Recent moves by China to crack down on cryptocurrencies have been devastating to those who jumped on the bitcoin bandwagon this spring after a new buying frenzy had sent the digital units soaring to record highs.
And a report out Wednesday from the Bank for International Settlements (BIS), a Switzerland-based financial institution often described as "the central bankers' central bank," may mean the worries of digital coin holders are not yet over.
Read more at:
World's central banks launch new campaign against cryptocurrencies | CBC News
Showing posts with label Central Banks. Show all posts
Showing posts with label Central Banks. Show all posts
6/24/21
7/17/19
Global Economy: Central Bankers Are Sick of Rescuing the World Economy Alone - by William Horobin and Simon Kennedy
Global central bankers are again in the driving seat when it comes to
propping up the world economy, but many are demanding governments join them in the rescue effort.Amid slowing global growth, the Federal Reserve, European Central Bank and perhaps even the Bank of Japan are all set to ease monetary policy in coming months. But with less room to act than in the past, their leaders are telling politicians they will need to assist if a downturn takes hold.
The pressure could be applied in person on Wednesday when central bankers and finance ministers from the Group of Seven nations meet for talks north of Paris. They convene at a hazardous juncture for the global economy, as an unpredictable trade war risks precipitating a deeper downturn, and some bond markets hint at a growing possibility of a recession.
G-7 host nation France may even offer a reason to take note. President Emmanuel Macron’s 17 billion euros ($19.2 billion) of support for consumers in response to the Yellow Vests protests may have been contrary to his deficit-reduction mantra, but is proving fortuitous amid a global slowdown. French growth in 2019 is expected to outpace the euro-area average for the first time in six years.
“We are seeing political risks rising everywhere, so addressing the lack of growth that benefits all is quite urgent,” said Laurence Boone, chief economist at the OECD. “That cannot be achieved only through monetary policy.”
France’s GDP is expected to be more resilient than peers this year
While Powell has warned the U.S. fiscal position is unsustainable in the
long-run, he said last week it’s “not a good thing to have monetary
policy being the main game in town.”
The U.S. got a boost in 2018 from
President Donald Trump’s $1.5 trillion tax overhaul, but that effect is
fading.
Read more at: Central Bankers Are Sick of Rescuing the World Economy Alone - Bloomberg
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7/20/18
Global Economy: Key Takeaways from PIMCO’s Secular Outlook: Rude Awakenings
In case you missed it—given the recent gyrations in Italy and financial markets—we published our Secular Outlook
in May. Difficulties in Argentina and Italy, and President Trump’s
imposition of tariffs on steel and aluminum imports from the EU, Canada
and Mexico, among other disruptions, are some recent examples of rude
awakenings for complacent financial markets. However, as we lay out in
more detail in the outlook, these events may only be a small precursor
of things to come over the secular horizon. Here are the key takeaways.
Following the three-day Secular Forum with distinguished external speakers and our Global Advisory Board, as well as our subsequent internal discussions, we concluded that we may be witnessing an important turning point: Ten years after the financial crisis, the global economy and financial markets look set to enter a new era of potentially radical change that will make the future look very different from the past.
The post-crisis environment has been characterized by financial repression through regulation; dominant central banks; mostly passive or restrictive fiscal policies; largely uninhibited trade and capital flows; subdued growth and inflation; and low volatility in the macro economy and markets. To be fair, the past decade had its fair share of rude awakenings, but whenever they came along, central banks were quick to step in and prop up markets and economies.
We expect a very different macro landscape to emerge over the next five years—for better or worse. Already, there are important shifts underway: The monetary-fiscal policy mix has been changing, with central banks retreating and fiscal policy becoming more expansionary; the regulatory discussion is moving from the financial to the tech sector; and economic nationalism and protectionism are on the rise. However, bigger disruptions may lie ahead. Here are five potential sources of major rude awakenings for investors over the secular horizon:
Read the full report at: Key Takeaways from PIMCO’s Secular Outlook: Rude Awakenings
Following the three-day Secular Forum with distinguished external speakers and our Global Advisory Board, as well as our subsequent internal discussions, we concluded that we may be witnessing an important turning point: Ten years after the financial crisis, the global economy and financial markets look set to enter a new era of potentially radical change that will make the future look very different from the past.
