http://www.zerohedge.com/news/2013-02-17/norway-enters-currency-wars

Norway Enters The Currency Wars

Submitted by Tyler Durden on 02/17/2013 11:36 -0500

While the G-20 and the G-7 haggle among each other, all (with perhaps the exception of France) desperate to make it seem that Japan's recent currency manipulation is not really manipulation, and that the plunge in the Yen was an indirect, "unexpected" consequence of BOJ monetary policy (when in reality asRichard Koo explained it is merely a ploy to avoid the spotlight falling on each and everyother G-7/20 member, all of which are engaged in the same type of currency wars which eventually will all morph into trade wars), Europe's energy powerhouse Norway quietly entered into the war. From Bloomberg: "Norges Bank is ready to cut interest rates further to counter krone gains that interfere with the inflation target, Governor Oeystein Olsen said. “If it gets too strong over time, leading to inflation that’s too low, we will act,” Olsen said yesterday in an interview at his office in Oslo.

The problem for Norway is that on one hand it, too, seeks to boost its export-business in an imitation of the beggar-thy-neighbor policies adopted by every other government, or artificial monetary union, with a printing press, while on the other, its property market which is overheating due to Norway's perceived status as one of Europe's safest money parking locations (alongside Switzerland) will merely heat up even more should the Norges Bank cut rates as it appears set to do, in order to preserve its front in the global currency war.

Olsen and his colleagues are torn between protecting exporters through lower rates that stem krone gains, and a policy that addresses an overheated property market. Western Europe’s largest oil exporter, which boasts the biggest budget surplus of any AAA rated nation, has emerged as a haven from the euro area’s debt crisis.

The krone sank as much as 0.6 percent against the euro following Olsen’s comments. Versus the dollar, it dropped as much as 1.4 percent. The krone was little changed at 7.3939 per euro as 11:57 a.m. today.

“A pronounced weakening of growth prospects, or a krone that is too strong, may over time lead to inflation that’s too low,” Olsen also said in the text of his annual speech held yesterday in Oslo. “Such development would be counteracted by monetary policy measures.”

Some will see in Norway's actions the germ of the same ruinous policies enacted by Ben Bernanke:

Low interest rates and falling unemployment have boosted private borrowing, with household debt estimated to swell to more than 200 percent of disposable incomes this year, according to the central bank. House prices, which rose an annual 8.5 percent last month, have surged almost 30 percent since 2008, almost doubling in the past decade. “Household debt and house prices are still moving up,” Olsen said. “These are the key reasons why the key policy rate hasn’t been lowered further.”

The dilemma has spurred debate on the extent to which monetary policy should target asset bubbles, or whether rates are too blunt a tool. The central bank will start advising the Finance Ministry on how much extra capital banks need to hold in their counter-cyclical buffers next month. That follows a proposal to triple minimum risk weights on banks’ mortgage assets to 35 percent and a separate recommendation to limit the use of covered bonds to finance mortgages.

“Although growth in our part of the world is weak and real interest rates are low, many banks are still operating with high return targets, which could lead to excessive short-term risk taking,” Olsen said. “Banks and their owners should accept that return on equity will be lower, but also safer in the years ahead.”

Yet while hurting domestic home buyers, a weak FX policy will certainly help home sellers and everyone else looking to flip assets for a quick gain - a process that has taken the entire developed world by storm once more - and will most certainly aid exporting mega corps such as Norsk Hydro.

Companies such as Norsk Hydro ASA, Europe’s third-largest aluminum maker, have struggled to adjust to a stronger krone, which is pushing up export prices even as demand from Europe declines. The krone reached a record on a trade-weighted basis yesterday. Demand has left the currency 41 percent overvalued versus the dollar this year, topping 12 major currencies, according to calculations from the Organization for Economic Cooperation and Development.

Olsen also said yesterday the bank has no plans to talk the currency “up or down” and no “specific” level for what too strong means.

We may have heard that one before.

“It’s appropriate to use a few years to bring up inflation,”Olsen said. “Prices for Norwegian goods have increased considerably more than consumer prices, reflecting the improvement in Norway’s terms of trade. Incomes, output and employment are rising at a solid pace.”

