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foreign policy and global economy

Archive for the tag “financial system”

Debt Looks Like The ‘New Normal’ For The Global Economy – Until The Next Crisis

In the “new normal” economic world, many beliefs have been turned on their head. Trade wars supposedly  do not cause lasting harm, declining corporate output, earnings and investment are no cause for alarm, stock prices can go on rising regardless, and record global debt is nothing to lose sleep over.

Read Here – South China Morning Post

Europe’s Dream: Escaping The Dictatorship Of The Dollar

Trump’s hostile behaviour is reinvigorating efforts to turn the euro into an alternative to the world’s dominant currency. If only the Europeans could find some way to do it.

Read Here – Foreign Policy

Addressing the Dark Side Of The Crypto World

Whether Bitcoin’s value goes up or Bitcoin’s value goes down, people around the world are asking the same question: What exactly is the potential of crypto-assets? The technology behind these assets—including blockchain—is an exciting advancement that could help revolutionize fields beyond finance. It could, for example, power financial inclusion by providing new, low-cost payment methods to those who lack bank accounts and in the process empower millions in low-income countries. The possible benefits have even led some central banks to consider the idea of issuing central bank digital currencies. Before we get there, however, we should take a step back and understand the peril that comes along with the promise.

Read Here – International Monetary Fund

The Battle Of Three Centuries

Twenty years ago next month, the British government gave the Bank of England the freedom to set interest rates. That decision was part of a trend that made central bankers the most powerful financial actors on the planet, not only setting rates but also buying trillions of dollars’ worth of assets, targeting exchange rates and managing the economic cycle. Although central banks have great independence now, the tide could turn again.

Read Here – The Economist

Is China The Next Mexico?

Of course, it is hard to compare anywhere else to China given the sheer scale of the People’s Republic and its transformation. And yet, much like Mexico in the 1990s, China has long been ruled by a one-party dictatorship that has outgrown its ideological purity (all lip service aside) in favor of a widely acclaimed technocratic pragmatism. If there is a social contract in China, it boils down to the government telling its people: You all pretend to be communists, and so will we; but we’ll actually allow you to become wealthier by not being real communists, so long as you don’t rock the boat and play along.

Read Here – Zocalopublicsquare

BRICS New Development Bank Launched In Shanghai

The five BRICS countries are home to 42.6 percent of the global population, 21 percent of the world’s economy and nearly half of the world’s forex reserves, but have been marginalized in the global financial landscape. For example, in the World Bank, the five have a total of only 13 percent of voting rights, while the United States alone holds 15 percent. A similar picture can be seen at the International Monetary Fund (IMF).

Read Here – Global Times

Will the World Ever Boom Again?

The problem is that China’s recent slowdown from 10 percent annual growth to about 7 percent is only the beginning. The recent drops in housing and stock prices are harbingers of a further economic moderation. That is inevitable, since no country can grow at a breakneck pace forever. And with the slowing of China, Brazil and Russia have been slowing as well — the heyday of the BRICs (Brazil, Russia, India and China) is over. But the really worrying question is: What if other nations can’t pick up the slack when China slows? What if China is the last country to follow the tried-and-true path of industrialization?

Read Here – Bloomberg

China May Tip World Into Recession

Forget about all the shoes, toys and other exports. China may soon have another thing to offer the world: a recession. That is the prediction from Ruchir Sharma, head of emerging markets at Morgan Stanley Investment Management, who says a continuation of China’s slowdown in the next years may drag global economic growth below 2 percent, a threshold he views as equivalent to a world recession. It would be the first global slump over the past 50 years without the U.S. contracting.

Read Here – Bloomberg

Who Blew Up China’s Stock Bubble?

In China, the invisible hand of the market sometimes needs help from the iron fist of the state. That’s certainly true after a meltdown vaporized $3.5 trillion in the value of shares traded on the Shanghai and Shenzhen exchanges.

Read Here – Bloomberg

China Tries Japan’s Approach to a Stock Bubble – Bloomberg View

The Moral Of The Greek Story

It’s easy to moralize Greece’s feckless borrowing, weak tax collection and long history of default, and hey, go ahead; I won’t stop you. But whatever the nation’s moral failures, what we’re witnessing now shows the dangers of trying to cure the problems of weak fiscal discipline with some sort of externally imposed currency regime.

Read Here – Bloomberg

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