’s sovereign debt monetisation
The big theme in today’s links is the ECB yet again. With the interview with Joerg Asmussen out, backing Mario Draghi’s previous statements, it is now more clear than ever where this is headed in Europe. The lead story here from Ambrose…
More on the ECB’s using redenomination risk as the rationale for intervention
A while ago I posted a translation of Joerg Asmussen's Frankfurter Rundschau interview and my interpretation of his commentary. Here is the rest of the translation and some commentary.
There are to be bond purchases once more. What makes…
Asmussen: The ECB will start buying peripheral bonds again to eliminate redenomination risk premia
An extremely important interview with ECB board member Joerg Asmussen was carried in the Frankfurter Rundschau recently. Below is a translation with key bits highlighted. Afterward I will interpret his remarks in light of ongoing…
Links: Europe’s never ending crisis – ECB and Italy, Spain, Slovenia, and Greece
Here’s round two of the links, this time on Europe. It is mostly about the ECB and the rumours about unlimited liquidity. I have already written about this twice today so I won’t say any more. But I will note the Reuters article on how…
Links: On declining corporate earnings, technology, and the US economy
The fact that earnings are declining at US companies should not be a surprise given the decline I reported in earnings on the national income and product accounts for Q1. But now reported earnings are showing year-on-year declines for the…
More thoughts on yield ceilings on euro zone sovereign debt
This is just a quick follow-up to my article on ECB sovereign debt yield caps. I don’t think the ECB is about to put ceilings on euro area sovereign debt yields. The speculation generated by the Spiegel article is not warranted in my view.