Few years? Hasn't Mr Olsen heard that in Japan Abe plans on talking up the USDJPY by some 20% in a matter of months, and at last check economy minister Amari had a 13,000 Nikkei target by the end of March. Surely if a central bank does not stick to such a ridiculous hourly schedule it will lose all credibility. Or something.

As for Norway, its formal entry into the global FX war will likely take place next month:

The bank left its benchmark interest rate at 1.5 percent for a fifth meeting in December and signaled it may raise rates as early as next month to cool record debt growth.

The conclusion:

Norway’s politicians, central bankers and business leaders have joined forces in a push to weaken the currency. Kristin Skogen Lund, chief executive officer of the Confederation of Norwegian Enterprise, said krone gains were the “main” reason Norway’s exporters have a cost disadvantage.

And with that we return to the regularly scheduled C-grade gameshow infomercial straight from the G-20, titled: "The FX price is wrong; or let's lie to everyone just a little more."

and....

http://www.zerohedge.com/news/2013-02-15/euro-land-banks-trouble

Euro-Land Banks In Trouble

Submitted by Tyler Durden on 02/15/2013 13:34 -0500

Ireland

Italy

non-performing loans

Via Pater Tenebrarum of Acting-Man blog,

A Record Amount of Bad Loans

A recent study by Ernst & Young has revealedthat euro-land banks in the aggregate now hold € 918 billion ($1.23 trn.) in non-performing loans (7.6% of all loans outstanding). E&Y sees about 15.5% of all loans in Spain and 10.2% of all loans in Italy as likely to be in NPL status (this exceeds the most recent official numbers somewhat).

In light of such staggering numbers, the idea to use the ESM for direct bank recapitalization seems somewhat ambitious. This is especially so as the idea to employ the ESM to take over the costs of already bailed out banks is being pushed by a number of euro area members. No doubt Ireland and Spain would be happy to see that (in fact, Spain is already the 'exception' as the ESM is potentially on the hook for € 100 billion for its banks – but this is structured as a loan to Spain's government, not a direct bank bailout).

The problem is that if the ESM wants to retain its AAA rating, it will have to back any financing it obtains from the markets with far higher guarantees if it rescues banks rather than governments. Given that what has been pumped into ailing euro-zone banks to date already amounts to €300 billion, its official capacity could be quickly exceeded if these existing bailout commitments were taken over by it.

Taxpayer-funded bank rescues in the euro area so far – the total already amounts to €300 billion, and that is not counting what might be used to bail out Cypriot banks and what may still be required in Italy and Spain (chart via Die Welt).

and.....

http://www.zerohedge.com/news/2013-02-15/fx-manipulating-g-20-glass-house-unable-cast-stone-fx-manipulating-japan

FX Manipulating G-20 "Glass House" Unable To Cast Stone At FX Manipulating-Japan

Submitted by Tyler Durden on 02/15/2013 09:00 -0500

Curious why nobody at the G-7 or G-20 had the gall to outright accuse Japan of currency manipulation? Simple: because everyone elsein the G-7 and G-20 has been doingprecisely what Japan only recently started doing a few months ago. As such, it would be outright "glass house" hypocrisy if there was a formal Japanese condemnation by the group of overlevered nations, which moments ago released its draft communique not namingthe island nation outright as was widely expected. Of course, that the G-20 did notaccuse Japan of engaging in what everyone clearly knows is currency war, does not mean that everyone else is not doing this. To the contrary: they are, and the lack of a stern rebuke of Japan simply means the currency wars will now intensify, devolving into the same protectionism and trade wars as the first Great Depression was so familiar with, which to borrow a parallel from history again, will end with the kind of war that ultimately ended the first Great Depression.

Nomura's Robert Koo explains:

Currency devaluation the natural response for trade deficit nations

For example, US Treasury secretary Lawrence Summers reacted angrily when Japan’s Ministry of Finance ignored western government warnings in June 1999 and tried to push the yen lower with a ¥3trn intervention from a starting level of 117 to the dollar. When the US reaction was made known, the yen climbed sharply and stopped only when it had approached 100. Today, in contrast, Japan is running a trade deficit vis-à-vis the world and Europe (exports to the US still exceed imports). It is natural for a country running a trade deficit to reduce the deficit by devaluing its currency, and trading partners would have little justification for opposing such a move.

