Category: Economics

Sino-U.S. Strategic & Economic Potential


Behind the 7th Sino-US Strategic & Economic Dialogue

In the recent S&ED between China and the U.S, the most intriguing developments involved not just the formal bilateral progress, but also those undercurrents that illuminate the potential future of the dialogue.

After months of diplomatic friction over the South China Sea, both sides acknowledged an easing of tension in the run-up to the seventh meeting of the Sino-U.S. Strategic and Economic Dialogue (S&ED).

Pushing the Monetary Policy Envelope


In a recent address to the Economic Society of Australia, the Reserve Bank Governor Glenn Stevens hit the nail on the head when he remarked, “monetary policy alone can’t deliver everything we need and expecting too much from it can lead, in time, to much bigger problems.”

What was particularly important in this address was the (implicit) suggestion that the answer goes hand in hand with another question; what should we expect from fiscal policy?

Does the Fed or BOE Blink First and Raise Rates?


A week ago, the UK reported a largest than expected rise in average weekly earnings for the three months through April.  The 2.7% rise is the highest in four years.

It followed a revised 2.3% increase in March, originally reported at 1.9%.  Recall that last June average weekly earnings had actually fallen by 0.2% on a three-month year-over-year basis.

Staying the Course on Freedom of Navigation


In a recent East Asia Forum article, Sam Bateman criticised a decision by the US Secretary of Defense Ashton Carter to develop military plans for more assertive freedom of navigation (FON) operations in the South China Sea (SCS). Specifically, Bateman asserts that ‘there are significant legal, operational, and political risks involved with these operations’. While there may be risks associated with conducting FON operations in proximity of China’s man-made islands in the SCS, much of what Bateman states in support of his position are misplaced.

After Ten Meetings on Greece, Surely the 11th Time Will be the Charm


Another make it or it break it deadline passes in Greek negotiations and the markets take it in stride.  Indeed, the relatively calm markets conceal the angst below the surface.  After nine Euro group meetings since the election of the Syriza government failed to put any closure on the issue, it is little wonder that they failed the tenth time.  Now European officials reportedly are set to give Greece a “take it or leave it” ultimatum.  However, the heads state summit today and tomorrow is key. 

Some Likely Suspects That May Be Using the Fed’s Custody Service


The Federal Reserve offers custodial services for foreign central banks.  Precisely which countries use these services is confidential as is who patronizes a commercial bank’s services.

There was a large draw down in the Treasuries the Fed holds for foreign officials beginning last September and running through mid-March.  During this period, the Fed’s custody holdings of Treasuries fell from $3.024 trillion to $2.974 trillion (see the Great Graphic from Bloomberg).

Australia’s Diplomatic Efforts Regarding the South China Sea Need Vigor


Despite its calls for ‘more Jakarta and less Geneva’, the Abbott government appears to have fallen into a passive approach to multilateral diplomacy. Moreover, as tensions in the South China Sea ratchet up, the Australian public deserves to know more about why their regional foreign policy may suddenly be lurching onto a military track. If this is the case, the government needs to show that diplomacy has been seriously tried and found wanting. However, the evidence is that multilateral diplomacy has not been pursued with the required vigour or intensity.

The EU Summit is on Deck with New Optimism for Greece


The US dollar has been trending gently higher against the major currencies over the past 3-4 sessions but is trading heavier today.  It is largely within yesterday’s trading range.  The two main drivers remain Greece and the US economy.

The Export-Import Bank: Should It Stay or Should It Go?


Last summer, a debate over the historically ho-hum Export-Import Bank of the United States (aka Ex-Im Bank) simmered over and went mainstream, as a growing chorus of Republicans and many companies demanded its dismantling.

Like many government agencies, the Ex-Im Bank – which provides financing for exports of American goods and services – requires reauthorization every so often. In addition, during the 2014 debate to do just that, some major US businesses petitioned Congress to terminate the bank, while others fought fiercely to preserve it.

The Global Leadership Demand/Supply Imbalance


In our rapidly changing world, new global contradictions are emerging rapidly. Today, the biggest global contradiction is this: the demand for global leadership has never been greater but the supply seems to be diminishing.