The Greek crisis: An autopsy

on , from voxeu.org

For its sheer intensity and duration, the Greek crisis has been quite unprecedented. One measure says it all – real income per capita declined every single year between 2007 and 2013, a cumulated drop of 26%. Since then, it has barely risen. To put the Greek crisis in perspective, we compare it in Figure 1 with the sample of all ‘Trifecta crises’ since 1980 – the combination of a sudden stop with output collapse, a sovereign debt crisis, and a lending boom/bust. This is the who’s who of financial crises, a distinguished group that includes Argentina and Turkey in 2001, Ecuador in 1999, Indonesia and Russia in 1998, Chile and Uruguay in ... (Read the full story)

A secret meeting of leaders in a Chinese beach town could determine the future of the country

on , from cnbc.com

A closed-door meeting in a resort town on the Bohai Sea may be where China's future leadership begins to take shape, at a time when observers say there's tension at the top in Beijing. President Xi Jinping is said to be hosting the very highest echelon of China's Communist Party this week in Beidaihe. No hard decisions on leadership are expected to come immediately from the annual meeting, but this year's conclave is expected to initiate those conversations among top officials. The precise whereabouts of the meeting are not disclosed, but sources close to CNBC said the annual meeting typically takes places in four to five villas ... (Read the full story)

Why We Remain Bullish on EUR and JPY? - Morgan Stanley

on , from efxnews.com

Markets are now questioning the effectiveness of monetary easing (rate cuts or QE) to be able to weaken currencies. In particular, JPY and EUR cometo mind where both the BoJ and ECB eased further in January and March yet saw their currencies strengthen afterwards. Our analysis on whether monetary easing can weaken currencies going forward is now based on the ability to bring down long-term bond yields.Previously currencies were able to weaken for two major reasons outside of yield reductions, but these reasons are now reaching limits. First, there was a rise in inflation expectations from the belief that monetary easing would ... (Read the full story)

The Sobering Lesson of a Good Jobs Report

on , from bloomberg.com

The improvement in the U.S. labor market is certainly good news. It could soon become a headache, however, if it persists alongside disappointing economic growth. The economy added 255,000 jobs in July, after adding 292,000 in June. Employment growth was weaker earlier in the year, and two solid months don’t make a trend -- but even so, the labor market is in pretty good shape. The unemployment rate stands at just 4.9 percent, yet the economy keeps drawing workers back into the labor force and creating new jobs. The problem is that economic activity, according to the most recent indications, remains subdued. The implication is that ... (Read the full story)

Negative rates, helicopter money and the Bank of England

on , from blogspot.com

Yesterday Mark Carney said he was against negative interest rates and helicopter money, but in reality he implemented a way of doing a version of both. Let me explain. When negative interest rates are discussed, we normally think about savers, and the fact that they could avoid being charged to deposit money in a bank by hoarding cash. But borrowers would have no problem with negative rates: borrow £1000, and just pay back £990. The bank they borrowed from would have, unless there were negative rates on savings or they were getting a subsidy to lend. Helicopter money is normally thought of as the central bank sending a cheque to ... (Read the full story)

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