Thursday, 27 October 2011
In his fascinating Financial History of Western Europe, Kindleberger describes the genesis of the lender of last resort and the gradual assumption of this role by central banks. But why should we care about our own financial history? Obviously This time is different...
here Paul de Grauwe on the ECB and the LLR.
Monday, 24 October 2011
Friday, 21 October 2011
Jornal de Negocios’ news elaborate on this by reporting that expenditure with public employees is falling more than 6%, reflecting the 5% average wage cut that took place earlier this year (see here). Simultaneously, the revenues’ side is over performing, mostly driven by direct taxes paid by enterprises and VAT (see here).
All in all, the State budget deficit is falling more than 30% since January (more here).
Wednesday, 12 October 2011
The average unemployment rate for the aggregate OECD group was kept unchanged in August, at 8,2%, sligthly smaller than the Euro-area and US' numbers, 10% and 9,1% respectively.
More information here.
Source: Labour Force Statistics
Tuesday, 11 October 2011
"PROVISIONAL VERSION 11.X.2011 ECONOMIC AND FINANCIAL AFFAIRS
Financial assistance to Ireland and Portugal
The Council adopted two decisions amending the terms of financial assistance granted to Ireland and Portugal under the European Financial Stabilisation Mechanism
The decisions extend the maximum average maturity of the loans to Ireland and Portugal to
12,5 years, while the maturity of individual tranches of the loan facilities may be of up to 30 years. The interest rate margins will be reduced to the EU's cost of funding. The extension of maturities and the reduction in the interest rate margin will also apply to the tranches that have already
The decisions amend implementing decisions 2011/77/EU and 2011/344/EU on granting EU financial assistance to Ireland and Portugal. They implement conclusions reached by the euro area heads of state or government on 21 July 2011."
Monday, 10 October 2011
In summary, the General Government deficit (national accounts) was 8.8% of GDP in the 12 months ending in Q2 (decreasing from 9.3% in the previous quarter), mainly due to reductions in wages and social transfers in kind.
Alberto Joao Jardim, president of Portugal's autonomous Madeira archipelago, won regional elections Sunday, even though he has been blamed for (unreported) debts that boosted the country's overall deficit. This relates to Fitch's statement last Friday that Portugal's outlook was negative, meaning that its BBB- rating could be further downgraded in the near future. Recall that the Madeira bill further burdened Portugal's deficit (it amounted to 8.3% of GDP in June, far from the 5.9% end-of-year target). In fact the Finance Minister Vitor Gaspar said recently "These irregularities... impact negatively on the country's credibility".
Official results showed that the Social Democrat Party (PSD) obtained 48.56% of the vote, its worst result under Jardim's 33-year leadership.
CDS-PP, which forms the national ruling coalition along with the PSD, came second with 17.63%, well up on the 5.34% it got in the last elections in 2007.
Portugal's main opposition party, the Socialist Party (PS), had to content itself with third place taking just 11.5% of the vote, down from second place and 15% in 2007.
Today the Royal Swedish Academy of Sciences awarded two Americans, Thomas Sargent and Christopher Sims, the Nobel in economics. The prize's justification is as follows: "for their empirical research on cause and effect in the macroeconomy".
According to the prize committee the winners developed methods for answering questions such as how economic growth and inflation are affected by a temporary increase in the interest rate or a tax cut. Sargent and Sims, both 68 years old, carried out their research independently in the 1970s and 1980s.More details on the prize can be found here.
For the winners' personal webpages: Thomas Sargent and Chris Sims.