Category: Political Economy

Obama Budget Harnesses Cheap Multiplier Effect


Obama’s $4 trillion budget depends on lower inflation, as the president hopes more spending on the middle class will stimulate demand and growth throughout the economy.

The new budget includes a number of initiatives that drive spending slightly higher than the prior budget, while assuming that the Consumer Price Index will rise 1.4% in 2015, down from the 1.7% increase in 2014. The budget assumes inflation will reaccelerate in 2016, where prices will rise by 1.9% before reaching the Fed’s target rate in 2017, when prices expect to rise 2.1%.

Geopolitical Shifts in the Face of Low Oil Prices


In a documentary that aired recently on the Canadian Broadcasting Corporation’s popular The Fifth Estate program, an allegory of Vladimir Putin was presented. The wily Russian president was described growing up in a shabby St. Petersburg apartment, where he would often corner rats. 

Now, punished by low oil prices and Western sanctions against Russian incursions in Ukraine/ Crimea, Putin is himself the cornered rat. Many wonder, and fear, what he will do if conditions in Russia become increasingly desperate. 

Syriza Wins! – Does Greece?


As the demonizing of Syriza gives way to post-electoral analysis, its victory appears anti-austerity, not anti-EMU.  Politics makes for strange bedfellows, and a small conservative party, Independent Greeks, have agreed in principle to form a coalition.  The period of political uncertainty that was a clear risk will not materialize, with a quick swearing in of a new government.  

Why Fracking Bans Promote Higher Unemployment and Lower Incomes


The federal equalization program envisioned by Canada had the best of intentions. However, consequences have pushed two provinces to turn away from the most sensible economic opportunities for their areas, reducing job opportunities, incomes, and tax revenues. Two examples of this issue are the ongoing ban imposed on hydraulic fracking in Nova Scotia, and the recently imposed ban on fracking in New Brunswick.

Politics Joins the ECB’s Monetary Policy Party with Elections in Greece and Italy


It is not about the data today though there has been a slew of data that in other times would have moved the market.  The flash HSBC China PMI reported above expectations at 49.8 from 49.6 in December, but still shows that the manufacturing sector of the world’s second largest economy is slowing.  Eurozone’s flash PMI was also a bit better than expected, consistent with 0.2%-0.3% quarterly GDP.  

Don’t Write Off Hong Kong’s Umbrella Movement Just Yet


The Hong Kong Umbrella Movement, the city’s first significant and sustained extra-legal protest, provided a number of valuable lessons for the future.

Japan’s Tattered Political Opposition to the LDP a Blow to Democracy


Prime Minister Abe’s decision to call a snap election paid off big time for him and for the Liberal Democratic Party (LDP). The LDP and its coalition partner the Komeito emerged from the election with its two-thirds majority in the lower house intact. In addition, Prime Minister Abe came out of it certain of reelection as LDP president next September and having every reason to believe that he will remain at the helm of the Japanese government until 2018.

The Promise of Something Better if Abenomics Works


The 2014 Japanese election result was no more or less than a victory for the political status quo. All it did was reaffirm the Liberal Democratic Party’s (LDP) predominance and the opposition parties’ collective weakness.

Understanding the Dismal Life in North Korea


For time immemorial, North Korea has been one of the world’s most tight-lipped nations in the world. It is one of the last few countries still under communist rule. The Democratic People’s Republic of Korea (DPRK) formally established in 1948 amid the chaos that had ensued after the end of the Second World War. Its history is dominated by its supreme leader and first president, Kim Il-sung, also known for having shaped its global political affairs for nearly five decades.

What Happened to Japan’s Political Opposition?


Last Sunday’s general election in Japan has returned Prime Minister Shinzo Abe’s Liberal Democratic Party (LDP) and its ally, the New Komeito, with a two-thirds majority in the lower house of the Diet. That the LDP would get a majority of seats was expected, as various polls had shown since Abe unexpectedly announced snap elections in November. Now the LDP holds 291 seats and New Komeito 35 in the 475-seat lower house.