Japan helped avert currency war after global financial crisis

A second reason why the Japan bashers’ arguments are less convincing today—something also noted by Finance Minister Taro Aso—is that Japan has been the only country to observe the agreement reached at the November 2008 G20 emergency meeting in an attempt to prevent a currency war. In contrast, western nations have freely pursued weaker currencies: the UK and the US via massive quantitative easing and Switzerland via direct intervention on the forex market.

A key reason behind Japan’s decision was that if a trade surplus nation behaved in the same way as trade deficit nations, the latter might be prompted to engage in more extreme currency devaluations, sparking a global round of competitive devaluations and a sharp contraction of global trade in a repeat of the 1930s. It was a commendable decision made in consideration of global economic history.

In the 1930s, the US not only participated in the currency wars despite its large trade surplus but also raised import tariffs and engaged in other protectionist actions, thereby contributing to the collapse of the world trade order.

One reason why the global economy managed to avoid a depression after the events of 2008 was that the Aso government and Finance Minister Hirohisa Fujii, a member of the DPJ cabinet that followed, were willing to accept a strong currency despite the resulting pain for Japanese industry because they had learned the lesson from the 1930s that trade surplus nations must not engage in certain actions during a global economic crisis.

Unfortunately, western politicians and media remain largely ignorant of the fact that Japan’s sacrifice prevented a repeat of the global economic tragedy of the 1930s. Japan’s efforts in this regard have been taken for granted, and now some are even claiming the Abe administration has started a currency war.

Mr. Aso, however, was one of the key architects of the G20 agreement four years ago and should be able to respond to western criticism from both the perspective of macro fundamentals (Japan is running a trade deficit) and policy track records (Japan’s tolerance of a strong yen helped prevent a currency war). When asked at a press conference on 28 January whether he was concerned about western criticism of recent yen weakness, he was quick to note Japan’s policy track record in this regard.

and.....

http://www.zerohedge.com/news/2013-02-15/ltro-repayment-enthusiasm-evaporates

LTRO Repayment Enthusiasm Evaporates

Submitted by Tyler Durden on 02/15/2013 08:07 -0500

European Central Bank

LTRO

The bangish enthusiasm that European banks launched off LTRO repayment season, when on January 25 some 278 banks repaid a grand total of €137.2 billion in LTRO funds, has dried down to a whimper, and as reported earlier today, the ECB announced that just 9 banks opted into the latest weekly putback ofexcess ECB capital. This is the lowest weekly number of participants since the LTRO repayment window was opened, and may indicate that European banks are starting to get seller's remorse about parting with Draghi's money a little too fast in a desperate attempt to telegraph an all clear when it comes to their balance sheet and funding needs.

But while today's action was to be expected, it is next week that everyone will focus on. As Goldman explains: "Next week we expect a large put-back. Banks have the option to begin putting back LTRO-2 funds allocation on February 27; the announcement of intent to repay is due on February 22. We see this as the date of a larger put-back amount, as the banks in the core – which have opted for full repayment of LTRO-1 – get the opportunity to repay the LTRO funds in full."

And now that the bogey is out there, any repayment that is less than spectacular, or if the number of participants is lower than expected, and suddenly the concern that European banks are once again hoarding cash "for whatever reason" will be back on the table right and center.

