WASHINGTON | By Pablo Pardo | The Monty Python are back in London, and one of their most famous sketches revolves around the phrase “nobody expects the Spanish Inquisition.” The Bank of International Settlements (BIS) is like the Spanish Inquisition, only less funny and more predictable than the British surreal comedy group: it is the bearer of orthodoxy, even if it means sending everybody to the stake. Its prescriptions are suicidal in economic terms, wrong from a moral point of view, and unjust from a societal perspective.
MADRID | By The Corner | The International Monetary Fund (IMF) revised downwards its growth forecasts for the US from 2.8% in April 2014 to 2%, and maintained 2015 outlook in 3%. Furthermore, the institution believes that the country will not achieve full employment before 2017.
MADRID | The Corner | It’s not only about China or the US. Housing prices are well above their historical averages in many countries such as Poland, Turkey or Brazil. And that could mean big trouble for those economies, some of which need to assess their lack of capacity, like the UK. This time the EU’s peripherals are following the opposite trend, with home prices falling 7% in Greece, 6.6% in Italy and 5% in Spain in 2013. The graph shows home prices’ y-o-y evolution in 4Q13.
MADRID | By Julia Pastor | The key for a Spanish sustainable economic recovery are the country’s SMEs. Considering they mean about 90% of the national corporate landscape, the IMF’s last report on Spain provides two main recipes for helping them survive: extending aids for insolvent companies, which would “preserve Spain’s strong payment culture,” and also increasing wages cuts.
MADRID | By Ana Fuentes | Well-known U.S. economic theorist and financial strategist Michael Pettis believes the European project has a blatant, simple economic problem: Germany benefits from a weak euro while Spain suffers from a strong currency. As for the IMF’s recommendation of cutting wages in countries like Spain, Mr Pettis thinks it’s an absurd tip that can only make the global demand imbalance worse. He answered our questions via email from Beijing, where he is currently based.
WASHINGTON | By Pablo Pardo | Shadow banking in the U.S. doubles in size to the banking system, just the opposite than in Europe. According to the IMF’s number 3, José Viñals, it’s in the shadow financial where there is “a debt that grows very quickly and investors who are underestimating the risk of certain financial assets.” And he adds: “Careful, we’ve heard that song before.”
SAO PAULO | By Marcus Nunes | For the last four years many have touted increasing the inflation target to 4% as the best way to “cure” our ills. If I well recall, it started with the IMF, at least by its Chief-Economist Olivier Blanchard, who in an IMF publication wrote “Rethinking Macroeconomic Policy.”
SAO PAULO | By Marcus Nunes via Historinhas | “The IMF has been very generous in its suggestions on what we should do,” said Mr Draghi in a sarcastic tone on Thursday.
BARCELONA | By Joan Tapia | Spain has seen its credibility boosted by the European Commission and other international players like the IMF. However, this brighter image has not been translated into more confidence from its citizens.
WASHINGTON | Via IMF’s Staff | Finance Ministers and Central Bank Governors will meet on the Australina city on February 22-23. The IMF’ s staff has prepared a note as an anticipation of the event. The institution says the recovery is still weak and significant downside risks remain, thus further action and cooperation are needed to promote financial stability and robust economic upturn.