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Currency War

Atlanta Fed Sees Far Weaker Than Expected Q1 GDP

by John Rubino on February 1, 2016 · 7 comments

Another Monday, another set of “surprisingly” bad economic numbers. A few representative headlines: China manufacturing prices decline for 18th straight month Oil prices fall 5% on bad China data, OPEC uncertainty Global factories parched for demand, need stimulus Junk bonds suffer a rare negative return in January US consumer spending softens, savings hit 3-year high […]

Well that didn’t take long. Two weeks of falling share prices and the European and Japanese central banks caved. First the ECB promised new stimulus — which the markets liked — and then the BoJ upped the ante with negative interest rates — which the markets loved. Here’s a quick summary from Bloomberg: Central Banks […]

Earlier today, articles started appearing about the rise of France’s right wing, anti-immigration National Front party in recent polls. This wasn’t a surprise given the ascendancy of formerly fringe political movements in most European states. See, for instance, Portugal Is Potentially A Very Big Deal. Still, that a formerly (and not so long ago) neo-Nazi […]

The old saying “When elephants fight, the grass gets trampled” captures perfectly the dilemma of the world’s non-superpowers. From Brazil to Thailand to non-eurozone Europe, the currency war raging between the leading economies is creating collateral damage. Here’s Bloomberg on the war’s European theater: Europe’s Quiet Currency War Besets Nations Losing Inflation Grip From Stockholm, […]

Bye Bye Brazil

by John Rubino on September 4, 2015 · 41 comments

For about a decade there, Brazil was the Latin American country that got it right. Under a socialist but apparently reasonable government they kept their budgets under control, managed the population shift from farm to city, and developed some efficient export industries that brought in plenty of hard currency. The Brazilian real held its own […]

A month ago China’s stock bubble was bursting and Greece was imploding. Yet the US Fed, in a violation of both headline sentiment and common sense, was still promising to raise interest rates come September. Fast forward to this week. China’s surprise currency devaluation has sent the global markets into a tailspin, but rather than […]

China About To Make History — Again

by John Rubino on August 9, 2015 · 7 comments

Any discussion of China has to open with the now-widely-understood fact that the numbers it reports are not to be trusted. Knowing this makes it easy to dismiss claims of high and consistently-on-target GDP growth, for instance, as a combination of government-directed borrowing and spending, and simple fabrication. But how to handle negative numbers? When […]

After nearly three decades of stagnation, Japan in 2013 went all-in, ordering its central bank, the Bank of Japan, to buy pretty much every bond on the market with newly-created yen. The BoJ’s balance sheet — a rough proxy for the amount of money it has created and dumped into the economy — soared at […]

China: Major Devaluation Coming

by John Rubino on July 27, 2015 · 8 comments

The whole “market economy” thing is turning out to be a little trickier than China’s dictators expected. To set up the story: After the 2008 crash the country borrowed about $15 trillion (an amount that dwarfs the US Fed’s quantitative easing programs) and spent the proceeds on history’s biggest infrastructure program. This pushed up the […]

Was Greece Always Part Of The Plan?

by John Rubino on July 19, 2015 · 14 comments

Since its inception, critics of the eurozone have been pointing to its incomplete nature — everyone uses the same money but keeps their own national budgets and tax regimes — and speculating that this “fatal flaw” would doom the system. Other observers, however, gave the euro’s creators more (Machiavellian) credit and assumed the initial version […]

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