BEIJING | By Andy Xie | The fact that emerging market economies have not borrowed in foreign currencies means there’s a way out, and a soft landing will be helped if China keeps its currency stable.
By David Denton via The Richter Scale | For anyone who was growing up in the 1970s there is a short list of things that one has to be concerned about: The music of The Bay City Rollers, the instant pudding – “angel delight”, playing rugby against the Welsh and inflation. Although the oil price shocks affected all industrialised economies inflation had a particularly severe impact on the UK, we quickly became known as the sick man of Europe.
SAO PAULO | By Marcus Nunes via Historinhas | Recently I showed this chart [see above] to press the point against the conventional wisdom that the purpose of the sequence of QEs was to lower long term rates.
MADRID | By Luis Arroyo | The appreciation of the euro, in a deflationary context as the current one, may be the last push so as to cross the ECB’s red line and reach a Japanese style deflation. Macroeconomic variables don’t encourage optimism, especially because inflation in the euro zone is getting closer and closer to the ECB’s zero red line.
NEW YORK | By Benjamin Cole Fisher via Marcus Nunes’ Historinhas |Dallas Fed president wants the institution to stomp on the brakes and quit Quantitative Easing (QE) now, and preferably yesterday. Indeed, Fisher proudly told his audience he would have been a bulwark against QE, if he could have been.
MADRID | By Julia Pastor | Christine Lagarde, Managing Director of the International Monetary Fund and Mario Draghi ECB’s president were in the same Davos panel on Saturday. Both talked about signs of recovery across the world and the euro zone. However, as she said that deflation potential risks in the euro zone must not be ignored, he minimized danger and insisted once more that the bank is prepared to deploy a QE’s policy if deflation appeared.
NEW YORK | By Mike Konczal via Next New Deal | One way of judging how the economy evolved in 2013 is to compare it to the Federal Reserve’s projections of it. As some market monetarists believe, these projections aren’t neutral projections of inflation and growth but also a communication of what the Fed thinks about what it can accomplish. So, how did the Fed’s projections for 2013 turn out? Did the economy end up how the Fed said it would when it announced expanded monetary policy?
LONDON | By Joseph Abate at Barclays | For a global 21st century economy, there is a surprising amount of US paper currency circulating. Total US currency outstanding is approximately $1.2trn, which on a per capita basis works out to $3,800.
SAO PAULO | By Marcus Nunes | According to Alan Goolsbee, as Mr. Bernanke prepares to depart at the end of January and the Fed has initiated the exit-strategy countdown with the start of tapering, it is time to take stock of the QE Era—and time for the critics to admit they were wrong.
LONDON | By Barclays analysts | The ECB left monetary policy unchanged as expected and strengthened the downside bias of its forward guidance somewhat. Mario Draghi insisted on the fragility of the economic recovery and repeated that the ECB would be ready to act should downside risks materialize. We still think that monetary policy should be kept unchanged at least for the next two years, but we acknowledge the risk of further easing should inflation and inflation projections fall further. Besides, liquidity measures could be introduced to support the financing of the economy.