The post-crisis environment has been characterized by financial repression through regulation; dominant central banks; mostly passive or restrictive fiscal policies; largely uninhibited trade and capital flows; subdued growth and inflation; and low volatility in the macro economy and markets. To be fair, the past decade had its fair share of rude awakenings, but whenever they came along, central banks were quick to step in and prop up markets and economies.
We expect a very different macro landscape to emerge over the next five years—for better or worse. Already, there are important shifts underway: The monetary-fiscal policy mix has been changing, with central banks retreating and fiscal policy becoming more expansionary; the regulatory discussion is moving from the financial to the tech sector; and economic nationalism and protectionism are on the rise. However, bigger disruptions may lie ahead. Here are five potential sources of major rude awakenings for investors over the secular horizon:
Read the full report at: Key Takeaways from PIMCO’s Secular Outlook: Rude Awakenings
11/4/16
Finacial Industry: Easy Money is Dangerous Without Activist Fiscal Policy - by Teresa Ghilarducci
Weak fiscal policy and a political commitment to permanent austerity in many advanced economies has left monetary policy do a job for which it was never designed, and at which it is failing.[1] The supply of easy money amid conditions of austerity is increasingly dangerous, not only because it weakens the economy but also because it threatens to destroy the advance-funded pension model. These policies, and a cynical reliance on private debt to fuel consumption by households in the bottom 90 percent of the income distribution — and especially the bottom 50 percent[2] — will doom all forms of private pensions that rely on advance funding with financial assets.
Given the limited tools available to them, the world’s central banks are unable, acting alone, to stimulate the world economy. That much is plain in the impotence of the European Central Bank without a robust fiscal union,[3] and even in the U.S. experience.
In 2008, Fed chief Ben Bernanke rapidly extended the Fed’s activity to provide liquidity through “quantitative easing,” including providing loans to all financial institutions, not just commercial banks; loaned money to businesses through the “commercial paper” market; and loaned money to AIG, an insurance company. As a scholar of the Great Depression of the 1930s[4], he was mindful of the scale of the danger posed by the financial meltdown, and acted quickly and appropriately to implement a monetary ease, buying bonds from untraditional sources[5] and lowering interest rates.
Short-term low interest rates have their place as a temporary measure; without those, the recession would have been longer and deeper. But the low interest rate policy was complemented by quick action by Congress and the President to decreases taxes and boost spending, but only for a limited period. When these fiscal measures expired, so did the recovery.
Low interest rates plainly can’t stimulate the economy – and can actually be dangerous — without activist fiscal policy, for seven main reasons: eak fiscal policy and a political commitment to permanent austerity in many advanced economies has left monetary policy do a job for which it was never designed, and at which it is failing.[1] The supply of easy money amid conditions of austerity is increasingly dangerous, not only because it weakens the economy but also because it threatens to destroy the advance-funded pension model. These policies, and a cynical reliance on private debt to fuel consumption by households in the bottom 90 percent of the income distribution — and especially the bottom 50 percent[2] — will doom all forms of private pensions that rely on advance funding with financial assets.
Given the limited tools available to them, the world’s cencentral banks are unable, acting alone, to stimulate the world economy. That much is plain in the impotence of the European Central Bank without a robust fiscal union,[3] and even in the U.S. experience.
In 2008, Fed chief Ben Bernanke rapidly extended the Fed’s activity to provide liquidity through “quantitative easing,” including providing loans to all financial institutions, not just commercial banks; loaned money to businesses through the “commercial paper” market; and loaned money to AIG, an insurance company. As a scholar of the Great Depression of the 1930s[4], he was mindful of the scale of the danger posed by the financial meltdown, and acted quickly and appropriately to implement a monetary ease, buying bonds from untraditional sources[5] and lowering interest rates.
Short-term low interest rates have their place as a temporary measure; without those, the recession would have been longer and deeper. But the low interest rate policy was complemented by quick action by Congress and the President to decreases taxes and boost spending, but only for a limited period. When these fiscal measures expired, so did the recovery.
Low interest rates plainly can’t stimulate the economy – and can actually be dangerous — without activist fiscal policy, for seven main reasons: Click on link below for full report.
Read more: Easy Money is Dangerous Without Activist Fiscal Policy
Given the limited tools available to them, the world’s central banks are unable, acting alone, to stimulate the world economy. That much is plain in the impotence of the European Central Bank without a robust fiscal union,[3] and even in the U.S. experience.
