Benjamin Cole | The US Senate Banking Committee Jan. 17 voted thumb’s up on Jerome Powell, President Trump’s appointment to the Chair of the Federal Reserve. Barring calamity, Powell should take over in February.
Manuela Andreoni | As Brazil braces for its most important election in decades, hopes of stabilization are dwindling. The country is slowly stepping out of an almost three year-long recession, but uncertainty over what will happen at the ballot boxes later on this year is pushing debate on how to resume growth into a distant future.
What was a surprise in the IMF’s updated growth estimates was the correction made to the growth forecast for Spain this year (-0.1 pp to 2.4%) given “the impact of greater political uncertainty on confidence and demand.”
It seems we have a consensus: Europe is overbanked. Zombie banks need to be allowed to fail and the process of mergers needs to be strengthened, particularly cross-border. But the US model is more of an exception than the rule and there are countries, like Spain, where the consolidation could start to be excessive.
Despite bitcoin has plunged below $10,000, almost halving in value from its peak price near $20,000 in late December, it is undeniable that alternative currencies are gaining attention against fiat currencies. However, as reported by Flossbach von Storch they all lack one characteristic absolutely necessary for money to have value over the long term: its existence as a commodity that has intrinsic value or can be changed into one that does.
After nearly a decade of easy money, the financial markets and the economy have not just become addicted to debt, but also indifferent to the continued growth in global debt.
2018 may be the year of the infrastructures. Perhaps it won’t be the best or the most efficient plan which emerges. But what’s clear is that something has to be approved which allows Donald Trump to cut the ribbons on motorways, bridges and other more or less large structures.
The trend in inflation is confusing those in charge of monetary policy. After a significant uptick in the last part of 2017, it has really stagnated, in stark contrast with the growing dynamism of the economy.
Benoit Coeure, a member of the European Central Bank (ECB) Executive Board, believes the renminbi will eventually become a major international currency. He also warns about the bitcoin bubble, reminding that the bitcoin is not a currency but a speculative investment.
How do I see the year 2018? Low growth and productivity, a declining working population, and an unsustainable rise in animal spirits. Everything comes to an end, and the longer it takes, the worse it is.