The Economist (February 10)
“America’s extraordinary economic gamble” is off to a rough start. “Fiscal policy is adding to demand even as the economy is running hot” and, seemingly as a result, volatility is back in a big way. “A long spell of calm, in which America’s stockmarket rose steadily without a big sell-off, ended abruptly this week.”
Tags: Calm, Demand, Economic gamble, Economy, Fiscal policy, Hot, Sell-off, Stockmarket, U.S., Volatility
Bloomberg (November 10)
The Bank of Japan (BoJ) proved no match for the zero lower bound. “The Bank of Japan’s recent quarterly report says, in effect, that the central bank has done all it can do to raise growth and inflation, and that fiscal policy needs to step in and help.” The BoJ already “owns more than half of the ETF shares in the whole country” and is estimated to soon “be the biggest shareholder in 55 of the 225 companies in the Nikkei index.” Other central banks will follow Japan’s retreat. “The era of bold monetary policy experimentation that began with the global financial crisis is now drawing to a close.”
Tags: BOJ, Central banks, ETF, Fiscal policy, Global financial crisis, Growth, Inflation, Monetary policy, Nikkei, Shareholder, Zero lower bound
Financial Times (December 13)
“France is in a similar situation to Italy. Both are attempting structural reform while fighting the threat of recession and asking the EU—which is to say Berlin—for more leeway on fiscal policy.” The reforms will help to remove “the bureaucratic sclerosis that chokes off innovation and growth.”
Tags: Berlin, Bureaucracy, EU, Fiscal policy, France, Growth, Innovation, Italy, Recession, Structural reform, Threat
Euromoney (October Issue)
“As investors lament the unsustainable credit boom and reform inertia that has blighted China, India and Indonesia, in particular, in recent years—raising the spectre this summer of a repeat of the 1997 Asia crisis—Singapore has consolidated its status as the region’s competitive dynamo, thanks to a flurry of supply-side reforms, backed by judicious fiscal and monetary policies.” Singapore’s economy is now “the most competitive in the world, according to the World Bank, with the highest income per capita in southeast Asia, outpacing the US in recent years.”“As investors lament the unsustainable credit boom and reform inertia that has blighted China, India and Indonesia, in particular, in recent years—raising the spectre this summer of a repeat of the 1997 Asia crisis—Singapore has consolidated its status as the region’s competitive dynamo, thanks to a flurry of supply-side reforms, backed by judicious fiscal and monetary policies.” Singapore’s economy is now “the most competitive in the world, according to the World Bank, with the highest income per capita in southeast Asia, outpacing the US in recent years.”
Tags: Asia crisis, China, Credit boom, Fiscal policy, India, Indonesia, Investors, Monetary policy, Reform, Singapore, Supply-side reforms
Wall Street Journal (July 21)
“Since taking office in December, Mr. Abe has shown a nearly unprecedented level of resolve on all three fronts [fiscal, monetary, regulatory] compared to recent prime ministers.” In his quest to reignite Japan’s economy, “Mr. Abe still faces a long and difficult road to get from where Japan is now to where he wants it to be. He may yet fail, or only partially succeed, in some of his priorities. But outside observers should not discount the extent to which Mr. Abe is giving voters something tangible to support. Voters certainly didn’t discount that on Sunday when they gave their support to Mr. Abe’s party.”
Tags: Fiscal policy, Japan’s economy, Monetary policy, Prime minister, Regulatory policy, Resolve, Shinzo Abe, Support, Voters
Wall Street Journal (June 11)
Unemployment has been slowly trending down in the U.S. but still remains too high. The Federal Reserve has been doing everything it can to improve the situation, but there are limits to monetary policy. In contrast, “the fiscal cupboard is not bare. There are things we could be doing to boost employment right now. That we are not doing anything constitutes malign neglect of the nation’s worst economic problem.” Instead of complacency, “policy makers should be running around like their hair is on fire…. Congress could make a good start on faster job creation simply by ending what it’s doing—destroying government jobs.”
Financial Times (September 21)
Concern is dampening initial celebration over the third quantitative easing (QE3) program, which was announced by Federal Reserve Chairman Ben Bernanke last week. This monetary program is not a substitute for a proper fiscal solution. QE3 is neither a “free lunch,” nor without risk. Still, “Mr Bernanke has shown commendable bravery in compensating for Congress’s inaction. But his aggressive policy stance will not work forever. US politicians would be foolish not to use wisely the time the Fed has bought them.”
Tags: Bernanke, Congress, Fed, Fiscal policy, Monetary policy, QE3, U.S.
Wall Street Journal (September 10)
“Mario Draghi laid out the European Central Bank’s latest bond-buying venture Thursday, and we suppose the good news is that it isn’t as sweeping as it might have been.” Still, it amounts to “another giant step into fiscal policy. This is far from the original vision of the euro, and the costs to the central bank’s political independence will be steep.” Furthermore, the benefits are marginal. “At best, the new program will give Messrs. Monti and Rajoy more time to promote the reforms in labor markets, taxation and other things their countries so desperately need to grow again.”
Tags: Bond-buying, ECB, euro, Fiscal policy, Italy, Mario Draghi, Monti, Rajoy, Spain
New York Times (September 20)
Nobel prize winning economist Paul Krugman was convinced “the next great crisis would be different” from the last. He figured it might be technology- or resource-related, rather than financial. He’s now surprised to find “we’re having the same crisis, and making the same mistakes.” We are again suffering from “a banking crisis and a collapse of aggregate demand, aggravated by bad monetary and fiscal policy.”
Washington Post (September 7)
We used to divide Europe into the East and West, but Europe “is slowly redividing itself into ‘North’ and ‘South.’” The description is not strictly geographic. Countries in the North (Germany, Poland, Estonia, Scandinavia, the Czechs and the Slovaks ) follow conservative fiscal policy. The South is made up of those countries that overspend (Greece, Spain, Portugal, Italy, Hungary, Bulgaria and Ireland). In between, is the UK, which is desperately trying to get back into the Northern grouping with drastic austerity measures.
Tags: Europe, Fiscal policy
