Death Star Economics



EU strikes deal on budget rules; Japan continues to confuse

In an effort to mask eurobonds as something less repulsive to German chancellor Angela Merkel, the EU has set up a working group to do a feasibility study for a European debt redemption fund. This is part of a deal on budget rules, which includes the Commission’s insight into national budget proposals before those are voted on in national parliaments. read article 

Meanwhile in China, the PBOC withdrew CNY30bn ($4.81bn) from the banking system to ease inflationary pressures that had flared up following the continuous influx of fresh cash into the economy to reduce borrowing costs. read article

News out of Japan continue to surround monetary policy, with PM Abe saying the governing laws of the Bank of Japancould be conditional to changes if the 2% inflation target isn’t reached. Abe also said that buying foreign bonds existed as an option to exercise monetary policy if BOJ results should disappoint. This was disputed by Finance Minister Taro Aso today, who said Japan had no intentions to buy foreign bonds through a designated BOJ fund. It’s always nice to see consensus in an administration.

In other news, the German ZEW survey exceeded expectations by a ridiculous extent, rising to 48.2. The last time the survey reached that level of confidence was April 2010 (right before Greece started to disintegrate). Now it’s just a matter of time until expectations will probably adjust to the real world. read article

Finally, BP has admitted not to have reached a settlement ahead of the Deepwater Horizon trial, more or less because the company is convinced that the total fines would be much lower than the $20bn that have been estimated by some in the run-up for the court case. read article

So long. 


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