Higher oil prices tend to cause numerous social and economic problems. However, some countries have been able to cover up these problems through a variety of financial techniques. But with oil prices continuing to climb, can the economy continue to adapt to these prices?
Prof. James Hamilton of University of California recently wrote a post called Thresholds in the economic effects of oil prices. In it, he concludes:
The US Federal Reserve’s third round of quantitative easing, or QE3, has many observers arguing that the effects on risky assets could be greater than in previous rounds. But, despite the Fed’s commitment to aggressive monetary easing, QE3’s effects on the real economy and on US equities could well be smaller and more fleeting.
The European Union is expected to meet later this week and both Spain and Greece are expected to top the agenda of the two-day meeting held in Brussels. This week also, China reports its Q3 GDP numbers and early estimates suggest the world’s second largest economy may have grown at a rate of 7.4 percent, slightly slower than its 7.6 percent growth rate in Q2.
Monday, October 15
In the aftermath of its disastrous invasion of Iraq back in 2003, the U.S. has learnt critical lessons on the consequences of intervention, which has led to the emergence of a new foreign policy doctrine based on ‘reality’. As demonstrated by its actions in Libya, Syria and possibly Iran, the U.S. now appears to have entered a period in which it has moved from military domination to more subtle manipulation; and more importantly, they have begun to allow events to take their course.
The Indonesian government is set to omit the English language as a subject from primary school education as part of a curriculum overhaul to come into effect next year, reported the Jakarta Post on Thursday.
According to Deputy Education and Culture Minister Musliar Kaslim, the move was necessary to allow students to master the Indonesian language first before learning other foreign languages.
China will only stand to “lose out” by boycotting this week’s global economic meetings in Tokyo, said International Monetary Fund Managing Director Christine Lagarde today.
Lagarde made the comments today, after two senior Chinese financial officials cancelled their trip to Tokyo amid a territorial dispute with Japan.
Tokyo is host to a series of global economic meetings held this week, including the IMF, the World Bank as well as the G7.
Global rating agency Standard & Poor’s warned on Wednesday that India still faced a “one-in-three” chance of a credit rating downgrade within the next two years, despite last month’s blitz of new economic reforms to boost the sharply-flagging economy.
European banks may need to sell as much as $4.5 trillion in assets through 2013, if political leaders fail to quell the current fiscal crisis, said the International Monetary Fund in its latest Global Financial Stability Report on Wednesday.
In order to argue that we will not see a sharp slowdown in Chinese growth, it is not enough to claim that some expert or institution has predicted that Chinese growth will not slowdown. Neither can we hold on to the argument that China has enough savings in its coffers to bail itself out of a crisis. Nor can we assert that Beijing leaders cannot tolerate growth below 8 percent, so of course growth will not drop below 8 percent. As greater evidence for the bear camp surfaces, China bulls need stronger justifications for their positions or risk losing credibility.
An industry survey has found that almost half of Wall Street employees are looking forward to higher bonuses this year.
A survey by eFinancial Careers has found that 48 percent of Wall Street workers are anticipating higher bonuses this year. That’s an increase from last year, when the survey found that 41 percent believed their bonuses would jump.
