As loyal readers would know, I have been a staunch critic of the government’s efforts to make a financial center out of Istanbul. Not that it is not a great idea. If nothing else, it will mean more freelance consulting and writing jobs for your friendly neighborhood economist But I just don’t think making long … Read more
Slow growth is embedding itself solidly into the US economy and the bond mayhem in Europe continues. The external environment for China is getting worse. This will almost certainly make China’s adjustment – when Beijing finally gets serious about it – all the more difficult. With still weak domestic consumption growth, and little chance of … Read more
Financial firms in Europe and the US are hitting crisis mode, as illustrated by relative borrowing costs, spreads, to comparable government bonds (see financial spreads chart to left and click to enlarge). World policy leaders anxiously await – and some promise to deliver – a solution to the euro area sovereign debt crisis at the … Read more
The IMF just published its Article IV Consultation Preliminary Conclusions. Here are some highlights: The Fund notes the unbalanced nature of growth I mentioned in the last post. It also ties some of the increase in import demand to higher inflation, which has decreased Turkey’s competitiveness (another point often made by yours truly). The IMF … Read more
The following piece of analysis was summarized in an OpEd published Tuesday in the Financial Times. In order to clarify a number of points made, here is the full analysis. Greece Should Default and Abandon the Euro By Nouriel Roubini Greece is insolvent, uncompetitive and stuck in an ever-deepening depression, exacerbated by harsh and excessive … Read more
The overall gist of Jim Chanos‘ comments on Bloomberg yesterday were that China has off-balance sheet contingent liabilities due to its implicit commitment to state-owned enterprises which are knee-deep in land and property speculation. This speculative excess will lead to credit writedowns. Chanos repeated his contention from CNBC last week that he is net short … Read more
Admittedly, my RSS reader is hardly a definitive check, but it does cover a pretty large number of financial and economics websites, including those of academics. And from what I can tell, an extremely important paper by Claudio Borio and Piti Disyatat of the BIS, “Global imbalances and the financial crisis: Link or no link?” … Read more
In Saturday’s Wall Street Journal, Daniel Yergin, chairman of IHS Cambridge Energy Research Associates, gave his explanation of what’s wrong with peak oil. Here’s why I don’t find his analysis altogether convincing. Yergin does not offer a statement of exactly what he means by “peak oil”, though his essay refers to it as a “fear” … Read more
I’d like to remind the Troika – the ECB/EU/IMF – that their one-size-fits-all (OSFA) solution won’t work for every economy in the euro area. OSFA: forced fiscal consolidation for each euro area country that falls into the throes of a liquidity crisis, thereby finding themselves in need of funding at “reasonable” rates. First it was Greece … Read more
This past weekend the German-language newspaper Frankfurter Allgemeine Zeitung (FAZ) wrote an article centered on a report by the Deutsche Institut für Wirtschaftsforschung (German Institute for Economic Research). The report claimed that the German banking system was undercapitalised by 127 billion euros. Reuters reported on this briefly but I have yet to see any further … Read more