Japan’s election uncertainty

Call a snap election.  What could possibly go wrong?  Well, as embattled UK Prime Minister Theresa May could tell us (in between coughing fits) — plenty.  And yet Shinzo Abe, Japan’s premier, is set to go down the same path. Will he regret his decision to summon the country to the polls in October? At … Continue reading “Japan’s election uncertainty”

When economic pessimism means more hikes, not fewer

There has been a striking shift in recent Bank of England (BoE) communication. In the minutes of its September meeting, policy makers noted that “some withdrawal of monetary stimulus is likely to be appropriate over the coming months.” This message was then reiterated in speeches by noted ‘dove’ Gertjan Vlieghe and Bank Governor Mark Carney. … Continue reading “When economic pessimism means more hikes, not fewer”

Inflation is dead, long live inflation

When the Federal Reserve and other central banks introduced quantitative easing in response to the global financial crisis, the loudest and most persistent criticism was that such actions would unleash a major surge in inflation. The reality has been very different. Inflation has persistently fallen short of central bank targets and economic forecasts for the … Continue reading “Inflation is dead, long live inflation”

Supercharged: the car industry in a post-oil world

Governments around the world, barring a handful of exceptions, are seeking to limit the effects of climate change caused by burning fossil fuels. Earlier this year, some 200 countries signed the Paris Agreement, which commits them to help curtail global temperature rises. Part of the solution lies in promoting fuels that produce less of the … Continue reading “Supercharged: the car industry in a post-oil world”

Is China’s tech boom worth investing in?

China’s statistics are often larger-than-life but the numbers relating to mobile phone ownership and money spent online are truly staggering. As of the end of last year, more than half the population – some 731 million people – were online. That’s almost all the people in Europe. Some 95% access the internet via mobile devices. … Continue reading “Is China’s tech boom worth investing in?”

Financial Crisis Ten Years On

Ten years ago, queues quietly began forming outside branches of Northern Rock. Unsettled by press reports that the bank was asking for help from the Bank of England, anxious customers wanted out. The first run on a UK bank for over a century was underway, and Northern Rock would be nationalised within a year. In … Continue reading “Financial Crisis Ten Years On”

North Korea is a problem for China – if only the US would realise

North Korea now has nuclear warheads that it can attach to missiles, that can travel great distances – to Guam, almost certainly, the nearest offshore US territory, and, with a bit of practice perhaps heavily populated parts of the US mainland. It sounds scary, but then Russia, China and others have had this capability for … Continue reading “North Korea is a problem for China – if only the US would realise”

Economic effects of Hurricane Harvey

Hurricane Harvey was a tragedy. It also has the potential to have a considerable economic impact on both the economy of Texas and on the broader US economy. There are also material implications for both commodities and insurance markets. Economic Impact Early estimates put property damage at between $30bn and $100bn (0.2%-0.5% of GDP). For … Continue reading “Economic effects of Hurricane Harvey”

The US Fed must learn from mistakes of the crisis

A decade is a long time in central banking. Ten years ago Ben Bernanke used his speech at the Jackson Hole symposium for central bankers to explain the tumult that was rippling through financial markets at the time. He explained that while there were problems in the US housing market, the global financial system was … Continue reading “The US Fed must learn from mistakes of the crisis”

Broken-hearted again …

Having raised interest rates by 0.25 percentage points in June, the Federal Open Market Committee has indicated that it expected to hike rates once more this year and that it plans to begin its balance-sheet normalisation program (its plan to sell off the assets that it purchased under quantitative easing) “relatively soon”. In the UK, … Continue reading “Broken-hearted again …”

What’s wrong with low interest rates?

Interest rates are low, but is this a problem?  After all, in times gone by the worry was that rising interest rates killed off economic expansions. You know the story: inflation picks up as economic slack diminishes; central banks slam on the brakes; and recession follows. Since the global financial crisis, however, interest rates (and … Continue reading “What’s wrong with low interest rates?”

When smooth waters cause ripples

It is proving to be a healthy quarter of results for US banks and the outlook is fine, regardless of what might or might not happen about regulation. The banks have decent economic growth to thank for much of their own health. Higher interest rates have been good for bank lending and net interest margins … Continue reading “When smooth waters cause ripples”

New Dawn for India’s Solar Dreams

India isn’t a country you would associate with environmental stewardship. The Ganges River, an object of veneration for Hindus, is famously polluted; the country hosts 13 of the world’s 20 most polluted cities, according to the World Health Organisation; last year you could even see the smog hanging over New Delhi from outer space. Indeed, … Continue reading “New Dawn for India’s Solar Dreams”

Putting politicians on pedestals only leads to disappointment

It is hard to overstate the expectations resting on Emmanuel Macron’s shoulders. He has only just been elected and already he is being heralded as Europe’s saviour. But high expectations can easily drift into unrealistic ones. A little circumspection would better serve us all. Macron’s ascent is certainly remarkable. His party didn’t even exist eighteen … Continue reading “Putting politicians on pedestals only leads to disappointment”

Curve ball

Governments aren’t the only things proving to be less than strong and stable these days. Take the Phillips Curve, which describes the relationship between unemployment and wage growth. As unemployment falls, using up spare capacity in the labour market, it makes intuitive sense that wage growth starts to pick up. Given the key role played … Continue reading “Curve ball”