Economist John Taylor of Stanford is worried that the appetite for liquidity is rising… again. The source for this concern starts by recognizing that “quantitative Easing (both I and II) has caused the monetary base—the sum of currency and bank reserves—to explode in the past three years, but has not resulted in similarly large increases … Read more
Riots in London, labor unrest in China and public protests in Tel Aviv are some of the surprises that marked the summer of 2011. This was on the back of political gridlock in the U.S., surprise electoral outcomes in Latin America and the reverberations of the Arab Spring. Social tensions are on the rise, and … Read more
“While the impact of service-sector liberalization and privatizations may be positive on medium-term growth, the budget cuts are likely to have quite negative effects on the short-term GDP dynamic. We expect Italian GDP growth to slow to close to zero in 2012 and 2013.” Giada Giani, Citigroup According to one anonymous German official speaking off … Read more
Is the PBoC going to stop buying USG bonds? Once again we are hearing very worried noises from various sectors about the possibility of a reduction in Chinese purchases of USG bonds. Here is what an article the South China Morning Post said: China will press ahead with diversification of its US$3.2 trillion in foreign exchange … Read more
I think many are in a contemplative mood, seeing that after all the drama of the past month, it looks like the Democrats, with the full faith and leadership of President Obama, will cave almost completely to the Republicans. We could have done this weeks ago. On the Democratic side of the aisle, some might … Read more
The massive volatility and sharp equity-price correction now hitting global financial markets signal that most advanced economies are on the brink of a double-dip recession. A financial and economic crisis caused by too much private-sector debt and leverage led to a massive re-leveraging of the public sector in order to prevent Great Depression 2.0. But … Read more
History rarely presents us with ironies as rich as those that preceded the death of Osama bin Laden, the al-Qaida chief who dealt a devastating blow to the United States and, indirectly, drove infidel troops from Saudi land nearly a decade ago. The terrorist leader lived just long enough to witness an almost complete repudiation … Read more
In order to be able to reduce interest rates, the Official Gazette must not belie the recent official discourse of fiscal adjustment. The reactions of economic policy in Brazil to the big crisis of 2008 are considered to have been successful. Although Brazil emerged relatively unscathed from the most critical period of the crisis, quickly … Read more
Despite the media hyperventilation and pundit hyperbole about the downgrade of US’s credit rating, the real issue remains Europe. There is no imminent danger that the US cannot finance its requirements. The US’s cost of debt will not increase significantly as a result of the marginal downgrade, by one of the three major rating agencies. … Read more
Helene Cooper of the New York Times wrote a “news analysis” story saying that the challenge for President Obama is this: “Is he willing to try to administer the disagreeable medicine that could help the economy mend over the long term, even if that means damaging his chances for re-election?” The problem, she goes on … Read more