Although it’s hard to get a clear picture of China’s overall credit policy — because there are so many policy levers, and because so much is done behind closed doors — it appears that the country is feeling out a novel approach to macroeconomic stabilization. That program focuses on asset prices, bank finance, real estate and administrative control of banks.
So far, economists see only faint effects of the new tax law in housing prices. The predicted carnage hasn’t materialized.
To exaggerate a bit, the world may soon only have one borrower— In some sense that’s a safe equilibrium: the United States borrows in dollars, so it is less exposed to the risks created by the Fed’s monetary tightening and a rising dollar than others. Exorbitant privilege and all.
Over the last few months, the risk premia on Italian government bonds have increased considerably. This column uses data on sovereign credit default swaps and governments bonds denominated in different currencies to disentangle fiscal risk from redenomination risk (i.e. the risk of Italy leaving the euro). Redenomination risk appears to be responsible for about half of the overall increase in the spread, suggesting that playing with the idea of exiting the euro can be costly even if public finances remain under control.
Bernanke and his Fed justify a second thank-you note for being overly cautious and using QE to address “too big to fail” by recapitalizing banks through the back door. Finally, thank every dour headline from the past nine-plus years for helping keep euphoria at bay and stocks’ fundamental strength a secret.
The market share of a company does not have a strong influence on its financial performance, a new study in marketing at the Faculty of Management, Economics and Social Sciences of the University of Cologne shows. Companies should instead invest in building customer relationships and a strong brand.
Markets don’t care who the president is. People may not like to hear this but it’s true. Investors care about earnings, interest rates, trends, and sentiment. The stock market and the economy are bigger than any one person or one administration.
The euro area economy is in its fifth year of recovery, unemployment is close to its pre-crisis level and the output gaps of most countries have closed. Yet, core inflation continues to be low, notwithstanding temporarily high headline inflation due to higher energy prices.source
Speech by Dr Jens Weidmann, President of the Deutsche Bundesbank and Chairman of the Board of Directors of the Bank for International Settlements, to the Hellenic Bank Association, Athens, 30 August 2018. Source: Jens Weidmann: Exploring the agora – lessons for a more stable economic and monetary union
Introductory statement by Dr Jens Weidmann, President of the Deutsche Bundesbank and Chairman of the Board of Directors of the Bank for International Settlements, at a discussion with the Association of the Foreign Press (VAP), Berlin, 23 August 2018. Source: Jens Weidmann: The economic situation in Germany and the euro area, monetary policy and the longer-term challenges facing the euro area