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Euro zone rescuer Draghi faces daunting 2013
http://www.reuters.com/article/2012/12/18/us-ecb-draghi-idUSBRE8BH0LL20121218
(Reuters) - With two short sentences, the head of the European Central Bank took the heat out of the euro zone crisis this year. In 2013 Mario Draghi has to live up to even bigger expectations.
The ECB's own forecasts suggest the euro zone economy will shrink 0.3 percent next year and markets remain skeptical that the bloc's weaker members, such as Spain and Italy, can fund ballooning government deficits without formal aid programs.
Progress towards closer economic and fiscal union -- deemed essential by policymakers to solve the euro zone crisis -- is likely to be painfully slow in 2013 because two of the bloc's top three economies, Germany and Italy, hold elections.
Draghi's inbox will fill up quickly.
"There will be a lot of focus on preparation for the ECB as the new single supervisor," said Nick Matthews, economist at Nomura, referring to new plans for the ECB to take over supervision of the bloc's biggest banks.
"The other big challenge is the performance of the real economy - does confidence return as the ECB is expecting?"
Draghi had only been in office eight months when he pulled the euro zone back from the brink of break-up by saying in July: "Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough."
Although he began 2012 relatively untried at the European level, with Berlin suspicious, the new ECB president won support from German Chancellor Angela Merkel and her nominee on the ECB board, Joerg Asmussen, for his bold plan to save the euro.
That involved the ECB standing ready to buy government bonds in secondary markets to bring down borrowing costs for stricken countries, provided they signed up to a tough program of economic targets.
Draghi's stroke of genius - or luck - was that during 2012 the mere threat of ECB action sufficed to push borrowing costs down by a critical two percentage points for Spain and Italy, without the need to actually intervene.
This was just as well, since the most influential single ECB council member - Germany's Jens Weidmann - opposed the plan.
Clemens Fuest, research director at Oxford University's Said Business School and an adviser to the German Finance Ministry, explained that Draghi's vow to "do whatever it takes" to save the euro and the development of his plan came at a time when Berlin was under intense pressure to hold the bloc together.
"They didn't like (being pushed to do more) and they knew this would take the pressures away from that area," he added.
For a man who likes to say "the proof is in the eyes of the beholder", Draghi will need to deliver on his pledge next year but without triggering another ECB internal schism that would blow the market confidence he has restored.
The first test is already looming. In Draghi's native Italy, the reforming government of technocrat Mario Monti has collapsed and there is no guarantee that elections early next year will deliver a strong government committed to economic reform.
This threatens to take the three-year-old crisis to a new level and further test Draghi's ability to get a convincing policy response from a fractured ECB Governing Council.
The ECB will likely need to activate its new bond-purchase program - dubbed Outright Monetary Transactions (OMT) - in 2013 to ease Spain's borrowing costs. Any intervention will have to be strong enough to show Draghi's pledge is credible.
Bundesbank chief Weidmann would rather not use the OMT at all. Others at the ECB would, and sooner rather than later.
"We would prefer them to apply," one member of the policymaking Governing Council, speaking on condition of anonymity, said with reference to the request for aid from Europe's bailout fund Madrid must make before the ECB can act.
If juggling these pressures is not enough, Draghi also faces the managerial challenge of building up a banking supervisory body at the ECB next year that is both credible but separate from the bank's main business of setting interest rates.
BANKING BEHEMOTH
The ECB's new supervisory role is part of a vision for a more integrated euro zone that Draghi has pushed for since he succeeded Frenchman Jean-Claude Trichet as ECB president in November, 2011.
Under a landmark deal last week, the ECB will have new powers from 2014 that will give it automatic oversight of around 150 of the euro zone's 6,000-odd banks, and the authority to intervene in smaller banks if there are signs of trouble.
The establishment of this single supervisory mechanism is a first step towards a banking union that will lay a cornerstone for closer economic integration.
The Governing Council member, speaking on condition of anonymity, described the banking union as being of "existential importance for the euro zone". It will later include a fund to wind down problem banks and a deposit guarantee scheme,
But he and others at the ECB still worry about how the central bank will handle its new supervisory role without compromising its independence on setting interest rates - for instance by keeping rates low to keep banks alive.
"This institution is starting to be overburdened," said the Council member, who wanted tight rules to delineate the bank's new supervisory role and to separate it from monetary policy.
Draghi's challenge here is two-fold: he needs to put the right structures and people in place to ensure the supervisor operates effectively. But he must also separate it from ECB monetary policy business or risk losing the bank's independence.
Draghi's solution is to keep himself out of the supervision business - a strategy that poses a risk of its own as the ECB must make the new body credible without the authority he brings.
"It's not going to be me who is going to take care of this," he told European lawmakers on Monday. "We have to make sure that monetary policy and supervision are rigorously separated."
TIGHTROPE WALK
One tightrope walk Draghi cannot opt out of its monetary policy: in the past this was mainly the business of setting interest rates to keep inflation in check. This year, Draghi took ECB's monetary policy to a new level with his OMT plan.
