Economics

Unfashionable monetary policy strengthens Brazil

12 Mar 2009

At 11.25%, Brazil s shortterm interest rate is still over 5% in real terms. That gives it massive room to stimulate its economy further by monetary means. Brazil has shared other countries fate during the global decline, but its recovery should be quicker and more robust.

G20 must keep trade on the agenda

11 Mar 2009

Global trade has so far fallen a third of the way towards the 65% drop seen in the Great Depression. Whether the problem is scarce finance, inventory backup or weak demand, arresting the decline is a component of economic recovery the industrialised nations need to pursue.

Bernanke offers hope that there’s a real plan

10 Mar 2009

The US central bank chief still blames Asia s excess savings for America s woes. But otherwise, his diagnosis of the roots of the economic crisis too big to fail banks, ad hoc financial infrastructure, procyclical regulation, fractured oversight makes sense.

Allocation of scarce capital is key to world growth

9 Mar 2009

The World Bank s estimate of negative global growth in 2009 looks right. Even if stimulus programmes and natural recoveries turn rich country economies round by midyear, emerging markets may well suffer capital shortages that cause their economies to deteriorate further.

US Congress shouldn’t foment economic nationalism

9 Mar 2009

A committee plans to criticise Treasury officials for allowing US banks to invest money abroad after receiving government infusions. Such grandstanding could further impede the effective functioning of international capital markets at the worst possible time.

US jobs data could herald approaching bottom

6 Mar 2009

The 651,000 decline in US employment is nasty, but the rate of job loss has stopped accelerating. Stimulus moves should provide a shortterm boost soon, so a bottom to the economic downturn may be approaching. Sorting out the budget deficit and inflation will come later.

Obama’s honeyed words on trade may conceal a Smoot

3 Mar 2009

The US president s agenda appears to include more obstacles to free trade than incentives. New trade deals, for instance, must satisfy tough standards on workers rights and the environment. Obama s trade rhetoric may sound soothing but his practice could prove protectionist.

Dire US GDP figures may have silver lining

27 Feb 2009

The GDP growth revision from minus 3.8% to minus 6.2% looks bad. But while it rules out mild recession it may also rule out a 1990s Japan scenario. The US could be approaching the bottom, wherever it is. Also, banks with 4Q profits or modest losses may be stronger than they seem.

Bigger US budget problems to come after year one

26 Feb 2009

President Obama's budget combines a huge deficit in 2009 with ambitious plans to reduce it sharply by 2013, as well as major new government programmes. It's a very high risk strategy, requiring the economy and markets to be as responsive as its people to Obama's magic.

Japan’s export drop is not just its own problem

25 Feb 2009

Its 46% fall in exports in January does not reflect just its own weakness; other Asian countries' exports were down comparably. One hopeful possibility is that the US has outsourced its recession's inventory overhang. Or it could foreshadow a more severe global trade decline.

Hapless policymakers: Bernanke is as much to blame as Greenspan

11 Mar 2008

Inefficient market: The Perils of Tanzi finance

19 Feb 2004