Post Tagged with: "trade"
Ireland: Is austerity enough or will we see haircuts?
It is high time politicians in Berlin to started to recognise that fiscal austerity is not the be all and end all of the policy issues they now face. Ireland is applying fiscal austerity, but this alone may well not be enough. A better distribution of the pain needs to be found. As the IMF itself notes in its latest staff report: ”there is a strong sense that burden-sharing between taxpayers and creditors for the cost of supporting the banks has been unfair”
UBS: Euro break-up – the consequences
The following is excerpted from today’s UBS research note by Stephane Deo, Paul Donovan and Larry Hatheway on the consequences of a euro break-up. The full note is embedded below
Why Made in China Costs More in China
Chinese goods cost more in China because of currency, taxes, transportation,logistics and inflation. The Chinese get the jobs, while Americans get the consumer products; The Chinese government gets the dollar, but the U.S government gets to spend the dollar! The Chinese like to say: the Americans get a better deal!
Brazil Surprise Rate Cut To Weigh On BRL
While most EM central banks have moved into dovish wait-and-see stances, very few have cut rates during this cycle. Besides Brazil, only Turkey has this distinction and we’ve seen markets punish the lira in recent weeks. While the underlying fundamentals are much stronger in Brazil than in Turkey, we simply point out that market credibility is something that should not be taken for granted
Foreign capital, go home!
Once again we are hearing very worried noises from various sectors about the possibility of a reduction in Chinese purchases of USG bonds. Is the PBoC going to stop buying USG bonds
What is the secret to Germany’s economic success, part 2?
There are a lot of reasons Germany has been doing well: wage restraint, educated workforce, low unemployment, etc. I could go on and on. But in a global growth slowdown, the Germans will not be immune any more this go round than they were last time when their contracted more violently than most along with the other export-dependent aging society, Japan. If Germany wants continued economic success, its government must do a much better job in leading the euro zone out of its existential crisis. If the periphery sinks, we all sink
Estonia is also part of the Eurozone periphery
It is far from clear that the current level of Estonian CDS prices risk in in any more satisfactory way than they did at the height of the crisis, since membership of the Eurozone has brought with it both positives and negatives. The 0.28% contribution of the country to any future EFSF bailouts may not seem like a very big deal, but in comparison to Estonian GDP the sums involved may well be far from trivial. The country does not have, and is not likely to have, either a fiscal deficit or a sovereign debt problem, nor does it have a home grown banking system which might need bailing out. The risk to Estonia comes from elsewhere, from its association with Ireland, Spain, Greece, Portugal and Italy. Depending on how far the core EU countries are willing to finance debt and absence of growth in those countries the Eurozone’s future is far from clear
Andy Xie Recommends China Diversify Out Of Treasuries
The Chinese foreign reserve accumulation is really about the exchange rate peg. As long as the Yuan’s dollar peg remains near present levels, the current account imbalance will result in an accumulation of dollar reserves. Former Morgan Stanley Economist Andy Xie says the Chinesse do have a choice as to what US dollar assets to buy, even so. He suggests the US diversify out of Treasuries and into other US dollar assets
Could There Really Be A Recession Risk In Germany?
In Germany movements in GDP follow movements in the rate of expansion of exports. Let’s not get into why that is for the moment (think Germany’s particular demography), and just consider the possibility, despite all the talk over the years of Germany finally “decoupling”, that it can’t. Export dependence could well be the key explanation for why the performance of the German economy is so “extreme” and so volatile, with quarters of record growth being witnessed just before the onset of substantial recessions, recessions which often register record falls in output only to be followed by massive recoveries
Trade, Trial Balloons, and the Yuan
Regardless of the source of inflation, it is a serious concern for Chinese officials. Chinese history shows that periods of high inflation are associated with social, economic, and political unrest – all things that the central planners in Beijing wish to avoid. Toward that goal, the return to stronger export performance might provide a convenient pretense for another round of yuan appreciation. A strengthening yuan would lower the import cost of commodities and energy, both essential components throughout the food chain. China is the world’s biggest consumer of energy and soybeans, and its import bills have been soaring. So, what are the odds that the yuan will be allowed to rise
A ‘United States of Europe’ or Full Exit from the Euro? (Part 2)
This is the second in a two-part essay on the origins of the sovereign debt crisis. Here the emphasis is on the present situation within the euro zone and the imbalances between the core, dominated by Germany, and the euro zone periphery
Buiter: Europe will slow and Greece will have a hard restructuring
In the US, you have a weakening recovery, uneven job growth, less accommodative monetary policy, tightening fiscal policy at the federal and local levels, austerity in Europe and tightening in emerging markets coupled with secularly high profit margins and above long-term trend price-earnings ratios. From a global perspective, the only way to counteract these headwinds is through business capital investment or household consumption