World economy

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Moderation in the Chinese economic slowdown

By CaixaBank research team, in Barcelona | The rise of prices below the government’s target of 4% has created further room for expansionary policies. Hence the government cut the official interest rate by 25 basis points, down to 6.31%, at the beginning of June, and reduced the cash reserve ratio by 50 basis points in mid-May. For the remainder of the year, we predict further reductions in the cash reserve…


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How close is Washington from a fiscal cliff?

After months focused on the eurodrama, markets are starting to care more about the so-called fiscal cliff, a popular shorthand term used to describe the situation that Washington will face at the end of this year. Bush tax cuts are set to expire unless Republicans and Democrats agree on how to extend them and who would have to pay. This combined with $110 billion in defense and domestic spending cuts…


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Standard and Iran: another punch in the face for the banking sector

It’s definitely not the best time for British banks. The last one under the spotlight is Standard and Chartered, until now regarded as a darling of the financial sector. The emerging markets-focused lender which managed to escape the effects of Europe’s debt crisis may now lose its operating licence in New York: US regulators alleged it hid $250 billion in transactions with Iran over nearly a decade. According to the…


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How to learn and prosper in China

BEIJING | The BBC recently released an article on how Chinese students with foreign qualifications are having a harsh time looking for a job. Not so long ago, the article goes, they used to have a promising professional future in China ahead of them. They had an experience, language skills and qualifications other potential employees educated in local universities did not. Conversely, nowadays their academic profile seem not to fit…


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U.S. data good, but not good enough

After the Draghi’s drag, deciding not to take any immediate action to stop the euro bleeding, markets are digesting a very awaited yet not so bright U.S. job report. It was the best data in five months -July was the best hiring month since February- but still not sufficient to reassure. America added 163,000 nonfarm payroll jobs in July, the Labor Department said (compared to a revised 64,000 jobs in…


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Unsold homes: in the US, in Spain

By Luis Arroyo, in Madrid | With a little help from the Federal Reserve and the current government, the number of unsold housing in the US is beginning to reach some normalcy. Oversupply, one of the biggest barriers to restore a healthy functioning sector, has stopped. House volume per family now sits at 1992 levels. In Spain, unfortunately, we haven’t even started. The only sure thing about these matters in…


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Job creation loses steam in the US

By CaixaBank research team, in Barcelona | The slowdown in the recovery of the labour market is the factor that best explains this slump in consumption. In May, 69,000 net jobs were created, a very modest figure that follows on from the bad figures for April. Similarly, the hours worked and weekly wages also fell. The recovery is too slow and the level of employment prior to the crisis is…


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Is the Fed also waiting for Draghi?

Ben Bernanke is not taking the wallet out of his pocket, at least not yet. The Fed will first assess July and August US unemployment reports and also “financial developments”, as it said in a statement at the conclusion of a two-day meeting in Washington. Meaning what? Meaning financial stability in Europe, which is one of US main concerns. We’ll have to wait until September, but there are some hints…


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Business investment rate nearly stable at 20.6% in the euro area

The euro zone’s doggedness showed up again in the latest quarterly European sector accounts released by Eurostat, the statistical office of the European Union, and the European Central Bank. From January to March of 2012, compared with the last three months of 2011, the business investment rate remained nearly stable in the euro area and fell slightly in the wider European Union. Also, the business profit share even rose slightly in the euro area, as wage costs remained…


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The US is not Japan, JP Morgan argues

MADRID | Three years have passed since the US took hold in mid-2009 of something of an economic recovery. The green in the green shoots has been paler than first thought, though. JP Morgan analysts in Spain released today a note saying that, by GDP per capita standards, we are witnesses of the weakest rebound the US has lived since World War Second. In the JP Morgan chart, populations has…