Japan’s descent into recession has prompted questions of what the country must do to right itself — and many agree that “Abenomics” will not be enough. Most Japan watchers and economists, and even Abe himself, say that to restore sustainable growth, Japan needs sweeping deregulation and structural reforms. But pushing through such changes is proving daunting, despite Abe’s pledges to “drill deep into the bedrock” of Japan’s vested interests.
Articles by Julia Pastor
About the Author
MADRID | By Julia Pastor | The designs of the markets are unfathomable. Mario Draghi might forget the QE idea and the British housing sector might collapse. These are some of the Saxo Bank’s ludicrous forecasts for 2015. A year ago they claimed there would be a default in the Russian debt and the collapse of the oil price, and they were right. Nonetheless, most of the experts that talked to The Corner agree on a scenario for 2015 led by the ECB’s quantitative easing, the oil price reduction and low interest rates.
MADRID | By Julia Pastor | While the idea is spreading that the ECB can become the European “bad bank” if it finally buys securities from Greece and Cyprus, our readers should note that the ABS market is too small in some EU countries such as Spain. Also, many issuers do not even have a credit rating and those who have it would not obtain more than a BBB-. The reality is that there is not much “junk” to buy.
BEIJING | By Qin Min via Caixin | Government agencies are leading a shift to cloud-based computing to save money and promote a new industry.
MADRID | By Julia Pastor | Mario Draghi has been saying he doesn’t rule out a sovereing debt QE: he reminded it at Jackson Hole, then at the European Parliament and in a euro summit in Lithuania on Thursday. Markets are discounting those eventual state debt’s purchases. But do they make sense? Although the eurozone does not have a liquidity problem, analysts remind that the US didn’t either, and yet half of the QE3 went into govies.
MADRID | By Julia Pastor | It is likely that the Spanish government will revise its growth forecasts upwards for the country in 2014, but only by one tenth of a percentage point-to 1.3%. This is likely to be the submission that the Ministry of Economy together with the Ministry of Finance will give to the next Council of Ministers.
MADRID | By Julia Pastor | ECB’s Mario Draghi brought put the bleak panorama that the Eurozone’s economy is facing on the table, and we saw it again reflected in the not-so-promising September manufacturing PMI. The index came in at 50.5 compared to 50.7 in the prior month, whereas EZ Services PMI accelerated at 52.8 for September versus 53.1 in August. Even the composite index plummeted to its lowest fee in the last nine months and reached 52.3. In Germany, both manufacturing and services indexes have also decreased; while in France only manufacturing improved, although it is still contracting.
MADRID | By Julia Pastor | The first TLTRO auction will not make history for its significance. Eurozone banks only asked for €82.6 billion, from which €14.147 million will go to Spanish entities (Santander €3bn; Caixabank €3bn; Popular 2.847 bn ; Bankia 2.7bn and BBVA 2.6bn), much less than the expected 100-150 billion, was firstly interpreted as a poor credit demand, although a second reading shows that lenders were right to be cautions.
MADRID | By Julia Pastor | As expected, ECB’s September TLTRO will not make big headlines. 255 European banks borrowed €82.6bn of liquidity below consensus estimate of €100-150bn. Although the Frankfurt-based institution doesn’t provide a geographical breakdown, banks in Italy and Spain were among the leading borrowers (40% of the total) to trim funding costs. Spanish entities are thought to have asked half of those €30bn at their disposal, although some entities “are not willing to disclose how much they asked for,” an ECB source confirmed to The Corner.
MADRID | By Julia Pastor | ECB’s upcoming ABS drive with senior, higher credit quality assets will be launched with or without guarantees from the states, that is for sure. The question is if countries will guarantee riskier tranches, the so-called mezzanine ABS. Spain is willing to do so if others go for it, yet Germany, France and the Netherlands are refusing. This makes sense since a state back up would mean to put assets with uneven exposure to bankruptcy on the same level. An eventual agreement would be a very difficult political decision. Details of the ABS plan will be announced after the central lender’s next monetary policy meeting on Oct. 2.