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Iceland banks

World economy 10th October 2014

Iceland banking collapse: 6 yrs later, gov starving Special Prosecutor of funds

LONDON | By Sigrún Davíðsdóttir at Icelog| After the Iceland banking collapse in October 2008, three things were set in motion by the government at the time (Independence Party, together with the Social Democrats): an investigation into the causes of the collapse, rewriting the constitution and an Office of a Special Prosecutor. The investigation was concluded with a report of 2400 pages published April 10 2010; so far, no country has done a comparable report on the financial crisis in 2008. Rewriting the constitution was not finished in the way intended due to a political backlash. The government now plans to review OSP’s role although the OSP was made a permanent serious fraud office in 2011 – and starve it of funds while the review is ongoing.

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World economy 10th October 2014

The SS explanation of the crisis

SAO PAOLO | By Marcus Nunes via Historinhas | It comes from Martin Wolf´s “The Shifts and the Shocks” and is reviewed by Paul Krugman in the New York Review of Books. The following passage of his review nullifies the whole thing: In particular, Milton Friedman had convinced many economists that depression prevention is actually a fairly simple task, which can be carried out by technocrats at the central banks that control national money supplies. According to Friedman, the Great Depression occurred only because the Federal Reserve failed to do its job in the 1930s; if it had acted to rescue troubled banks and prevent a fall in the money supply, catastrophe would have been avoided.

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World economy 8th October 2014

IMF’s Global financial stability report: Shadow banking may compromise recovery

MADRID | The Corner | As the global economy’s last data disappoint, shadow banks could be “compromising” growth even more, the IMF’s Global Financial Stability Report released Wednesday pointed out. Since “banks representing almost 40 percent of total assets are not strong enough to supply adequate credit in support of the recovery,” Financial Counsellor José Viñals said, controlling their non-regulated peers remains a great challenge. 

 

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World economy 6th October 2014

A Nobel Prize for discovering our inner GPS

MADRID | The Corner | Right now, you are sitting on your desk and plan to grab a sandwich from the vending machine, then consider investing on a stock. Your plans are clear. But do you know why you know that? Neuroscientists John O’Keefe, May-Britt Moser and Edvard Mos are the discoverers of that mechanism, our brain’s GPS, or cells that form a positioning system in it. They were awarded with the Nobel Prize of Medicine on Monday in Stockholm. Their research could mean advances in the Alzheimer research. 

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World economy 3rd October 2014

Why Draghi failed to convince the markets?

MADRID | By JP Marin Arrese | The crash in stocks all over Europe vividly showed how bitterly Draghi’s asset-buying plan disclosed yesterday disappointed investors. Yet, his introductory statement was widely in line with expectations. He broadly delivered last month promise to cash ABS and covered bonds issued by banking institutions, so long as the assets met the standard collateral requirements for  ECB facilities. He even took a step forward by extending eligibility to lower than senior debt, the so-called mezzanine tranche. Furthermore, he provided firm assurances the plan would  be in place for two years. What turned so utterly wrong? Undoudtedly, the ensuing press conference unfolded into an unmitigated disaster.

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World economy 2nd October 2014

China PMI fails to inspire

LONDON | By Christian Keller at Barclays | China’s official manufacturing PMI was flat at 51.1in September, slightly below Barclays’ forecast (51.3), but marginally above consensus of 51.0. The data reaffirmed the trend of improving external demand, but soft domestic demand. The China PMI data had a limited market impact, with local markets closed for National Day while AUD fell following the weak sales outcome. 

US China exchange rate conflict

World economy 1st October 2014

China under the markets’ spotlight: What is really going on?

MADRID | By Ana Fuentes |  Protests in Honk Kong have served to put even more pressure on Beijing’s economy, which is already struggling to maintain growth, boost household consumption and ease credit lending. The last monetary easing by the country’s central bank and the rumours that its governor could be replaced for being too reform-minded has seen certain questions arise. Are they pertinent or just distorting noise?

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World economy 30th September 2014

Steady progress toward US full employment

LONDON | By Rajiv Setia and Anshul Pradhan at Barclays | Developed rates markets rallied globally over the past week, led by the long end, largely in response to the across-the-board underperformance of risk-assets. Figure 1 shows changes in ED-implied rates on the day of the September FOMC meeting, as well as the change from pre-FOMC levels to now.