In 2008, Fed chief Ben Bernanke rapidly extended the Fed’s activity to provide liquidity through “quantitative easing,” including providing loans to all financial institutions, not just commercial banks; loaned money to businesses through the “commercial paper” market; and loaned money to AIG, an insurance company. As a scholar of the Great Depression of the 1930s[4], he was mindful of the scale of the danger posed by the financial meltdown, and acted quickly and appropriately to implement a monetary ease, buying bonds from untraditional sources[5] and lowering interest rates.
Short-term low interest rates have their place as a temporary measure; without those, the recession would have been longer and deeper. But the low interest rate policy was complemented by quick action by Congress and the President to decreases taxes and boost spending, but only for a limited period. When these fiscal measures expired, so did the recovery.
Low interest rates plainly can’t stimulate the economy – and can actually be dangerous — without activist fiscal policy, for seven main reasons: eak fiscal policy and a political commitment to permanent austerity in many advanced economies has left monetary policy do a job for which it was never designed, and at which it is failing.[1] The supply of easy money amid conditions of austerity is increasingly dangerous, not only because it weakens the economy but also because it threatens to destroy the advance-funded pension model. These policies, and a cynical reliance on private debt to fuel consumption by households in the bottom 90 percent of the income distribution — and especially the bottom 50 percent[2] — will doom all forms of private pensions that rely on advance funding with financial assets.
Given the limited tools available to them, the world’s cencentral banks are unable, acting alone, to stimulate the world economy. That much is plain in the impotence of the European Central Bank without a robust fiscal union,[3] and even in the U.S. experience.
In 2008, Fed chief Ben Bernanke rapidly extended the Fed’s activity to provide liquidity through “quantitative easing,” including providing loans to all financial institutions, not just commercial banks; loaned money to businesses through the “commercial paper” market; and loaned money to AIG, an insurance company. As a scholar of the Great Depression of the 1930s[4], he was mindful of the scale of the danger posed by the financial meltdown, and acted quickly and appropriately to implement a monetary ease, buying bonds from untraditional sources[5] and lowering interest rates.
Short-term low interest rates have their place as a temporary measure; without those, the recession would have been longer and deeper. But the low interest rate policy was complemented by quick action by Congress and the President to decreases taxes and boost spending, but only for a limited period. When these fiscal measures expired, so did the recovery.
Low interest rates plainly can’t stimulate the economy – and can actually be dangerous — without activist fiscal policy, for seven main reasons: Click on link below for full report.
Read more: Easy Money is Dangerous Without Activist Fiscal Policy
2/26/16
German Fin-Min Schauble opposes G20 fiscal stimulus package- by Axel Schmidt
Germany's Minister of Finance Wolfgang Schaeuble said on
Friday that the expansive fiscal and monetary policies implemented by
governments to spur growth might have laid the foundation of the next
economic crisis.
Those debt-financed fiscal policies and accommodative monetary policies had been only moderately successful in promoting growth, with public and private debt levels in the world now too high, Schaeuble said.
"Fiscal as well as monetary policies have reached their limits. If you want the real economy to grow there are no shortcuts which avoid reforms," Schaeuble said.
Those debt-financed fiscal policies and accommodative monetary policies had been only moderately successful in promoting growth, with public and private debt levels in the world now too high, Schaeuble said.
"Fiscal as well as monetary policies have reached their limits. If you want the real economy to grow there are no shortcuts which avoid reforms," Schaeuble said.
read more: German FinMin Schauble opposes G20 fiscal stimulus package
2/18/16
Central Banks: Timid central bankers have failed to convince sceptical audience
The job of central bankers more like that of technicians, carefully
turning knobs as they fine-tune the economy, or magicians, manipulating
the audience into the suspension of disbelief? Most of the time it is
the former. Monetary maestros nudge interest rates up and down with
meticulous precision.
Yet in extreme cases—such as when economies become trapped in a low-growth rut—central bankers must try to conjure up a change in the public’s economic outlook. Just as uncertain magicians often fail to pull off their tricks, so central banks are finding their audiences in an ever-more sceptical mood.
Economists have long acknowledged the role of mass psychology in business cycles. In 1936 John Maynard Keynes described the “animal spirits” that could drive swings in spending or investment.
The power of an abrupt change in market beliefs came sharply into focus in the early 1980s, when many economies were struggling to clamp down on stubbornly high inflation. Economists at the time worried that using interest rates to rein in inflation would be enormously costly.
