Shaun Riordan | The currency markets seem to have given the Turkish Lira a temporary respite. But the underlying problems remain the same: an unsustainable current account deficit; excessive dependence on foreign currency denominated (especially dollar denominated) debt; and high inflation.
Obsessed by minor issues, Europe forgets the important thing. If it really wants to avoid a repetition of the banking crisis, it should apply itself to guaranteeing high and sustainable growth, as well as introducing solid cushions of own funds for hard times and a more efficient preventive supervision. However, reducing the problems of the Eurozone to no more than the health of the banks is an exercise in short sightedness.
Shaun Riordan | Trump’s behaviour at the Singapore Summit with Kim Jung Un has little to do with foreign policy, or indeed North Korea. Like his attacks on allies at the G7 Summit last week, it is aimed at the mid-term elections for Congress. Long-time US allies count for little compared to Trump’s domestic political needs. Europe must take responsibility for its own future.
A three-party “Jamaica” coalition in Germany may not be so bad for Europe as observers fear. The real benefit for Europe would be German domestic policy. After four years of stasis under the grand coalition, the “Jamaica” parties could transform the German economy
By Alexander Coward|While it was a tragic day for those whimsical souls who see the lie in the notion of Britain being a modern great power, recognizing its status as a medium-sized country that used to have an empire, when Article 50 was triggered on March 29 it was not a sad day for Europe.
Nick Ottens via The Atlantic Sentinel | Brexit fundamentalists scored another victory on Wednesday, when the United Kingdom began the process of withdrawing from the European Union without a plan for what comes next.
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.
The reality being faced in the US and abroad is that the current world order has failed to deliver its promises.
The thesis is reasonable and well-known: greater growth, lower deficit. But what happened in 2015 seems to corroborate another idea: a larger deficit (-5%) fuels the biggest growth in Europe (3.2%). So the government unilaterally raises the 2016 deficit target from 2.8% to 3.6%, while Brussels is going for 3.9%.
BoAML | We have remained quite bearish on Euro area inflation for the past few years, particularly compared with ECB forecasts (but also consensus), and have highlighted the many downside risks to the inflation outlook.