Davos holds up funhouse mirror to shifting world 22 Jan 2024 Delegates from the Middle East and India made a splash at last week’s World Economic Forum, reflecting their wealth and investment appeal. Europeans and Chinese were subdued. Big Tech looks the winner from AI. This year’s Swiss conflab arguably exaggerated more than it distorted.
China consumers keep Beijing, and world, on edge 17 Jan 2024 The economy expanded 5.2% last quarter, thanks to manufacturing. But local demand remains weak, forcing factories to look abroad. That will stoke global trade tensions and add to fears that China will export deflation. All eyes are on how Beijing stimulates domestic consumption.
EU debt rules offer unity at price of relevance 21 Dec 2023 European Union finance chiefs reached a deal on a new fiscal pact, breaking a post-pandemic stalemate. Germany won austere deficit and debt targets, yet pain will be diluted by French-fought delays and concessions. The net result is an overly complex system that may not work.
White House needs to talk turkey about inflation 22 Nov 2023 The Biden Administration has encouraged Americans to “be thankful” for falling prices this year. But cherry-picking some items that have edged down from recent peaks won’t counter the fact that US citizens feel glum about the economy. A bit of empathy might go a long way.
American CEOs serve China’s Xi a too-rich dessert 16 Nov 2023 Tim Cook and Steve Schwarzman were among attendees at a dinner where the Chinese president got a standing ovation. For business leaders to curry favor with Xi’s regime is not new. Doing it so performatively, and on home turf, suggests there’s such a thing as too much harmony.
Social Security collides with idle golden years 9 Nov 2023 Republican presidential candidates pitched a handful of ideas for saving the US benefit, like a higher retirement age. But potential solutions can’t dent the real issues: an aging population and massive, broad overspending.
China rate scare reminds watchdogs of hidden risks 1 Nov 2023 A liquidity squeeze spooked the country’s money market just as top regulators completed a twice-a-decade summit to outline Beijing’s financial plan. Overnight rates as high as 50% may prompt more monetary loosening. Yet local government debt problems require more drastic surgery.
China’s leaders speed towards Japanisation 20 Oct 2023 The People’s Republic invests more than Japan did at the height of its 1980s asset bubble. China’s real estate is more overvalued, and its debt is higher. President Xi Jinping’s centralised rule and stifling of private enterprise increase the risk of Japanese-style lost decades.
Europe’s rising bond vigilantes are necessary evil 11 Oct 2023 Debt costs for weaker states like Italy are jumping. Europe’s delay in agreeing new fiscal rules means hostile markets are the only credible check on government spending. Slowing growth and a hamstrung ECB means the backdrop may well get choppier.
IMF’s bond vigilante script is ripe for a rewrite 10 Oct 2023 The International Monetary Fund wants politicians to close the fiscal taps. Yet it’s also warning about a sharp slowdown in global growth. Markets are worried about debt levels but without spending and investment the world will stagnate.
Germany risks letting a good crisis go to waste 3 Oct 2023 Europe’s largest economy is on track to shrink this year. The immediate causes are lower exports to China and higher energy prices. But decades of under-investment will continue to crimp growth unless Berlin ditches its hostility to fiscal stimulus and comprehensive reforms.
Long US shutdown is avoidable but seems inevitable 26 Sep 2023 A group of Republicans are holding up approval of a $1.5 trln budget because they want $60 bln in cuts. Fiscal responsibility is fair enough, but they’re being contradictory and unreasonable. Even if Republicans were to reach an agreement today, other issues will get in the way.
Meloni’s Italian job is a lesson for EU’s right 26 Sep 2023 In her first year, the PM pledged Rome’s commitment to NATO and fiscal discipline. That may be a template for nationalist parties trying to copy her success. Yet she also wasted time on culture wars. As growth stalls and immigration soars, the rest of her term will be tougher.
Capital Calls: US budget 21 Sep 2023 Concise views on global finance: US House Speaker Kevin McCarthy is siding with hardline conservatives to fund the government. Empowering the further-right flank narrows the already slim odds of new Ukraine aid, cannabis reform and crypto clarity.
Republican hopefuls’ deficit goals are all talk 24 Aug 2023 Conservatives vying for the Republican nomination vowed to slash the deficit in a debate. After years of spending under conservative leadership, it’s a throwback. Yet tax cuts and other costly projects are still key talking points. Worsened US finances make the agenda impossible.
China’s stimulus tone hits a high pitch 25 Jul 2023 Party leaders are finally admitting they need to do more to support the $18 trln economy and its real estate market. Some fiscal tweaks and measures to speed home sales in big cities may follow. But in raising expectations, what Beijing considers a new normal remains a mystery.
EU has to come clean on costs of green transition 18 Jul 2023 Europe’s race towards net zero carbon emissions will require energy investments of nearly 2% of GDP. And it will cause economic pain in the short term before benefits kick in. Unless governments explain how the bill will be shared, they risk a populist backlash.
Capital Calls: AMC’s meme investor backlash 18 Jul 2023 Concise views on global finance: A new lawsuit looking to force a shareholder meeting adds to growing antagonism between $2 bln movie theater chain AMC and the retail investors who buoyed its business during the pandemic. For boss Adam Aron, meme stock stardom comes at a cost.
China risks leaving it too late to stimulate 17 Jul 2023 The world’s second-largest economy grew a slower-than-expected 6.3% in the second quarter. Yet despite weakness in property and consumption, there are pockets of strength. Hitting the 2023 growth target looks less certain and a sharper slowdown could yet catch Beijing off guard.
The next revolution in monetary policy is underway 30 Jun 2023 Central banks are grappling with rising prices and fragile financial markets, raising doubts about their focus on price stability. Recent interventions by the International Monetary Fund and Bank for International Settlements are signs of a broader rethink, says Felix Martin.