News Links: Europe on the brink of a disaster
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The single currency is close to collapse – Telegraph
With Europe on the brink of a disaster, the euro must be reconstituted as an entity based on economic reality, not ideological folly.
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Most Greek bailout money has gone to pay off bondholders – The Washington Post
More than half of the money lent to Greece so far by the International Monetary Fund and European nations has gone to repay bondholders, a transfer of billions of dollars from taxpayers around the world to European banks and pension funds that invested in the troubled Mediterranean nation.
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S&P sees downgrade blitz in EMU recession, threatening crisis strategy – Telegraph
Standard & Poor’s (S&P) is to warn that a double-dip recession in Europe would imperil France’s AAA rating and set off a string of downgrades across Southern Europe, undermining the EU’s debt crisis strategy.
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Banks must find €108bn in new capital – FT.com
Europe’s big banks will be forced to find €108bn ($150bn) of fresh capital over the next six to nine months under a deal to strengthen the banking system agreed by European Union finance ministers.
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Italian bond yields reach point of no return – Telegraph
As the UK discovered to its cost during its ill-fated membership of the ERM, it is tough to impossible to be in any form of currency union with Germany.
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Merkel Takes Aim at Italy, Demands Eurozone Countries Cut Debt – Bloomberg
Italy’s outstanding debt at 120 percent of gross domestic product can’t be blamed on speculators, Merkel told a group of women in her Christian Democratic Union today. Markets demand higher interest rates on Italian bonds because the level of such debt is “seen very critically,” she said. […] “It doesn’t look much better in America, even if the markets aren’t quite concentrating on that,” Merkel said today.
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Eurozone leaders seek foreign money to boost bail-out fund – Telegraph
Eurozone leaders are hoping to tap the world’s largest sovereign wealth funds for hundreds of billions of pounds under revised plans to boost the single currency area’s bail-out scheme.
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FT Alphaville » Should the Fed target a nominal level of GDP?
Goldman: "Pairing a nominal GDP target with additional asset purchases would enhance the credibility of the shift in the short term. And the shift in the target would raise the likelihood that the asset purchases will be effective—making the whole greater than the sum of the parts."
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Macro and Other Market Musings: Three Objections to NGDP Level Targeting
Not everyone is a fan of nominal GDP level targeting. Here are three objections to it that I have run across recently followed by responses to them.
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‘Gruesome’ Qaddafi Video May Trigger UN Probe – Bloomberg
Muammar Qaddafi’s last moments were captured on video and released on the Internet: In one he is alive and in the other, dead. How the Libyan dictator met his end may now come under scrutiny in a United Nations probe.
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No Way to Run a Central Bank – Barrons.com
Federal Reserve, Heal Thyself! Two reports show that during the 2008 financial meltdown, regulators were taking advice from the regulated, who themselves were recipients of bailout largesse.
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Second Miracle in 15 Years Needed for U.S. as Productivity Wanes – Bloomberg
“An underlying trend of slow productivity growth has emerged, which means our baseline assumptions about economic growth may be a little too optimistic.”
it should be noted that there is a perfect correlation between the trend-lines for changes in output per hour and the unemployment rate.
so it makes a lot of sense that as this recession goes on, productivity will continue to fall.
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