Aggregated News




Euro Area

Italy Downgrades Itself  

The government announces that Italy's growth will be weaker than hitherto predicted and the deficit will be commensurately worse.

Reuters: “Italy slashes growth outlook, hikes deficit, debt goals

The government forecast that gross domestic product would shrink this year by 2.4 percent, twice as much as the previous projection of a 1.2 percent drop, made in April. The weakening economy is badly hurting fiscal consolidation efforts. The government hiked its forecast for the 2012 budget deficit to 2.6 percent from 1.7 percent, and more than tripled the 2013 target to 1.8 percent from 0.5 percent.

Until April, the government was pledging to balance the budget in 2013”

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FOMC Decision Aftermath

Paeans to Money Printing

Actually, it is not only the aftermath of the FOMC decision we will discuss below. There were also a number of comments in the press just before the announcement of 'QE3' that were noteworthy. We'll begin with the sirupy paeans to money printing that seemed to erupt left and right.

To us it remains astonishing how people who call more than three brain-cells their own actually believe that printing money will lead to wealth creation. If that were all it took, the whole world would be utterly free of want by now. Just as in the fantasies of the Utopian socialists of yore, the fried chickens would stand ready to fly into everyone's mouth.

Some of the articles we have come across are especially noteworthy for their economic illiteracy and confusion.

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ESM Ruling Aftermath

The German constitutional court's ruling on the ESM ratification has produced numerous comments in the press.  The consensus assessment was that the court did precisely what was widely expected of it: it delivered a 'yes, but' ruling that was seen as a defeat for the euro-skeptics that had sought to use the court to stop the bailout train. Typical for this type of report are the two articles from Germany's news magazine 'Der Spiegel' linked below, which appeared shortly after the decision was announced.

A Setback for Germany's Euroskeptics   – here Angela Merkel and the  German political establishment at large, including the main opposition party SPD, are described as the 'winners' of the ruling. However, is is also mentioned that Peter Gauweiler's motion to stop the ECB's bond buying program will be considered separately by the court.

Ruling Shows Court's Weakness in EU Matters  – in this article the court is described as essentially emasculated when it comes to the EU. All the pomp and circumstance of the eight judges in their red robes has grown hollow“, as the author states. There is something to be said for this view, but the devil is in the verdict's details.



German constitutional court president Andreas Vosskuhle (center) – emasculated?

(Photo via DPA)


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Euro Area

Reactions to ECB Decision

As might be imagined, the ECB decision has been met with quite a bit of doubt and has raised numerous questions.  Below are a few examples of reactions to the announcement in the financial press. Apparently the newest acronym introduced into the lexicon of money printing is meeting with some derision.

The Economist: The ECB and OMT: OTT, OMG or WTF?

Buttonwood wonders about the many questions Mario Draghi's plan raises. The most important one is probably the moral hazard question. Imagine for instance Spain applying from EFSF/ESM help and getting ECB support for its debt in the secondary market. The ECB says that if a country veers off the conditions of the MoU, it will cease buying its bond – but is that really a credible threat?

FT Alphaville: Seniority, the SMP, and the OMT

Joseph Cotterill discusses the odd decision to drop ECB seniority on new 'OMT' purchases, but keep it in place for the more than € 200 billion of bonds held in the 'SMP' portfolio.

Macro Man: Draghing the Devil from the Detail

The ECB certainly inspires a lot of word play these days. Macro Man muses about the possibility that a Greece-style 'PSI' may be in the offing for Portugal. Once again the question revolves around the odd decision regarding seniority  for bonds bought under OMT and SMP.

Reuters:  IMF ready to cooperate with ECB bond buying program

 No doubts expressed in this piece of course. How nice of the IMF that it is going to cooperate!

FT: Loan Rates Point to Euro Zone Fractures (non-paywall link to CNBC reprint)

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Aggregated News Page Renamed

We have decided to rename the 'Aggregated News' page, which will henceforth be called 'Odds and Ends' (if any of our readers have a better idea, don't hesitate to let us know). We decided to do this because it not only contains links to news, but also on opinion pieces and more general information.  As we have already said, this page is not necessarily going to be published every day, but it will definitely be a regular feature henceforth.


A Few Housekeeping Notes

We have several medium to longer term plans as to how to improve the utility of acting man, which will be implemented step by step as time and funding allows. This site is mainly a labor of love, but we are committed to make it as useful as we can within these constraints.

One idea we have long considered is to create a chart page that contains charts that are not published anywhere else (apart from our regular credit market charts feature). It will probably start out with a small selection that will be increased over time. The idea is to keep an eye on indicators that are a bit off the beaten path, which will hopefully provide readers with a small edge.


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Aggregated News, August 27 2012


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We Don't Have Time For Everything…

It happens every day that we come across articles or news stories that either harken back to something we have written about in the past, or simply would be well worth commenting upon in their own right.

However, the day only has 24 hours and we are essentially a two man operation consisting of a designer/editor and one author (apart from our valued occasional guest authors), both of whom actually have other things to do as well.  We simply do not have the time to comment on everything that strikes us as interesting – a choice must be made every day as to what we should write about.

In order to not let certain things disappear into the memory hole, we have therefore decided to introduce a new feature to Acting Man, in which we provide links to interesting articles including a brief comment by us and  occasionally also a chart that helps to illuminate things.


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