Because the public had come to expect high inflation, they reckoned, growth-crushing rate rises would be needed to force down prices and create new consumer expectations. A common estimate at the time had it that reducing America’s inflation rate by just one percentage point would cause economic damage of nearly 10% of GDP.
In this fraught world, central bankers risk falling into what Mr Krugman has called a timidity trap. The longer that knob-turning fails to get an economy out of the zero-rate rut, the less credible markets are likely to find subsequent attempts at regime change. Recent efforts to push interest rates into negative territory seem to have unnerved markets rather than sparked confidence.
Perhaps more importantly, central bankers tend not to adopt major shifts in mandates and targets unless urged to do so by popularly elected governments. It is difficult to muster Rooseveltian resolve without a Roosevelt. Expect growing scepticism about the power of knob-turning until voters choose politicians confident enough to wave a magic wand.
Read more: Slight of hand | The Economist
Yet in extreme cases—such as when economies become trapped in a low-growth rut—central bankers must try to conjure up a change in the public’s economic outlook. Just as uncertain magicians often fail to pull off their tricks, so central banks are finding their audiences in an ever-more sceptical mood.
Economists have long acknowledged the role of mass psychology in business cycles. In 1936 John Maynard Keynes described the “animal spirits” that could drive swings in spending or investment.
The power of an abrupt change in market beliefs came sharply into focus in the early 1980s, when many economies were struggling to clamp down on stubbornly high inflation. Economists at the time worried that using interest rates to rein in inflation would be enormously costly.
Because the public had come to expect high inflation, they reckoned, growth-crushing rate rises would be needed to force down prices and create new consumer expectations. A common estimate at the time had it that reducing America’s inflation rate by just one percentage point would cause economic damage of nearly 10% of GDP.
In this fraught world, central bankers risk falling into what Mr Krugman has called a timidity trap. The longer that knob-turning fails to get an economy out of the zero-rate rut, the less credible markets are likely to find subsequent attempts at regime change. Recent efforts to push interest rates into negative territory seem to have unnerved markets rather than sparked confidence.
Perhaps more importantly, central bankers tend not to adopt major shifts in mandates and targets unless urged to do so by popularly elected governments. It is difficult to muster Rooseveltian resolve without a Roosevelt. Expect growing scepticism about the power of knob-turning until voters choose politicians confident enough to wave a magic wand.
Read more: Slight of hand | The Economist
2/16/16
Voodoo Economics: Central Banks as Relentless Boosters of the Rich - by Daniel Stelter
Crafty as they are, at no instance did central bankers miss an
opportunity to justify their actions by the need to defend against
deflation, i.e., falling prices.
They profess to fear a self-enforcing doom cycle, like the one that the world experienced during the Great Depression.
Alas, that depression was caused – like our crisis today – by too much debt. A modest amount of deflation in itself is not bad. Over decades, the United States and other European countries experienced falling prices and high employment – paired with impressive growth.
It is fascinating to see that even more than 30 years of mismanagement by central banks, with significant damage to the real economy, has not yet dispelled the “hope” of politicians, business leaders, financial markets and the broader population of our countries that recovery rests on the shoulders of the central banks.
In the next emergency, we will once again see pictures of Yellen, Draghi and Co. assuring us that they will “rescue” the world one more time with their interventions. In reality, they are poisoning us even more!
Read more: Central Banks as Relentless Boosters of the Rich - The Globalist
They profess to fear a self-enforcing doom cycle, like the one that the world experienced during the Great Depression.
Alas, that depression was caused – like our crisis today – by too much debt. A modest amount of deflation in itself is not bad. Over decades, the United States and other European countries experienced falling prices and high employment – paired with impressive growth.
It is fascinating to see that even more than 30 years of mismanagement by central banks, with significant damage to the real economy, has not yet dispelled the “hope” of politicians, business leaders, financial markets and the broader population of our countries that recovery rests on the shoulders of the central banks.
In the next emergency, we will once again see pictures of Yellen, Draghi and Co. assuring us that they will “rescue” the world one more time with their interventions. In reality, they are poisoning us even more!
