World economy
There´s no “secular stagnation”, it´s about misguided monetary policy
SAO PAULO | By Marcus Nunes | Larry Summer made a splash with his closing speech at the IMF Conference. That was probably his intention following him being denied the Fed Chair. Several people have taken turns both critiquing and asserting his “secular stagnation” thesis.
To Wall Street’s Favorite Media, Spain Looks Quite Sexy Again
NEW YORK | By Ana Fuentes | Remember when Spain’s sovereign debt was smashing to a euro-era record high? Just 18 months ago Wall Street market makers as well as their favorite media expressed their suspicious about non-performing loans, the Spanish banks’ health, and government reforms. Pundits even talked about a Spain leaving the euro after the “Grexit”. Goldman Sachs was sure that “the worst” was yet to come and claimed that the country “should ask for a “Spailout.” But things have changed and now it’s time for the ‘mea culpa’ and the “may be it wasn’t that bad.” Investors are showing interest in Spain and headlines talk about growth, exports boom and the country getting back on its feet bank’s bailout.
Higher inflation target: A communication issue
LONDON | By Michael Pond and Chirag Mirani at Barclays | Some at the Fed believe that a higher inflation target could be a good strategy, though one that is difficult to communicate. Instead, in our view, it has an implicit near-term tolerance for above-target inflation; forward breakevens should be higher as a result.
New NSA leak: UK secretly agreed to US surveillance of British citizens
LONDON | By James Ball at The Guardian via Presseurop | British intelligence officials approved a US request to analyse and store the telephone, internet and email records of UK nationals, including those not suspected of any criminal activity, according to new documents released by former National Security Agency (NSA) contractor Edward Snowden.
Fed minutes: “Love me, love me not”
SAO PAULO | By Marcus Nunes | The Fed minutes came out. The stock market didn’t appreciate it, at least immediately. Bernanke’s concept of “open and transparent” monetary policy is really something!
Do U.S. Negative Rates Call For a Permanent Expansion of the Government?
WASHINGTON | By Mike Konczal at the Rortybomb blog via The Next New Deal | Everyone has been talking about the recent Larry Summers speech on secular stagnation, written up with force by Paul Krugman here. Gavyn Davies, in his own nice coverage, noted that the Q&A had an interesting exchange about fiscal stimulus between Bernanke and Summers, so I decided to write that up.
Our Weekly Cartoon: Walls of hatred
Can JP Morgan Settlement Set a Precedent?
NEW YORK | By Ana Fuentes | JP Morgan, the U.S. biggest bank, will have to pay a historic penalty of $13 billion over faulty mortgage practices, according to the settlement with the Department of Justice announced on Tuesday. That’s the equivalent of Iceland’s annual GDP, and more than three times the amount BP had to pay for the oil spill in the Gulf of Mexico in 2010. For some, it was about time that the administration started to take action against those who ignited the economic crisis. Others believe JP Morgan is just a scapegoat.
No Sugarcoating It: A Hard Landing Is Likely for China
BEIJING | By Andy Xie at Caixin | Real reforms stripping speculators of their candy involve limiting government power in China. They are unlikely to come fast enough in this bubble economy.