We can expect a rise in interest rates in 2017, driven up by the Fed, but fuelled by doubts over Europe. And I would bet the dollar will appreciate against the euro and the yuan – and sterling – although I am not normally a betting man.
Articles by Miguel Navascués
About the Author
I hate this endless temptation for bracketing time into what we call “years.” Time is time and, by definition, there are no interruptions. The problems which beset us in 2016 are still here, whether it’s terrorism or open warfare or Spain’s ingovernability. Thinking it’s going to be very different in 2017 is deceiving ourselves.
Those old jobs in productive manufacturing companies which exported from the developed countries to half the world are never coming back. You can’t suddenly use protectionism to reverse such a huge change which has taken place throughout the world.
There is a statistic link between profits and investment, in the US, so a drop in the former determines a recession in the following quarter. But the Trump effect is likely to mean another imminent recession will have to wait.
Spain’s Labour Minister has proposed that people should stop work at 6 pm. Where has that idea come from? And furthermore, where’s the good in that? Wouldn’t it be a better idea to work towards to make the working day as flexible as possible within each company?
The Fed has increased its daily interest rate to 0.75%, saying it predicts three further hikes in 2017. This is called active and persuasive monetary policy. But the central banks are no longer the masters of the economy, whipping it into a place they want.
Italy is a founding country of Europe and the euro. It has an ailing economy, which is not obvious at first sight, but its political weakness is evident. Italy is sick because of northern Europe’s austerity policies. And it can’t be expected to recover on its own because any crisis in its illness might cause the euro to take a definitive tumble.
The failure of Matteo Renzi, who wasn’t pursuing something which didn’t make sense, has almost immediate consequences for a tainted and confused Europe, but also for Spain. Because Spain needs a reform along the lines of Renzi’s proposal.
Two founding member countries of the European Union are really in a bad way: France and Italy. Both are threatening to turn this giant with feet of clay upside down, when it still doesn’t know how to deal with Brexit or the unknown elements which Trump has in store in “his” new world order.
Households have improved their debt levels, but the state has compensated for this. So Spain remains the most indebted country in the world, with public and private debt representing 300% of GDP. Another reason which helps explain the fact that investment is still not taking off. But what are very popular are “stock market games”.