Read more: Central Banks as Relentless Boosters of the Rich - The Globalist
11/27/15
QE: Lost In Contradiction: The IMF And Competitive Wage Dumping In The Euro Area - by Ronald Janssen
A staff discussion note
published recently by the IMF addresses the argument that squeezing
wages across a large part of the euro area is dangerous and deflationary
as it will not improve anyone’s relative competitive position while
undercutting domestic demand everywhere.
Since the IMF has always been a staunch advocate of the ongoing euro area experiment of substituting currency devaluation with wages devaluation, it is worth taking a closer look at its work.
The IMF bases its findings on a simulation whereby nominal wage growth in a set of five countries representing an economic weight of 30% of the euro area (Greece, Italy, Spain, Portugal, Ireland) is reduced by 2 percentage points over the course of two years. Importantly, this simulation is carried out under the assumption that the ECB’s hands as regards cutting its interest rates are tied because these rates are already hitting the zero mark. It is also assumed that lower wages growth is fully passed on into domestic prices, implying that there are no cuts in real wages.
Note EU-Digest: QE - Money printing presses going full speed and major dangers lie ahead for the US, EU and Japanese economies. When they come they will make the 2007/2009 economic crises look like child's play.
Read more: Lost In Contradiction: The IMF And Competitive Wage Dumping In The Euro Area
Since the IMF has always been a staunch advocate of the ongoing euro area experiment of substituting currency devaluation with wages devaluation, it is worth taking a closer look at its work.
The IMF bases its findings on a simulation whereby nominal wage growth in a set of five countries representing an economic weight of 30% of the euro area (Greece, Italy, Spain, Portugal, Ireland) is reduced by 2 percentage points over the course of two years. Importantly, this simulation is carried out under the assumption that the ECB’s hands as regards cutting its interest rates are tied because these rates are already hitting the zero mark. It is also assumed that lower wages growth is fully passed on into domestic prices, implying that there are no cuts in real wages.
Note EU-Digest: QE - Money printing presses going full speed and major dangers lie ahead for the US, EU and Japanese economies. When they come they will make the 2007/2009 economic crises look like child's play.
Read more: Lost In Contradiction: The IMF And Competitive Wage Dumping In The Euro Area
10/12/15
US Economy: Record Global Sell-Off of U.S. Debt Could Trigger Economic Collapse
But that's all changing now – events that could spark a U.S. economic collapse are already underway…
The Wall Street Journal revealed recently that China – the largest holder of U.S. investments – is ridding itself of its U.S. government bonds at the fastest rate in history.
In fact, a global sell-off of epic proportion is taking place.
Central banks in China, Russia, Brazil, and Taiwan are selling U.S. government bonds at such a pace that it's caused the most dramatic shift in the $12.8 trillion Treasury market since the 2008-2009 financial crisis.
Foreign official net sales of U.S. Treasury debt maturing in at least one year hit $123 billion in the 12 months ended in July, according to Deutsche Bank Securities Chief International Economist Torsten Slok, reported WSJ. That's the biggest decline since data started to be collected in 1978.
By contrast, foreign central banks purchased $27 billion of U.S. notes and bonds in the prior 12-month period.
Foreign central bankers' massive offloading of U.S. debt sends this dangerous signal…
Read more: WARNING: Record Global Sell-Off of U.S. Debt Could Trigger Economic Collapse
9/16/15
ECB gives central banks power to announce emergency funding
National central banks in the euro zone
will now have the power to make announcements about any emergency
funding that they provide to their banks, the European Central Bank said
on Wednesday.
Read more: ECB gives central banks power to announce emergency funding - The Globe and Mail
Official announcements
about the supply of Emergency Liquidity Assistance (ELA), such as in the
case of Greek banks, had so far been made by the ECB itself.
“The Governing Council of the European
Central Bank has decided that national central banks will from now on
have the option to communicate publicly about the provision of Emergency
Liquidity Assistance (ELA) to the banks in their country, in cases
where they deem that such communication is necessary,” the ECB said on
Wednesday.
Central banks will still have to seek ECB approval to provide ELA and to make any announcement about it.
Read more: ECB gives central banks power to announce emergency funding - The Globe and Mail
6/26/14
The Banking Industry:Out-of-control Central Banks are Buying Up the Planet - by Ellen Brown:
When the US Federal Reserve bought an 80% stake in American
International Group (AIG) in September 2008, the unprecedented $85
billion outlay was justified as necessary to bail out the world’s
largest insurance company.