Start Your Day With The Usual Disappointing European Economic Data

Submitted by Tyler Durden on 02/15/2013 07:07 -0500

The quiet overnight session was started by comments from Buba's Weidmann, whose statement, among others, that the ECB will not cut interest rates just to weaken the EUR together with the assertion that the EUR is not seriously overvalued, sent the EURUSD briefly higher in pre-European open trading. Of secondary importance was his "hope" that the ECB will not have to buy bonds (it will once the market gets tired of Draghi open-ended verbal intervention), something he himself admitted when he said the ECB "may be forced to show its hand on OMT." The stronger EUR did not last long, and in a peculiar reversal from prior weeks when the European open led to a spike in the cross, saw the EURUSD dip to three week lows, touching on 1.3310, before modestly rebounding. This validity of the drop was confirmed two hours later when in the first key economic datapoint, it was revealed the Euroearea exports fell 1.8% in December, the most in five months. As SocGen said "the monthly trade data rounded off what has undoubtedly been a pretty dismal quarter for the euro area. Overall euro area exports fell by 1.8% m/m in December although this was offset by a even bigger 3% decline in imports - which itself reflects the weakness of domestic demand in some euro area countries. Maybe of more interest is the latest data on the destination of euro exports. These continue to show a pronounced weakness in global demand (albeit for November). This indicates that weakness in Q4 is not solely a domestic affair but also reflects a wider slowdown in the global economy."

SocGen is correct, and as the chart below shows, there is much more to the Chinese hard landing than the Politburo's liea, as European exports to China just dropped to a fresh multi-year low.

The other key economic news of the night was yet another economic miss in the UK, where retail sales ex autos/fuel dropped -0.5% on expectations of a +0.5% print, best summarized laughably by Goldman as "retail sales hit by the January snow... the weakness of today's data was largely caused by the unusually bad weather." These excuses are just getting plain silly.

Finally, despite expectations for a major repayment in today's LTRO put back announcement, only 9 banks repaid some €3.79 billion in LTRO funds, even smaller than last week's €4.99 billion repaied by 21 banks.

Various other key overnight news from Bloomberg:

Treasuries steady, 10Y headed for weekly decline; yen gains vs. dollar as G-20 finance chiefs and bankers meet in Moscow amid speculation of a currency war.
Japanese ruling party lawmaker Kozo Yamamoto said a race to devalue currencies would spark global growth, dismissing German criticism of Prime Minister Shinzo Abe’s plans for monetary easing which have weakened the yen
Bundesbank’s Jens Weidmann said an appreciating euro alone won’t trigger a cut in interest rates and the exchange rate’s gains are justified by the economic outlook; EUR/USD reached 14-month and 3-yr highs against USD and JPY earlier this month
U.K. retail sales unexpectedly fell in January for a second consecutive month
France’s Socialist president Hollande, facing EU pressure to reach budget targets, is risking the wrath of his core supporters to shrink the pension system, which had a deficit of EU14b ($19b) in 2011
- S&P owner McGraw-Hill Cos. was downgraded by Moody’s after the U.S. government filed a lawsuit that seeks as much as $5b in damages
- BofAML Corporate Master Index OAS holds at 147bps as $4.625b priced yesterday; Markit IG at 86bps, near YTD low 85bps. High Yield Master II OAS steady at 497bps; $875m priced yesterday. CDX High Yield little changed at 102.75
- Nikkei falls 1.1%; China closed all week for New Year’s. European stocks, U.S. equity-index futures decline. Italian and Spanish bonds little changed. Energy lower, precious metals rise
More on the overnight action from DB:

Despite the S&P500 (+0.07%), Dow Jones (+0.07%) NASDAQ (+0.06%) and CDX IG (+0bp) indices all closing virtually unchanged on the day, there was a lot to digest. The opening bell saw the S&P 500 trade 0.4% lower after euro area GDP disappointed (-0.6%qoq vs -0.4% expected) with Germany, Italy and France all coming in lower than expected. Our economists note that together with the earlier -0.7% qoq figure for Spain, these make Q4 the worst quarterly GDP print since H1 2009 for the EMU4 countries. US equities spent the rest of the day recovering from the lows as sentiment took on news that Berkshire Hathaway was joining with an investment firm in acquiring Heinz in a transaction valued at $23bn.
The announcement certainly added to talk of a return of LBOs and investors seemed to spend much of the session yesterday scouring for similar names. It also comes just a few weeks after the news of Dell’s management buyout and probably explained some of the underperformance in CDX IG (of which Heinz is a member) versus European credit indices. Yesterday also saw the last day for the filing of quarterly Form 13Fs in the US, where investment managers are required to report their holdings to the SEC. This apparently resulted in a number of unusual market moves towards the end of the session. In terms of the economic data, initial jobless claims declined 27k to 341k (vs 360k expected) while continuing claims declined -130k to 3114k, the lowest reading since July 12, 2008. This number has been up and down a lot in recent weeks and months so its probably a bit too early for markets to get excited/worried about the improvements.

