I ran a bit late this morning. SO there will be no daily commentary until tomorrow. It is a slow news day, in any event. I think the links here capture the essence of what’s happening.
Swedish banks have 14 billion dollars in loans outstanding to Russia.
Debt of Bank Austria was downgraded by Moody’s along with its parent Italian Unicredito.
Cyprus got an upgrade from Moody’s to a positive outlook from negative on sovereign debt.
Portugal is almost out of the troika program. The cost is 16% of GDP. Experts are now 40% of GDP versus just 28% pre crisis. This article praises Spain and Portugal for using the crisis to lift productivity and move to higher value added exports.
The Swiss will decide whether to institute a 4000 Franc per month minimum wage.
“Asked to define a bubble, some Wall Street wags say it is a bull market that an investor has missed. But with the period between earnings seasons now under way and the S&P 500 back near its record high, investors may turn more attention to the stock market’s overall health rather than just that of its components. ”
“You will actually find a great deal of the more modern stuff in the textbooks, but essentially in the form of add-ons. So first students are taught that central banks fix the money supply, and then they learn about Taylor rules. First they are taught about a Keynesian consumption function (with a large mpc), and then they learn about consumption smoothing. This is silly. It is also dangerous, because the problem with add-ons is that they may not get added on. In particular, students who learn all about the money multiplier may never go on to be taught that if banks are not short of reserves or have easy access to them, they can simply create deposits by issuing loans. I suspect it is this lacuna which helped motivate the Bank’s authors to write their article.”
“A close adviser to Shinzo Abe has called for the Bank of Japan to take action “within one or two months” of next week’s increase in consumption tax, if data were to indicate that consumers were struggling to cope with the fiscal squeeze.”
I am not sure I wholly believe the narrative here, but here it is: “Russia grew richer during the last decade but did not develop in the normal sense of building up more sophisticated manufacturing industries. In a vibrant developing economy such as Korea or the Czech Republic, manufacturing accounts for at least 20% of GDP. Manufacturing in Russia accounts for just 15% of GDP, down from 18% in 2005. Small and medium-size companies of any kind, including banks, struggle to gain a foothold alongside state behemoths. The result is that the Russian state has few new sources of income outside of oil and gas, at a time when it is taking on more dependents.”
This German article shows the German angst over sanctions against Russia. They say that German export strength is a big reason for Germany to be most affected by sanctions.
This Swiss article says Russia’s loss off the Crimean war in the 1850s to the Ottoman Empire, Britain and France was a boon to Russia because it showed just how important industrialization was.
I want to make a habit of entertaining a multiplicity of perspectives. If we entertain views from one perspective, it leaves us with blind spots from an analysis perspective. So here’s one out of consensus perspective on Ukraine. It points to corruption as a big problem.
This is the phone call between US State Department Assistant Secretary Nuland and the US Ambassador to Ukraine about Ukraine that was leaked as the protests were building against the corrupt Yanukovych regime. It depicts the US as having a close relationship with the leaders now in place in Ukraine.
“When I was in Kiev last, in November 2009, Tymoshenko was running for president against Viktor Yanukovich, and her chances did not look good: Kievans I spoke to were fed up with her ruthless political style. Moreover, they saw her as a main reason for the ultimate failure of the Orange Revolution. She was also of questionable moral caliber: her fortune, then numbering in the hundreds of millions, was stashed abroad in cash and gold bullion, her mansion guarded by an army of personal bodyguards. Her business partner and crony politician Pavlo Lazarenko was in federal prison in the U.S. for money laundering, wire fraud, and transporting illegal goods, and there were charges that he siphoned off over $20 billion of Ukraine’s public funds into personal accounts in the U.S. Tymoshenko had herself been arrested for trying to smuggle out millions in cash.”
Corruption is rampant in Ukrainian politics as almost all the major political figures live in opulence, even those from the Euromaidan scene.