Financial Times (September 6)
The U.S. is not “going the way of Japan,” according to Paul Sheard global chief economist at Nomura. There are similarities, both nations had massive asset bubbles, but “a series of policy errors” led to Japan’s lost decades. “Inflation and deflation are, at the end of the day, policy choices. US policymakers, by and large, have learnt the lessons from the policy mistakes of Japan and have applied them, so far reasonably successfully.”
The Economist (June 2)
“For most Brazilians life has never been so good.” Brazil’s economy has become the envy of others, but success could be its undoing. “Many of Brazil’s economic officials now have an air of smugness about them, as they argue that the rest of the world has more to learn from Brazil than vice versa.”In fact, Brazil has both pressing short-term problems, most notably inflation, and long-term structural problems such as pension reform. Because these issues require immediate attention, “the timing of such complacency could not be worse.” As the economy overheats, “the government is stalling on a deeper reform agenda that is essential to boost Brazil’s long-term growth and fiscal stability.”
Wall Street Journal (April 21)
The Journal argues that the Federal Reserve should act more as a global central bank. “The dollar is the world’s reserve currency…. Yet for at least a decade, and especially since late 2008, the Fed has operated as if its only concern is the U.S. domestic economy.” The result has swamped countries trying to battle inflation with huge capital inflows. Domestic repercussions will also emerge. The Fed has single-mindedly expanded the money supply to stimulate the economy. “The bill is coming due in a weak dollar, food and energy inflation, and the decline of U.S. economic credibility.”
Tags: Economy, Fed, Inflation, Reserve currency, U.S.
Financial Times (January 25)
Inflation in India is taking a toll on the stock market and causing foreign investors to rethink their exposure. Who would have guessed “that a rise in the price of onions would put a brake on the stellar growth of India’s stock market”? To battle food price inflation, the Reserve Bank of India has raised interest rates seven times during the past year. As a result, investors are now worried that “high inflation in India could threaten its economy.”
Wall Street Journal (January 22)
“Four of every 10 rows of U.S. corn now go for fuel, not food.” In 2001, the figure was less than one in 14. This helps explain soaring food inflation. The Journal criticizes the government subsidies behind the shift to fuel use. “At a time when the world will need more corn and grains, it makes no sense to devote scarce farmland to make a fuel that exists only because of taxpayer subsidies and mandates.”
Tags: Environment, Ethanol, Food, Inflation
Barron’s (May 22)
Nobody should be buying 35-year U.S. Treasury bonds, which offer just a little over 4% annual interest. Yet people are. Barron’s warns that “today’s investors” will see the value of their investment dwindle because “sunny days of low inflation won’t last.”
Nobody should be buying 35-year U.S. Treasury bonds, which offer just a little over 4% annual interest. Yet people are. Barron’s warns that “today’s investors” will see the value of their investment dwindle because “sunny days of low inflation won’t last.”
Tags: Inflation, Interest, Treasury bonds, U.S.
