“The markets have drawn comfort” from the Fed, said Mr Lewis after officials at the central bank said they believed economic developments would “warrant only gradual increases in the federal funds rate”.  However, Mr Lewis said further rises presented “a major uncertainty” hanging over both the Fed and markets.  “All territory is now uncharted”, he argued, as the US central bank attempts to raise rates from historically low levels, while the banking system is flush with cash.

He added: “The Fed and other major central banks have maintained emergency policy-settings for so long that the global economy cannot be presumed to react in standard fashion to a rise in interest rates, however small that might be.”  The central bank, led by chairman Janet Yellen, plans to keep increasing rates by quarter-point increments after raising rates by a quarter of a percentage point from their 0pc to 0.25pc range last month. Stephen Lewis, chief economist at ADM ISI, said that Fed policymakers would regard “the mildness of the response to their action as a tribute to their success”. While the main US index, the S&P 500, closed lower in 2015 as a whole – its first annual loss since the financial crisis – economists have not attributed this to the Fed’s move. Annual wage growth is expected to have picked up from 2.3pc to 2.8pc in December, generating inflationary pressures. Central bank watchers will also pay close attention to the minutes of the Fed’s December meeting, being released on Wednesday. These will show how confident policymakers are in returning inflation to target. The Fed has a mandate to promote full employment and to steer inflation towards 2pc. The inflation measure tracked by US policymakers stood at just 0.4pc in the year to November. Analysts at Barclays said that they expected to see “disparate views on the current state of inflation” and they would “be attentive” to how this impacts on “different views on the most likely path of monetary policy in 2016”.

Money by itself has little value : it is a government permit allowing you to make transaction. It's like a building permit. And, even a thousand building permits do not make a single building if nobody wants them. In the desert a hundred dollar bill is useless if there is no water and nobody around to sell it to you.
The rich put their money in banks, buy assets, invest in companies, and get money income from it. But their (eternal) problem with that is that they are rich already. Lucky for them ,these assets and companies give them "control" and now the game has no end. And of course becomes more and more unreal all the time (not even Napoleon Bonaparte, with all his brothers and his marshals managed to control Europe} In the end the rich do no longer control those assets, but only the (tax free) foundation that does it. Such control usually ends up (in the long run) in watered down control and spin off in monetary assets i.e. money again and little control. Only the poor guy, who picks up a dollar bill in the street ,gets full value ,as well as control at full value, until he finishes his beer.

MADRID—Spain's central bank said a recession in the euro zone's fourth-largest economy deepened slightly in the final quarter of last year, but it said austerity cuts are bringing the country's runaway budget deficit under control. In the first estimate of fourth-quarter economic performance, the Bank of Spain said the economy contracted 1.7% compared with the same period a year earlier and likely contracted 0.6% from the previous quarter. In the third quarter, the economy had shrunk 0.3% from the previous quarter, and 1.6% on an annual basis. The Bank of Spain said gross domestic product fell just 1.3% in the whole of 2012, which was less than the 1.5% contraction anticipated by the government and a sign that strict budget cuts across the board are having a less detrimental effect than some feared. It cautioned that continuing cuts could still weigh on an economy already hurt by efforts to trim debt. "This budget consolidation effort has had a net contracting effect on activity throughout the year, especially in the last few months," the central bank said. This year, meeting even stricter austerity targets "will require an additional, very ambitious fiscal effort by the central and regional governments." Those comments are in line with heightened concerns by local and foreign observers that accelerated austerity measures promoted by the European Union are self-defeating, as a collapse in economic activity makes it harder to boost tax revenue, putting pressure on budget deficits. Earlier this month, the International Monetary Fund said it revising its metrics for how quickly governments should cut their budgets and the IMF's top economist Olivier Blanchard made the case that Europe's fiscal tightening has been too severe. "We do need to reduce the deficit, but the EU should be more flexible about the deadlines," said Josep Comajuncosa, an economics professor at Spain's ESADE business school. "Requiring a fast and drastic reduction of the public deficit could backfire. The deficit target should be pushed back one or two years." The central bank said tax revenue increases in recent months will make it easier for the government to get closer to its target of lowering the 2012 budget deficit to 6.3% of GDP from 9% in 2011. The target for this year is 4.5% of GDP. The latest data available, the central bank said, indicates tax revenue picked up in recent months due to higher value-added and corporate tax receipts, while expenses fell after the government suspended an extra monthly payment for civil servants and decided not to adjust pensions for inflation—two measures which eroded popular support for Prime Minister Mariano Rajoy. Spain's statistics institute is due to release an official preliminary estimate of fourth-quarter GDP Jan. 30. Full data on Spain's 2012 budget deficit, including for regional governments, will likely be released late February.(sursa : WSJ)

Heil Merkel!.......

