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Worrying escalation in Crimea. Interfax reports Russian servicemen have take over a military airport in the Russian-speaking region of Ukraine and armed men are also patrolling the airport at Crimea’s regional centre of Simferopol.
Kiev has condemned the moves as an “armed invasion”.
There has been no bloodshed and there are more constructive noises from Moscow to weigh in the balance.
Russian President Vladimir Putin has ordered his government to continue talks with Ukraine on economic and trade relations and to consult foreign partners including the IMF and the G8 on financial aid.
This is a developing theme from Moscow, military muscle flexing on the one hand while making encouraging noises about an aid package for Ukraine on the other. The interesting thing is this is the first time Putin has put his name to the call for financial help. Which impulse will prevail is the $64 million question.
Amid the euphoria surrounding Ireland's removal from junk credit rating status, it's easy to get swept along by the consensus tide of opinion that the Emerald Isle is the "poster child" for euro zone austerity.
But were another country to find itself in Ireland's unfortunate financial predicament now, few would suggest it follow the path Dublin took.
A landmark deal curbing Iran’s nuclear programme in return for a loosening of sanctions appears to be underway, an agreement intended to buy time for a permanent settlement of a decade-old standoff.
Under the deal, Iran must suspend enrichment of uranium to a fissile concentration of 20 percent. An Iranian official has just said Tehran will start its suspension of uranium enrichment up to 20 percent in a few hours.
Friday is European ratings day since EU rules took force requiring ratings agencies to say precisely when they will make sovereign pronouncements and to do so outside market hours.
S&P has already shifted its outlook on Portugal’s rating from creditwatch negative to negative. The rating remains at BB, one notch below investment grade. That sounds obscure but it’s actually something of a vote of confidence though probably short of what the market had been hoping for.
Euro zone inflation, or deflation, is the focus of the moment.
Germany’s HICP rate fell to 1.2 percent last month, Italy’s hit 0.6 percent and Spain’s just 0.3 in December (not to mention Greece’s -2.9 percent). Today we get the figure for the euro zone as a whole. Forecasts for it to hold at 0.9 percent may now look a little toppy.
It’s too early for any dramatic moves but the European Central Bank, which has a policy meeting on Thursday, may well be pushed into easing policy if inflation refuses to pick up and/or the banks clam up ahead of this year’s health tests.
Ireland will officially exit its bailout on Sunday. Not much will happen but symbolically it’s huge and will be used by the EU as evidence that its austere crisis-fighting approach can work. Today, the IMF will confirm Dublin passed the last review of its bailout programme – the final piece in the jigsaw. Finance Minister Michael Noonan is also expected to speak.
For Dublin, this is only the beginning.
Support for the coalition government has slumped with the minority Labour party suffering worst (‘twas ever thus in coalitions).
As a result, Labour is pressing for a loosening of the purse strings while the dominant Fine Gael under premier Enda Kenny seems prepared to bet on a return to growth delivering the votes they need to rule outright after the next election, due by early 2016.
Today’s meeting of EU finance ministers will grapple with banking union and next year’s stress tests though with no German government in place, a leap forward is unlikely.
One German official seemed pretty clear yesterday, saying: “We don't want a mutualisation of bank risks.” That, some would argue, takes the union out of banking union and is certainly a very different approach to the one promised last year when EU leaders were scrambling to keep the euro zone together.
An alarming drop in euro zone inflation – to 0.7 percent from 1.1 percent – throws today’s European Central Bank policy meeting into very sharp relief. Not since the central bank cut interest rates in May has it been under such scrutiny.
No policy change is likely, and “sources familiar” are already talking down the threat of deflation. But the central bankers, who are mandated to target inflation at close to 2 percent, will be alarmed at the sight of price pressures evaporating. One need look no further than Japan to see the damage deflation can do, often for many years.
By Olaf Storbeck
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Ryanair is well known for the cheapness of its flights. But its shares are expensive and that remains true even after a 12 percent dive on Nov. 4.
Next time you ask an economist a question about the euro zone, be sure to enquire where their head office is based.
London? New York? Expect a pessimistic response on euro zone matters.
Frankfurt? Paris? Happier days are coming soon for the currency union.
So that's oversimplifying matters slightly - but as we've seen time over, institutions based outside the euro zone are likely to be gloomier about its prospects, and those based inside it are more likely to look on the bright side.