Turning to Asia, most of the attention overnight has been squarely focused on Japan ahead of today’s G20 meeting. The WSJ wrote that a draft communiqué being put together by the G20 will include a general pledge for members to refrain from currency manipulation but will not single out any particular country or currency. The communiqué will be released at the G20 meeting today and will include a recommendation that monetary policy should focus on price stability and that “persistent exchange rate misalignment" should be avoided. This comes despite pressure from Russia to use “stronger and more specific language” on the need to avoid currency manipulation, according to the WSJ who cite a senior G20 official.
In Japan itself, reports suggest that the Japanese PM Abe is close to selecting his nominee for the next BoJ governor and will likely finalise his decision over the next few days. Former deputy BoJ governor Toshiro Muto is the leading candidate for the post which may disappoint some who were hoping for a candidate with a more openly radical approach to monetary policy (Reuters). Japan’s economy minister Amari said today that the government has no target for the domestic stock market, seemingly back tracking on recent comments that he would like to see the Nikkei at 13,000 by the end of March.

For the moment though, the Nikkei is down 1.2% as we type, and is poised to extend its streak of +/- 0.5% days to eight trading days. USDJPY is down 0.36% overnight. Outside of Japan, Asian equities are mixed with the Hang Seng (-0.1%) trading marginally lower but the KOSPI (+0.08%) making back to positive territory. Newsflow remains fairly thin on the last day of the Lunar New Year holidays before the Chinese market reopens next week.

In other news, Fed’s Bullard reiterated that it made sense for the Fed to slow asset purchases as data improved, rather than to suddenly bring the purchases to a halt, and said this could even be done in a formulaic manner where for every one-tenth decrease in the unemployment rate, the pace of purchases could be brought down by $15bn per month. In a touch of irony, Moody’s downgraded McGraw-Hill, parent of Standard & Poor’s overnight from A3 to Baa2. The outlook remains negative. Moody’s cited the recent civil lawsuits filed against McGraw-Hill in relation to its ratings on mortgage securities as one of the reasons for the downgrade.
Glancing through today’s data calendar we have Spanish CPI and Eurozone trade balance in Europe. In the US, the Empire State Manufacturing, TIC Flows data, Industrial Production, and the preliminary print of the UofM Consumer Confidence survey are the highlights. Draghi will also speak at the G20 conference this morning at 9.15am London time.

And with dismal economic scenarios , taxpayer funding of green energy goes bye bye in Germany and Spain.....

http://www.zerohedge.com/news/2013-02-14/germany-spain-set-pull-plug-green-energy
Germany, Spain Set To Pull The Plug On Green Energy

Submitted by Tyler Durden on 02/14/2013 21:11 -0500

Germany

Greece

Iceland

Recession

SWIFT

Unemployment

Over ten years ago, when Europe was a bright and shining example of experimental monetarist "brilliance", and when the money was flowing, the continent decided to do the ethical thing and actively promote the pursuit and development of renewable energy through countless government subsidies. As a result, Germany and Spain became the undisputed leaders in the race for a green future, and both created similar laws to encourage the development of renewable energy. There were two problems: i) green energy, while noble in theory, is about the worst idea possible when it comes to profitability and capital self-sustainability and constantly needs governmental subsidies, and ii) it was the end consumers who would pay for the government's generosity, in the form of a surcharge on electric bills. In Germany, for example, as the industry grew (in size, and thus in losses) demand for the subsidy increased, driving the surcharge higher. In January, the surcharge, which amounts to about 14% of electricity prices, nearly doubled to 5.28 euro cents per kilowatt hour.

And, as the WSJ so deftly explains, "that means ordinary consumers shoulder the lion's share of the costs for what the German government calls its "energy revolution." And here is where a third problem comes into play, because while German and Spanish consumers were happy to pay a surcharge in the golden days of a Dr. Jekyll Europe when everything was great, soon Europe become a doomed Mr. Hyde-ian Frankenstein monster, with imploding economies, 60%+ youth unemployment and resurgent neo-nazi powers. In short: the German and Spanish consumers have had it with funding an infinite money drain (even bigger than Greece), when cash flow is scarce and getting worse, and have just said "Basta" and "Nein", respectively.

