World economy

bancos crisis TC

Are global growth fears over-stated?

MADRID | The Corner | Gloomy inflation data in the eurozone prompted a debate about recovery losing momentum. But while tackling disinflation should be a priority, we shouldn’t be too worried about growth.  “Leading indicators of growth are not – at present – consistent with any major slowdown in the world economy. Indicators of financial and monetary conditions and many industrial metal prices are relaying a similar message,”analysts at UBS commented on Thursday. 


china market

Inflation in China falls further amid lower commodity prices

HONG KONG | From Barclays analysts | China inflation fell further in September, to 1.6%, below consensus (1.7%), but in line with our forecast. The key downside drivers were lower commodity prices, and declining food inflation. Inflation has now fallen to its lowest levels since January 2010, a 56-month low.

 


No Picture

The Fed tightens and then is surprised with the outcome!

SAO PAULO | By Marcus Nunes via Historinhas | For the last 16 months the Fed has been on “tightening mode”. This is very clearly reflected in the chart for inflation expectations above. When Bernanke started the “taper talk” in May 13 inflation expectations came down and stayed down. Following the June 14 FOMC meeting, dedicated to discussions of “policy normalization” inflation expectations dived! How can they be surprised with the consequences.



Industria china sinopec TC

Spoilt Chinese SOEs need to move forward

Out-dated, inefficient and malfunctioning are some of the adjectives normally used to refer to Chinese SOEs. Their unhealthy financial situation poses a great threat to the future growth of the world’s second biggest economy. The Communist Party is pushing for a fresh set of reforms to make them able to compete globally. For decades, these companies knew little about competition or innovation, until today.



export

Export-led economies lose steam

MADRID | By JP Marín Arrese | No need to wait for IMF forecasts. The hasty downfall in oil prices signals a steep deterioration in most export-led economies, ranging from China to Brazil. An upsurge in the US dollar coupled with prospects of more stringent credit conditions, are rapidly changing the global mood towards risk aversion. As hot money flees emerging countries bogging down their investment plans, main suppliers of capital goods such as Germany become increasingly crippled. 


Iceland banks

Iceland banking collapse: 6 yrs later, gov starving Special Prosecutor of funds

LONDON | By Sigrún Davíðsdóttir at Icelog| After the Iceland banking collapse in October 2008, three things were set in motion by the government at the time (Independence Party, together with the Social Democrats): an investigation into the causes of the collapse, rewriting the constitution and an Office of a Special Prosecutor. The investigation was concluded with a report of 2400 pages published April 10 2010; so far, no country has done a comparable report on the financial crisis in 2008. Rewriting the constitution was not finished in the way intended due to a political backlash. The government now plans to review OSP’s role although the OSP was made a permanent serious fraud office in 2011 – and starve it of funds while the review is ongoing.


No Picture

The SS explanation of the crisis

SAO PAOLO | By Marcus Nunes via Historinhas | It comes from Martin Wolf´s “The Shifts and the Shocks” and is reviewed by Paul Krugman in the New York Review of Books. The following passage of his review nullifies the whole thing: In particular, Milton Friedman had convinced many economists that depression prevention is actually a fairly simple task, which can be carried out by technocrats at the central banks that control national money supplies. According to Friedman, the Great Depression occurred only because the Federal Reserve failed to do its job in the 1930s; if it had acted to rescue troubled banks and prevent a fall in the money supply, catastrophe would have been avoided.


No Picture

IMF’s Global financial stability report: Shadow banking may compromise recovery

MADRID | The Corner | As the global economy’s last data disappoint, shadow banks could be “compromising” growth even more, the IMF’s Global Financial Stability Report released Wednesday pointed out. Since “banks representing almost 40 percent of total assets are not strong enough to supply adequate credit in support of the recovery,” Financial Counsellor José Viñals said, controlling their non-regulated peers remains a great challenge.