Money market on strike

By: Casper de Vries (Erasmus University Rotterdam) and Jon Danielsson (LSE)

A proposal on how to address information asymmetry.

My three point plan for the G20

By: Wolfgang Münchau

Coordinate a stimulus, pool the euro area's seats at the IMF, and start thinking about exchange rates.

En route to hit the zero bound

ECB cuts by 0.75%, with interest rate futures pricing in another 50bp rate cut; markets unimpressed; 10-year Bund yield falls to multi-decade low; France unveils €26bn fiscal stimulus package largel in the form of structure investments, with hardly any effect on growth; Sarkozy, Brown and Barroso, meanwhile, are scheduled to meet in London without Merkel to discuss European stimulus.

Waiting for the ECB

Markets are pricing in a 75 basis point cut in ECB interest rates today; credit market conditions have deteriorate sharply, as the iTraxx crosses over 1000bp; the downturn in the global car industry has taken on further lethal momentum; Sarkozy plans a new stimulus package today to help the car industry; in the Ukraine, meanwhile, the IMF’s rescue plan appears to have had little effect on stabilisation.

Germany boycotts EU stimulus proposals

Steinbruck categorically rules out any further German contribution to EU stimulus package; the headline total of €200bn to be achieved through accounting tricks, not real money; finance ministers also agree Solvency II compromise; Spanish unemployment rise to 3m; the Irish government undertakes further pro-cyclical budget cuts; the European Commission, meanwhile, promised to be more flexible in handling bank rescue packages.

Down, and down, and down

Another bloodbath on the financial markets, amid further gloomy economic news worldwide; 10-year US treasury yield drops to lowest level since 1955, as Fed considers buying long-term securities; Paul Krugman warns that the pace of deceleration is now fast than in Japan in the 1990s; the financial crisis, meanwhile, has brought many pension schemes close to collapse.

Germany is boycotting the EU rescue programme

Merkel gets backing from her party to delay tax cuts until 2010; Steinbruck explicitly reject EU rescue plan; Donald Tusk also aligns with Merkel against the EU Commission; a former IMF chief economist says Greece might soon need a bailout; France reject EU Commission conditions for bank recapitalisation; a diplomatic fracas, Sarkozy, meanwhile, bullied Topolanek in accepting a French co-presidency of the Mediterranean Union.