Which means it is now a political issue in Spain, where the scandal ridden Rajoy has never been more unpopular, and certainly in Germany where Merkel faces an election in September and can't allow the public opinion to shift against her. As a result "with Spain in the grips of recession, the government wants to lower consumers' light bills. In Germany, Chancellor Angela Merkel faces an election in September and hopes to win points with voters by putting a stop to rising electricity bills." Specifically, "Ms. Merkel's government on Thursday proposed putting a cap on the green-energy surcharge until the end of 2014 and then restricting any rise in the surcharge after that to no more than 2.5% a year. The government also plans to tighten exemptions, which would force more companies to pay, and achieve a cut in green subsidies of €1.8 billion ($2.42 billion). The plan is a quick fix pending comprehensive reform after the election, government officials said."

Spain is not far behind:

The Spanish parliament took a similar step on Thursday, passing a law that aims to curb rising household electricity costs by cutting aid to the renewable-energy industry.

Renewable-energy producers "are going to receive less revenue, but these measures are better for consumers" said Energy Minister José Manuel Soria.

Among the changes in the Spanish system, the new law indexes certain subsidies and compensation to an inflation estimate that strips out the effects of energy, food commodities, and tax changes.

Naturally the response from the subsidized industries has been swift and damning:

Renewable-energy companies said that the government was backing away from previous promises that it would ensure them a reasonable return on their investments.

"Spain's government is trying to smash the renewable-energy sector through legislative modifications," said José Miguel Villarig, chairman of the country´s Association of Renewable-Energy Producers.

Actually all the Spanish government is thing to do is stay in power, and in order to do so, it must stop demanding that its people pay for the development of financial black hole industries.

The immediate result of these steps will be a widespread collapse in the alternative energy space in Europe, which is barely sustainable on an "as is" basis (see Solyndra) with ongoing government funding, and will melt as fast as a snowball in the Iceland thermal when the money is even modestly cut off.

Because like all truly money losing government ventures, one can't mothball a project that by definition has to lose money in hope one day it will be a new money-winning paradigm, especially since the imminent deleveraging wave which will hit the world once Chinese inflation wakes from its slumber, will mean conventional energy costs will once again have no choice but to drop (see: "On This Day In History.... Gas Prices Have Never Been Higher").

Yet all this means is that the government will merely have to find other, more creative ways to lose money now that the alternative energy fad is virtually dead. Luckily, spending money with absolutely nothing to show for it is one thing that every government in the current insolvent global regime, has a peculiar knack for. It also means that thousands of former government workers with no real marketable skills are about to hit the streets demanding more handouts from the nanny state, and lead to yet another wave of European civil unrest just as the 'other people's money' is about to run out.

and more news from europe and the G-20 meet in Russia begins.....

Portuguese PM opens door to cutting 2013 forecast

Back to Portugal, where the prime minister is sounding downbeat about the country's prospects this year. Pedro Passos Coelho suggested the government may have to cut its forecasts for this year, saying:

The [fourth quarter] results leave us with a level of foreign demand that, if extended into 2013, will not allow us to maintain the projections we have made.

Brazil will not allow over-appreciation of real

Brazil's finance minister Guido Mantega is now making his voice heard over in Moscow at the G20. He says Brazil will not allow an over-appreciation of the real.

Mantega is thoguht to have coined the term "currency wars" to describe the series of competitive devaluations adopted by rich nations to bolster their exports to the detriment of emerging market nations. Reuters reports:

Since then Brazil has actively sought to depreciate its currency, the real, to protect local manufacturers of everything from shoes to suits and make its exports more competitive. It has taken bold action to curb speculative capital inflows with higher taxes

Tensions in Greece continue to flare

Disabled citizens have gathered outside the main offices of the finance ministry in Athens this morning to protest against reductions to their salaries and pensions imposed as part of a broader government austerity program. Ekathimerini reports:

The union representing the country's disabled is lobbying the government to provide relief to the retired and working disabled and for guardians of those with heavy disabilities.