"We have laid the foundations to ensure that Greek debt, the most tortuous and destabilizing problem facing the country, has become manageable," Mr Samaras said in a television address, adding that Greece has "ensured its place in the euro." It came after eurozone finance ministers finally reached a deal over Greece's debt burden, enabling the release of its latest tranche of rescue funds. Markets breathed a sigh of relief as eurozone finance ministers finally reached a deal to keep Greece afloat through what was dubbed “bail-out number three”. After 12 hours of talks at their third meeting in three weeks, the euro group settled on measures to cut Greek debt by €40bn (£32bn) and keep the country in the eurozone, a deal which lifted European indices in early trading. The agreement enables the release of the latest €44bn tranche of bail-out funds for Greece and was heralded by Antonis Samaras, the country’s prime minister, as marking a “new day for all Greeks”. ... German news see Merkel and the Deutsche Bundesbank - the state bank- as the winners of the deal....Why? Whereas the ECB is handing over the billions profit it made on Greek bonds to help out, the Bundesbank is pocketing the profits that will fill the German Federal Governments pocket. The Bundesbank is the institution that blocked a further cut to Greek debt, as it stated earlier in the week. Germany in spite of all appearances is benefiting from prolonged Greek misery, and has no wish to see Greece come out of the red. Heil Merkel!

The Greek government will put labour market reforms proposed by foreign lenders to a vote in parliament next week, as a series of crunch meetings takes place next week.

The parliament will vote, despite a refusal to back the proposals by a junior coalition partner's refusal to back them, the finance minister said on Saturday. The 2102 budget law, which will bring a range of new austerity measure into the statute books, has been demanded by foreign creditors, will be presented on Wednesday.

A separate bill with new labour market reforms will be put to the vote later in the week, Yannis Stournaras, Greece’s finance minister said.

Greece is expected to run out of money in the middle of November and the government needs to get through a series of austerity measures to unlock the next tranche of aid.  The Democratic Left Party, which has refused to back the reforms, has 16 deputies in the parliament, with the government having a 176 majority. This means the law is expected to pass, but it shows fracture lines building within the ruling coalition.

On Wednesday eurozone finance ministers will hold a conference call on Greece, two days after Monday's Euro Working Group where senior eurozone officials examine the heavily indebted country's progress in meeting the required cost savings required by the Eurogroup.

Quarto RECH - well I wish you stupid Europeans good health and enjoy the german boot on your neck ...

On the "escrow" account:  The European citizens should know, however, that loans to Greece are paid into an "escrow" account and are used exclusively to repay past loans and to recapitalise near-bankrupt private banks. The money cannot be used to par salaries and pensions, or to buy basic medicines for hospitals and milk for schools. The precondition for these loans is more austerity, paralysing the Greek economy and increasing the possibility of default. If there is a risk to the European taxpayer losing their money, it is created by austerity.`The Greek message to Angela Merkel, Alexis Tsipras, The Guardian 8/10/12....What is needed is a full implementation of the promise to remove government liability for private financial sector banking debts, not only in Greece but in every EU nation state. This was mooted some time ago only to be followed by political elite class vacillation over whether or not pre-2012 debts could be included. The only way forward for the countries shouldering the burden of insolvent banks is to place responsibility for those debts back onto the banks and make the policy retrospective....Well,....Draghi enters lion's den to sell bond-buying plan (reuters)

Well actually it's just the Bundestag Budget and European Committees, but they're probably happy to be described as "lions". Given the amount of extra paperwork dumped on them by the Constitutional Court regarding EZ crisis-handling, they could do with being pepped up I expect.

It's a good report by Reuters, in any case.

I expect the big questions to be about Spain," said Guntram Wolff, deputy director of the Brussels-based Bruegel think-tank and a former Bundesbank economist.

"There is a lot of opposition to a programme for Spain. They are against it because they fear it would open the floodgates at the ECB. The concerns run very deep, also in the SPD."

Yes, the SPD are fiscal conservatives too.

But amid the concerns, there was general agreement that Draghi had done the right thing in offering to explain his policies at a time when many citizens in Europe feel momentous decisions are being taken without their input.

"One of the big problems of Europe is that European institutions only talk to voters through national governments," said Wolff. "So it's important to have a direct link to the people, and this is a step in that direction."

Yes. Draghi was really quite wise to make the offer to appear before the Bundestag committees.