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from MacroScope:

EU leaders meet for a gas

France's President Hollande talks with German Chancellor Merkel  during a meeting on the sidelines of a Europe-Asia summit in Milan

A two-day summit of EU leaders is supposed to focus on climate and energy policy including efforts to enhance energy security following the threat of interruptions to gas supplies from Russia.

That is no small issue. Russia and Ukraine have failed so far to reach an accord on gas supplies for the coming winter but agreed to meet again in Brussels in a week in the hope of ironing out problems over Kiev's ability to pay.

An agreement was reached on the price Ukraine would pay Russia's Gazprom as long as it paid in advance for the deliveries. But Moscow is still seeking assurances on how Kiev would find the money to pay. It’s likely the EU will have to step in there.

Putin had threatened to cut gas supplies to Europe if Ukraine stole from the transit pipeline to cover its own needs this winter. Any interruption to flows to western Europe, via Ukraine from Russia, would deal another blow to already struggling EU economies.

from The Great Debate:

Obama learns LBJ’s tough lesson: You can have guns or butter, not both

lbj-obama-combo(1)

President Barack Obama has lost his hold on a majority of Americans, according to recent polls. Though more than two years remain in his term, the popular appeal that propelled him to win the 2008 and 2012 elections may be beyond recovery.

It is sadly reminiscent of what President Lyndon B. Johnson experienced in the mid-1960s after winning the 1964 presidential election by one of the largest landslides in U.S. history.  This is not to suggest that history is repeating itself. There are too many differences between Johnson and Obama -- both the men and their presidencies -- to argue that. Yet, as Mark Twain said, history may not repeat itself, but it does rhyme.

from MacroScope:

Nearing a gas deal

A pressure meter and gas pipes are pictured at Oparivske gas underground storage in Lviv region

Russian and Ukrainian energy ministers are due to meet European Energy Commissioner Guenther Oettinger in Brussels after presidents Petro Poroshenko and Vladimir Putin said they had agreed on the "basic parameters" of a deal to get gas flowing to Ukraine again this winter.

Russia cut off gas supply to Ukraine in mid-June following more than two years of dispute on the price and said Kiev had to pay off large debts for previously-supplied gas before it would resume supply.

from The Great Debate:

Islamic State’s rules of attraction, and why U.S. countermoves are doomed

Demonstrators hold placards outside the U.S. embassy near to where a 9/11 anniversary memorial was being held in central London

The U.S. State Department is producing anti-Islamic State propaganda to persuade American and other would-be jihadis not to join the extremist group. It’s ham-handed, and often sarcastic, and unlikely to have the intended effect.

Why? Because the department fails to understand how Islamic State attracts recruits in the first place.

from MacroScope:

Franco-German meeting

German Finance Minister Schaeuble and his French counterpart Sapin attend news briefing after talks in Berlin

The big question of the week is whether financial market gyrations continue, worsen or calm. European stocks are being called higher at the open.

Greece has been effectively shut out of the bond market. If it and others on the euro zone’s southern flank come under persistent market pressure, in a way that hasn’t happened for two years, the onus on the European Central Bank to act will grow and grow.

from MacroScope:

Putin – is he ready to deal?

Russian President Vladimir Putin and Ukrainian President Poroshenko are due to meet on the sidelines of the EU/Asia summit in Milan today to try to find a way out of the Ukraine crisis.

Germany’s Angela Merkel and French President Hollande will also meet the pair as part of a four-way contact group. The Kremlin has just said Putin and Merkel have "serious differences".

from MacroScope:

Market selloff – blip or new crisis?

A trader watches the screen in his terminal on the floor of the New York Stock Exchange in New York

A two-day summit of EU and Asian leaders, which was going to be most notable for a meeting between the heads of Russia and Ukraine, risks being overtaken by financial market tremors which have spread worldwide.

There’s a good case that markets, primed with a glut of new central bank money, had climbed to levels which the state of the economies that underpin them did not justify. With the Federal Reserve about to turn its money taps off, investors seem to have woken up to poor growth prospects in much of the world.

from MacroScope:

French figures under microscope

French Finance Minister Sapin adjusts his tie while seated at the start of debate on France's 2015 budget at the National Assembly in Paris

France will submit its 2015 budget to the European Commission today and, after a respectable period of consideration, it is likely to be thrown right back.

Paris has confirmed it will yet again miss the EU’s debt limits, failing to achieve a budget deficit of three percent of GDP until 2017 four years after it should have done.

from MacroScope:

ECB in the dock

Protestors left some barbed wire in front of the euro sign landmark outside the headquarters of the ECB before its monthly news conference in Frankfurt

The European Court of Justice holds a first hearing on the legality of the European Central Bank's Outright Monetary Transactions programme. There won’t be anything definitive today but it serves to rekindle debate about the limits of the ECB’s powers.

In February, the German Constitutional Court asked the European Court to rule on the legality of OMT, the mechanism that drew a line under the euro zone crisis when it was unveiled in 2012. The court may give guidance about how best to make a final ruling which is expected in late spring next year.

from The Great Debate:

Under assault by U.S.-led coalition, Islamic State may shift tactics

Militant Islamist fighters take part in a military parade along the streets of northern Raqqa province

This summer, Islamic State fighters swept into the expanse of desert straddling the Iraq-Syria border. Riding in pickup trucks mounted with heavy machine guns, supported by skilled snipers and at least one tank, the Islamists captured the town of Rabia on the Syrian side of the border.

Kurdish militia fighters from the People's Protection Units -- known by its Kurdish acronym YGP -- rushed to the neighboring town of Al Yarubiyah, on the Iraqi side, in a desperate effort to contain the militants' advance. What followed was a two-month stalemate, as both sides harassed each other with machine guns, mortars and snipers.

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