In Germany, however, the OMT plan has led to worries that Draghi is moving the ECB away from the Bundesbank model of fierce independence. Before the ECB can intervene under the program, a country must seek help from Europe's bailout fund.
"This means the ECB becomes dependent on fiscal policy decisions, and gives up its independence to a degree," said Fuest, who in March takes over as head of German think tank ZEW.
These concerns echo the views of Weidmann. The resignations last year of his predecessor, Axel Weber, and German chief economist Juergen Stark in protest at the ECB's previous bond-buying plan rocked the young central bank.
While Weidmann has indicated he will not resign, 65-year-old Draghi was only able to secure his OMT plan by isolating the Bundesbank chief. Draghi needs to keep him in a minority of one, or else risk his signature policy plan losing value.
This means Draghi may have to forgo the interest rate cut some at the ECB would like in 2013 to help the euro zone's recession-hit southern economies, just to avoid other hardliners - or hawks - joining Weidmann in opposing use of the OMT.
Euro zone rates are currently at 0.75 percent, higher than Britain's 0.5 percent and the Fed's rate of close to zero.
"Draghi's key task for 2013 is keeping the sharpest weapon the ECB has - the OMT - as sharp as possible by keeping as many of the Governing Council hawks on his side as possible," said Christian Schulz at Berenberg Bank, a former ECB economist.
"If there is a gradual recovery, as expected, his chances are good because another rate cut, which the hawks would not like, would not be needed."
this is how you pick up chicks...
http://pics.wikifeet.com/Holly-Madison-Feet-701320.jpg
Gold Technical Analysis
http://video.cnbc.com/gallery/?video=3000136227
'Fiscal Cliff': Deal in Sight
http://video.cnbc.com/gallery/?video=3000136126
good discussion on where the market might go after a deal is don...
Facebook's Recent PUMP
http://video.cnbc.com/gallery/?video=3000136128
a lot of story telling going on with FB
some traders think the home builders are over bought...what do you think of LEN, PHM, HOV, NVR?
BAC: More Room to Run?
http://video.cnbc.com/gallery/?video=3000136129
Fast Money December 18th
http://video.cnbc.com/gallery/?video=3000136148
good market discussion...
this is total BS...story telling
http://www.reuters.com/article/2012/12/15/us-greece-economy-idUSBRE8BE06U20121215
Economic slowdown throughout euro zone a worry for ECB
http://www.reuters.com/article/2012/12/15/us-ecb-economy-liikanen-idUSBRE8BE04Z20121215
Reuters) - Economic growth is slowing to a worrying degree across the euro zone and not only in the periphery, European Central Bank Governing Council member Erkki Liikanen said in an interview to be published on Sunday in Germany's Welt am Sonntag newspaper.
"There are a number of indications that the economy is getting weaker and not only in the indebted southern European countries, but across the euro zone," Liikanen was quoted as saying in an excerpt released on Saturday.
"Economic developments are causing us concern," he said, adding that no-one is immune to the effects of the debt crisis. "Not even the German economy."
Liikanen did not say what action should be taken to deal with the slowdown, and a Reuters poll this week found economists are evenly split on what else - if anything - the ECB will do.
Thirty-nine economists said the ECB would hold its main refinancing rate at its current record low of 0.75 percent through the first quarter of next year, while 38 believed it would cut the rate to 0.5 percent.
The ECB on December 6 predicted the euro zone economy would shrink again in 2013. Its projections for economic performance ranged from a 0.9 percent drop to a meager 0.3 percent rise next year, suggesting contraction is far more likely than not.
It had previously penciled in a range of -0.4 percent to +1.4 percent for the euro area economy.
On Dec 7. the central banks of Germany and Austria forecast barely any economic growth in 2013, with the Bundesbank flagging risks of a recession in the euro zone's biggest economy as the debt crisis hits the bloc's core.
I haven't seen Lord of the Rings or the Hobbit yet lol...Hunger Games is the only game in town....;)
UN Leak Shows More Evidence Humans Cause Global Warming
http://www.bloomberg.com/news/2012-12-14/un-leak-shows-more-evidence-humans-cause-global-warming.html
How to Play FedEx Ahead of Next Week's Earnings
http://www.bloomberg.com/video/how-to-play-fedex-ahead-of-next-week-s-earnings-u3LR869pR6e1aFzgsv3Png.html
Boehner, Obama Fail to Reach Deal on Fiscal Cliff
http://www.bloomberg.com/video/boehner-obama-fail-to-reach-deal-on-fiscal-cliff-5is5hb3lTO2vPrpfjmbUtg.html
92% of Economists Predict Partial Cliff Solution
http://www.bloomberg.com/video/92-of-economists-see-a-partial-cliff-solution-rglifucMTMOvQyUGIbSi4Q.html
Reviving Gold
http://video.cnbc.com/gallery/?video=3000135421
Money In Motion, December 14, 2012
http://video.cnbc.com/gallery/?video=3000135423
Currency traders analyze the recent developments in Europe and this new banking union Europe is trying to develop...they also analyze the gold trade....also how the debt ceiling issue will come up again in Feb/March
Options Action, December 14, 2012
http://video.cnbc.com/gallery/?video=3000135412
traders discuss the price action in AAPL
Will Coal Stocks Follow China Higher?
http://video.cnbc.com/gallery/?video=3000135427
option traders are bullish on coal stocks....
