Yiannis Mouzakis via MacroPolis | Last July the conditionality of Greece’s third programme included savings of 1 percent of GDP from pensions. It did not require any major fortune telling skills to anticipate that this would soon lead the government of Alexis Tsipras into an extremely tense situation.
Nick Malkoutzis via MacroPolis | For some years now, and especially over the last 12 months, Greece has acted as Europe’s lifeguard, first aid provider and gravedigger. It seems, though, that the strain of the refugee crisis means Greece’s European partners also want it to serve as a prison warden.
Low oil prices can be good for the drivers, but they are simply catastrophic for the oil companies and the markets. Many top oil firms have seen their earnings sharply reduced and their credit ratings cut. It is expected that prices will rise again, but not before late this year or 2017. The big question is whether the industry will be able to survive until then.
Li Yuqian and Yang Gang via Caixin | The offshore yuan market in Hong Kong has been shaken to the core by weeks of volatility that analysts blame on strong intervention by China’s central bank. Wild fluctuations for yuan-based interbank lending rates as well as onshore-offshore yuan spreads in Hong Kong began in January and could continue indefinitely while the People’s Bank of China defends its currency against short sellers.
The collapse of the global stockmarkets, with European bourses falling 10 percent or more over the past month, is a cry for help to the central banks to ‘do something’, namely provide more stimulus to the economy. One of these voices is Ray Dalio, founder of the world’s biggest hedge fund Bridgewater, who said that the Federal Reserve needs to start printing money again to boost markets.
Francesco Saraceno | The EMU policy debate in the past few months kept revolving around monetary policy. Just this morning I read a Financial Times report on the never ending struggle between hawks and doves within the ECB. I am all for continued monetary stimulus. It cannot hurt. But there is only so much monetary policy can do in a liquidity trap. I said it many times in the past (I am in very good company, by the way), and nothing so far proved me wrong.
Many people feared that the outcome of the December 20 elections in Spain would be difficult to manage. But the final situation is much worse than expected. As soon as the recount began after the voting, the conservatives of Prime Minister Mariano Rajoy’s Popular Party (PP) lost their hopes of forming a majority government with Citizens (Ciudadanos). Spain is now, undeniably, facing a period of difficult coalition-building after yesterday’s elections. And this is a very worrisome situation for the country as uncertainty is likely to increase, affecting the mood of investors and companies.
Chitra Subramaniam | The very talented Swiss artist Patrick Chapatte’s 2006 cartoon to mark the start of the international climate talks in Nairobi in November 2006 could well have been repeated for the recently concluded climate talks in Paris. Nobody is quite sure what was achieved, but everyone is relieved that talks didn’t crash.
The market has already priced in that the ECB will adopt new monetary stimulus measures at tomorrow’s meeting, which in theory should boost growth and inflation in the eurozone. Analysts agree that more aggressive measures are necessary, but due care must be taken not to damage financial stability.
One of the main reasons that Alexis Tsipras wanted to hold elections as soon as possible after agreeing the third bailout in August was that it gave him the best chance of obtaining a fresh mandate before the impact of the latest set of fiscal measures was felt by the average voter.