Rationalizing China’s Exchange Rate Policy
By Yukon Huang via Caixin | Promoting the yuan as a reserve currency makes more sense regionally, but this would mean accepting more volatility relative to the U.S. dollar.
World economy
“If debt grows, it means that the world economy is still expanding”
How do we overcome a debt crisis with more debt? Bocconi University’s Marcello Minenna recalls that in a world with inflation it is always possible to control the behaviour of the debt/GDP ratio just by reaching negative real interest rates. Also, he points out that eight years after the financial meltdown the tight interconnections in real time between the global markets make the system intrinsically unstable.
Let’s talk about commodities’ crisis, not EMs’
The slowdown in oil prices affects all producer countries, both emerging and developed, whether Brazil, Mexico, Norway or the United States. The difference with the 90s is that EM are now much more solid.
Why is China finding it hard to fight the markets?
By Alicia García-Herrero at Bruegel | Sitting on a pile of debt, China’s only way out is to deleverage: more pain now for sustainable growth later. [Figure: China’s augmented fiscal deficit as % of GDP.]
SNB on the defensive at Jackson Hole
By James Alexander via Historinhas | Although it appeared that the VSPs gathered in Jackson Hole could only worry about non-existent inflation, I detected a defensiveness too.
Limited EM spillovers into DM (so far)
Could emerging markets spillovers push developed ones into recession?
Brazil will contract sharply in 2015 and stagnate in 2016
Brazil’s financial markets are being hit by political turmoil, economic deterioration and external factors.
China badly needs reshuffling
The Chinese authoritiess’ failure to prevent a stock exchange meltdown is casting serious doubts on economic prospects and so fuelling further losses.
What to expect from Chinese authorities?
On the policy front the Chinese state continues to wield its influence over large parts of the real economy.
US consumer confidence surges in August
US consumer confidence surged to 101.5 in August thanks to the positive evolution of the labour market.