Unionists have demanded a meeting with Finance Minister Yannis Stournaras, Labor and Social Insurance Minister Yiannis Vroutsis and others to discuss their grievances.

While Greek students celebrated Valentine's Day with a protest march last night, demonstrating against reforms to the education system.

Greek university students during a protest against educational reforms in central Athens last night. Photograph: ALKIS KONSTANTINIDIS/EPA

And in the country's second largest city, Thessaloniki, demonstrators gathered to protest against the death of 38-year-old Babakar Ndiaye from Senegal who died after falling from a height of 7m to the train station in Athens while being chased by the municipal police for selling goods in the street.

Greek university students during a protest against educational reforms in central Athens last night. Photograph: ALKIS KONSTANTINIDIS/EPA

And in the country's second largest city, Thessaloniki, demonstrators gathered to protest against the death of 38-year-old Babakar Ndiaye from Senegal who died after falling from a height of 7m to the train station in Athens while being chased by the municipal police for selling goods in the street.

Draghi says currency chatter is fruitless

Now it's ECB chief Mario Draghi's turn to speak out against currency manipulation. Over in Moscow for the G20, he says:

Currency chatter is inappropriate, fruitless and self-defeating.

He says the ECB mandate is mid-term price stability in both directions.

The exchange rate is not a policy target but it is important for growth and price stability, he adds, noting the fundamental issue at the heart of these discussions.

He too says the euro is not overvalued, saying that nominal and real euro exchange rates are around their long-term averages. He declines to comment on the likely wording of the G20 statement.

He also weighs in on the austerity vs growth debate, saying:

We don't believe that inflating budget deficits to create demand is sustainable.

Weidmann says ECB won't target euro

Ahead of the meeting, Germany's central bank governor Jens Weidmann spoke to Bloomberg. And, of course, the subject of currencies came up.

Weidmann said the euro was not seriously overvalued, and that the ECB would not cut rates just to weaken the euro.

He said ECB chief Mario Draghi was not trying to talk down the euro at the recent press conference. Sticking with the ECB, he said the central bank may be forced to show its hand on the outright monetary transactions bond-buying programme.

He too sees a gradual recovery in the second half.

On Ireland, he said the recent deal to switch a costly promissory note, used to pay for the rescue of failed Anglo Irish Bank, into less expensive sovereign bonds, could breach the ban on monetary state financing.

Finally, he said rumours of his resignation were greatly exaggerated. Keen readers of the blog may remember Twitter erupted with news of Weidmann's imminent departure last month, only for the Bundesbank to deny it within minutes.

G20 currency statement won't name Japan

Earlier this week, the G7 issued a joint statement reaffirming its "longstanding commitment to market determined exchange rates". But this show of unity was quickly undermined by off-the-record briefings critical of Japan.

It is thought that G20 hosts Russia would like to echo the thrust of the G7 text when they issue their communique on Saturday, but there will no doubt be substantial wrangling over the wording today and tomorrow.

Russian finance minister Anton Siluanov said yesterday:

The G-20 countries have always held the position that currency policy should be based on market conditions.

Russia has already said that Japan will not be singled out in the text. Siluanov's deputy, Sergei Storchak – who is Russia's G20 representative or 'sherpa' as they are known – told reporters:

There will be no specific mention of Japan - we are all in the same boat.

Catharsis Ours

Friday, February 15, 2013

European news and data - Febuary 15 , 2013 ..... initial comments as the G-20 commences in Russia

Norway Enters The Currency Wars

Euro-Land Banks In Trouble

A Record Amount of Bad Loans

FX Manipulating G-20 "Glass House" Unable To Cast Stone At FX Manipulating-Japan

LTRO Repayment Enthusiasm Evaporates

Start Your Day With The Usual Disappointing European Economic Data

Germany, Spain Set To Pull The Plug On Green Energy

Portuguese PM opens door to cutting 2013 forecast

Brazil will not allow over-appreciation of real

Tensions in Greece continue to flare

Draghi says currency chatter is fruitless

Weidmann says ECB won't target euro

G20 currency statement won't name Japan

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