Neoclassical economics has led us into a cul-de-sac. Although alternatives do exist, neoclassical thought has been so deeply entrenched into our finance ministries, economics departments, banks and other financial institutions, until a widespread belief has now materialised: that fictions like “perfect markets” and “efficient market hypothesis” are real.
German Chancellor Angela Merkel has agreed to increase the firepower of the eurozone’s emergency rescue funds, despite a history of strong opposition and resistance to the fund’s expansion plans.
According to German newspaper Der Spiegel, Merkel and German finance minister Wolfgang Schaeuble have abandoned their resistance to combining the two eurozone rescue funds, despite opposition from German voters that it would increase the country’s liability.
U.K. Prime Minister David Cameron is currently embroiled in an embarrassing nationwide scandal, after a top fundraiser for his political party was caught on tape trying to solicit for donations through promises of “direct access” to the national leader.
Asia’s three largest economies are moving closer to signing a trilateral investment deal which could soon pave the way for a wider free-trade agreement.
The investment deal, which needs to be signed into effect, is the first legal economic treaty between the three East Asian giants, despite a history of tension that has often slowed integration processes.
China’s central bank, the People’s Bank of China, signed a $31 billion currency swap agreement with their Australian counterparts on Thursday, as the Chinese government continues its push to establish the yuan as a global reserve currency.
Under the terms of the agreement, businesses from both countries would able to settle trade terms in their respective local currency, significantly reducing the cost of trade across borders.
Federal Reserve chairman Ben Bernanke has told Congress that American banks are able to withstand financial shocks from Europe despite the US banking system’s high exposure to Europe.
Testifying on Capitol Hill alongside Treasury Secretary Timothy Geitner, Bernanke sought to allay fears from policymakers of the need for another U.S. financial system bailout, should the European debt crisis spiral out of control.
Bernanke said the recent stress tests conducted by the Fed found that U.S. banks are able to weather another recession.
The US Internal Revenue Service (IRS) has set up a new department within the agency, which aims to crack down on corporations that have been moving their profits from country to country in order to lower their tax bills.
The world is afraid. Increasing concerns about a military conflict between Israel and Iran has created a “Fear Premium”, which has seen the price of oil soar to nearly $125 per barrel – even as the global oil supply remains plentiful and demand appears to have lowered. Now, as the drums of war grow louder, oil prices could rise in a way that will most likely cause a US and global growth slowdown or, worst still, another outright recession.
China’s biggest banks are set to report record level of profits for the fifth consecutive year. However, analysts are warning that rising bad debt and non-performing loans may soon trigger a series of worrisome defaults.
The world’s most profitable bank, the Industrial and Commercial Bank of China, and the four other Chinese banking titans, are expected to report their fourth-quarter net income by the end of this month, and analysts are expecting a profit increase of 15 percent.
In the next 20 years, China will face serious economic challenges: Rising inequality, environmental degradation, external imbalances, as well as an aging society, all present major risks to China’s future. With the nation heading for an inevitable slowdown, can its government provide long-term solutions to its short-term problems?