Today, however, central banks are on a global corporate buying spree not to bail out bankrupt corporations but simply as an investment, to compensate for the loss of bond income due to record-low interest rates. Indeed, central banks have become some of the world’s largest stock investors
.
Central banks have the power to create national currencies with accounting entries, and they are traditionally very secretive. We are not allowed to peer into their books. It took a major lawsuit by Reuters and a congressional investigation to get the Fed to reveal the $16-plus trillion in loans it made to bail out giant banks and corporations after 2008.
What is to stop a foreign bank from simply printing its own currency and trading it on the currency market for dollars, to be invested in the US stock market or US real estate market? What is to stop central banks from printing up money competitively, in a mad rush to own the world’s largest companies?
Apparently not much. Central banks are for the most part unregulated, even by their own governments. As the Federal Reserve observes on its website:
Read more: Out-of-control Central Banks are Buying Up the Planet | Alternet
Today, however, central banks are on a global corporate buying spree not to bail out bankrupt corporations but simply as an investment, to compensate for the loss of bond income due to record-low interest rates. Indeed, central banks have become some of the world’s largest stock investors
.
Central banks have the power to create national currencies with accounting entries, and they are traditionally very secretive. We are not allowed to peer into their books. It took a major lawsuit by Reuters and a congressional investigation to get the Fed to reveal the $16-plus trillion in loans it made to bail out giant banks and corporations after 2008.
What is to stop a foreign bank from simply printing its own currency and trading it on the currency market for dollars, to be invested in the US stock market or US real estate market? What is to stop central banks from printing up money competitively, in a mad rush to own the world’s largest companies?
Apparently not much. Central banks are for the most part unregulated, even by their own governments. As the Federal Reserve observes on its website:
[The Fed] is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.As former Federal Reserve Chairman Alan Greenspan quipped, “Quite frankly it does not matter who is president as far as the Fed is concerned. There are no other agencies that can overrule the action we take.”
Read more: Out-of-control Central Banks are Buying Up the Planet | Alternet
7/24/13
EU-Economy: Is an end to Europe's misery in sight? by:Larry Elliott
The latest news from the eurozone is as upbeat as it has been for 18 months. Snapshots of activity in the manufacturing and services sectors are consistent with the long recession in the single currency area – which has been entrenched for the past six quarters – coming to an end. If the evidence from purchasing managers is to be believed, Germany is looking good and France is clawing its way back to normality.
A better performance by the eurozone's Big Two – accompanied by a lessening of recessionary pressure in Spain and Italy – should, with luck, eke out some growth across the region in the second half of 2013.
Analysts put the recent improvement down to the growth stimulus provided by the European Central Bank, the slower pace of austerity in 2013 compared with 2012, and the help that last year's pickup in the global economy provided to Europe's export-dependent economy.
So is this it? Are the PMIs (purchasing managers' indices) proof that an end to Europe's misery is at last in sight? The good news is that Wednesday's report was no flash in the pan: the eurozone PMIs have been improving for the past five months. It is also encouraging that the pace of job shedding is easing, given that record unemployment has been a significant drag on activity.
Read more: EU Economy: Is an end to Europe's misery in sight? | Larry Elliott | Business | guardian.co.uk
A better performance by the eurozone's Big Two – accompanied by a lessening of recessionary pressure in Spain and Italy – should, with luck, eke out some growth across the region in the second half of 2013.
Analysts put the recent improvement down to the growth stimulus provided by the European Central Bank, the slower pace of austerity in 2013 compared with 2012, and the help that last year's pickup in the global economy provided to Europe's export-dependent economy.
So is this it? Are the PMIs (purchasing managers' indices) proof that an end to Europe's misery is at last in sight? The good news is that Wednesday's report was no flash in the pan: the eurozone PMIs have been improving for the past five months. It is also encouraging that the pace of job shedding is easing, given that record unemployment has been a significant drag on activity.
Read more: EU Economy: Is an end to Europe's misery in sight? | Larry Elliott | Business | guardian.co.uk
6/24/13
Central Banks Criticize Europe for Political Gridlock on Economy - by Jack Ewing and James Kanter
For European officials, it may have been an especially untimely — and embarrassing — example of political gridlock.
Read more: Central Banks Criticize Europe for Political Gridlock on Economy - NYTimes.com
Their failure early Saturday to agree on a crucial pillar of the euro zone’s new banking architecture, despite 18 hours of haggling, occurred just as the world’s central bankers were about to criticize politicians for exactly that kind of dithering.