What Is the S&P 500's Stumbling Block?
http://www.bloomberg.com/video/what-is-the-s-p-500-s-stumbling-block-WV2uVqqLSJabx1pAoKZYNQ.html
technical analysis on the S&P
How to Play Gold
watch at 1:17 for technical analysis on Gold
http://www.bloomberg.com/video/how-to-play-gold-zzP3yYFbTpiH8ReZtoZ74A.html
Will 2013 Be the Year of the International Rally?
http://www.bloomberg.com/video/will-2013-be-the-year-of-the-international-rally-W1TxKfPUTSStVeFJ2P984w.html
I'm thinking McAfee has Swiss accounts, he also did an interview on Bloomberg yesterday, says the Belize Gov't will probably take most of his assets, which is over $2 million...is also worried the Belize Gov't is going to hold his loved ones ransom
http://www.bloomberg.com/video/mcafee-belize-in-utter-chaos-trying-to-silence-me-b6ZfXn1~RkGXeHscj7F4Fg.html
Facebook's Lock-Up Expires Today: Who's Selling?
http://www.bloomberg.com/video/facebook-s-lock-up-expires-who-s-selling-mJ_b2VZPRfGl4Pa1d_N13A.html
Facebook will free-up nearly 156 million more shares for trading today. It's the fourth round of stock to be unlocked since the social network's initial share sale in May.
Major PUMP-n-DUMP
Facebook's Lock-Up Expires Today: Who's Selling?
http://www.bloomberg.com/video/facebook-s-lock-up-expires-who-s-selling-mJ_b2VZPRfGl4Pa1d_N13A.html
Facebook will free-up nearly 156 million more shares for trading today. It's the fourth round of stock to be unlocked since the social network's initial share sale in May.
Fisher on Fed's 'Hotel California' Fiscal Policy
http://video.cnbc.com/gallery/?video=3000134285
Fed's Fisher: 'There's a Lot of Verbiage Here'
http://video.cnbc.com/gallery/?video=3000135465
McAfee is now in the U.S...CNBC Interview lol
http://video.cnbc.com/gallery/?video=3000135295
John McAfee: 'I Will Not Be Charged With This'
last week, McAfee in hospital in Gautamala...
0:29
VIX Could Spike Before Christmas
http://video.cnbc.com/gallery/?video=3000135160
Option traders are speculating that if there's no deal by next week, (which Harry Reid already implied) then there might be a big sell off in the market...trader says if the VIX goes to 20.0 then traders are definitely getting ready for a sell off...Christmas Eve is on a Monday, so by the end of next week is when traders might start loading up on protection...
VIX Could Spike Before Christmas
http://video.cnbc.com/gallery/?video=3000135160
Option traders are speculating that if there's no deal by next week, (which Harry Reid already implied) then there might be a big sell off in the market...trader says if the VIX goes to 20.0 then traders are definitely getting ready for a sell off...Christmas Eve is on a Monday, so by the end of next week is when traders might start loading up on protection...
Pimco Warns 2013 Global Growth `Near Stall Speed'
http://www.bloomberg.com/video/pimco-warns-2013-global-growth-near-stall-speed-N_ugZCaQRKuWxnKezxkRXw.html
Pimco Warns 2013 Global Growth `Near Stall Speed'
http://www.bloomberg.com/video/pimco-warns-2013-global-growth-near-stall-speed-N_ugZCaQRKuWxnKezxkRXw.html
ANC May Call for Higher Mining Taxes
http://www.bloomberg.com/video/anc-may-call-for-higher-mining-taxes-o8WuTUtWTMuaYweOrAMzUw.html
The World in 2030: Pop. 8 Billion, Asia Rises
http://www.bloomberg.com/video/the-world-in-2030-pop-8-billion-asia-rises-w2o8D4B~QUuLx1sCrmuhMg.html
Uncertainty Abroad as Chinese Exports Sink
http://www.bloomberg.com/video/uncertainty-abroad-as-chinese-exports-sink-voclTie5T1KYn5oibx3lOw.html
Great discussion
A Banking Union in the Making
http://www.bloomberg.com/video/a-banking-union-in-the-making-0xekdP4cT2CtVtEFw~FdYg.html
some traders think the Fed is going to disappoint
3:45min
http://video.cnbc.com/gallery/?video=3000134606
some traders think the Fed is going to disappoint
3:45min
http://video.cnbc.com/gallery/?video=3000134606
at 7:45min, traders talk about the VIX
If Europe blows up next year and you're long XIV, you'll end up holding a huge bag...
Here's What Dennis Gartman Is Selling Now
http://video.cnbc.com/gallery/?video=3000134830
the wise man speaks...