The Bank for International Settlements, a group representing central banks including the Federal Reserve and the European Central Bank, warned political leaders on Sunday that they should not expect central banks’ cheap-money policy to hold the global economy together forever. The organization, based in Basel, Switzerland, said in its annual report that politicians should do their share of “the hard but essential work of adjustment.”
“Returning to stability and prosperity is a shared responsibility,” Jaime Caruana, the general manager of the organization, said Sunday in Basel, according to a text of his remarks. “Monetary policy has done its part.”
Read more: Central Banks Criticize Europe for Political Gridlock on Economy - NYTimes.com
5/29/13
Europe’s leaders starting to move away from austerity but remain weary about quantitative easing
Austerity is out after the euro-area recession extended to a sixth quarter, but stimulus isn’t in.
That was the something-for-everyone message from European leaders at a summit in Brussels on Monday.
All touted a previously announced €6 billion ($7.7 billion), seven-year initiative to fight youth unemployment, now at 24%.
“National governments won’t put up more cash,” German Chancellor Angela Merkel said. “It’s not a matter of money,” Merkel told reporters after the summit. “It’s a matter of looking at how to spend this money most productively.”
In an interview Dieter Wemmer, Member of the Board of Management of Allianz SE, Europe's largest insurer which has assets totaling more than 500 billion euros said: "Basically today financial markets are being manipulated by the central banks".
"Although terms like "quantitative easing" and "financial repression" sound more moderate, this is essentially what they boil down to. But it will be tricky to break with the current monetary policy any time in the near future, especially since Japan has now also taken interest rate measures to join the global race to secure export opportunities by maintaining a currency that is as weak as possible."
"In the US, two-thirds of the financing for private companies comes from bonds and one-third from bank loans. In Europe, the ratio is the exact opposite. This is an area in which investors with a long-term focus could play a particularly significant role in supporting European trade and industry.”
EU-Digest
That was the something-for-everyone message from European leaders at a summit in Brussels on Monday.
All touted a previously announced €6 billion ($7.7 billion), seven-year initiative to fight youth unemployment, now at 24%.
“National governments won’t put up more cash,” German Chancellor Angela Merkel said. “It’s not a matter of money,” Merkel told reporters after the summit. “It’s a matter of looking at how to spend this money most productively.”
In an interview Dieter Wemmer, Member of the Board of Management of Allianz SE, Europe's largest insurer which has assets totaling more than 500 billion euros said: "Basically today financial markets are being manipulated by the central banks".
"Although terms like "quantitative easing" and "financial repression" sound more moderate, this is essentially what they boil down to. But it will be tricky to break with the current monetary policy any time in the near future, especially since Japan has now also taken interest rate measures to join the global race to secure export opportunities by maintaining a currency that is as weak as possible."
"In the US, two-thirds of the financing for private companies comes from bonds and one-third from bank loans. In Europe, the ratio is the exact opposite. This is an area in which investors with a long-term focus could play a particularly significant role in supporting European trade and industry.”
EU-Digest
5/8/13
Stock Markets Bubble?: Dow tops 15,000, pumped by central bank largesse - by Michael Babad
The Dow Jones industrial average topped the 15,000 mark, climbing more than 87 points or 0.6 per cent to close at 15,056.20. The S&P 500 also set records again, gaining 8.46 points or 0.5 per cent to close at 1,625.96.
Both hits records last Friday after a report showing a stronger-than-expected jobs market.
Today, an interest rate cut by Australia's central bank helped fuel global market gains, which have also been pushed by corporate earnings.
“Investor appetite for risk assets continues unabated this week as accommodative central bank policy coupled with strong corporate performance fuels demand for equities,” said senior sales trader Alex Young at CMC Markets in London.
Read more: Dow tops 15,000, pumped by central bank largesse - The Globe and Mail
Both hits records last Friday after a report showing a stronger-than-expected jobs market.
Today, an interest rate cut by Australia's central bank helped fuel global market gains, which have also been pushed by corporate earnings.
“Investor appetite for risk assets continues unabated this week as accommodative central bank policy coupled with strong corporate performance fuels demand for equities,” said senior sales trader Alex Young at CMC Markets in London.
Read more: Dow tops 15,000, pumped by central bank largesse - The Globe and Mail
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