The current economic crisis demands solutions. But while most government officials, central bankers, and Wall Street economists have subscribed to the standard Keynesian formula for recovery, the potential results from this step simply paper over much of the real problems to the economy and create an illusion of normalcy. (Attached Video: Raghuram Rajan on Risks to the Global Economy)
The world faces a nasty credit problem. Far too often, companies and households with access to credit tend not to need it; while those who do, are not able to receive it. If this situation is left unattended, it might lead to a gradual, and then accelerated, renewed deleveraging of the economic system. How then can we unclog the global economy’s choked credit pipes?
Japan faces a significant population crisis over the next century, said the Japanese Health, Labour and Welfare ministry on Monday, after government forecasts estimated that the population would shrink by nearly a third of its current size by 2060.
A quick preview of the key economic events for the upcoming week:
China is back to business after the conclusion of the first of their weeklong Golden Holidays. With the conclusion of Davos, the latest buzz word seems to be the call for greater economic and social equality. Looking ahead to the week of reports and meetings, the sixth-part of the EU Summit could offer more clarity over the fate of the unified currency.
The International Monetary Fund will conduct a review to determine whether the Renminbi remains “substantially undervalued” in the global currency market, said an IMF spokesman last Friday, after a war of words emerged between the China and the US over the appropriate valuation of the Yuan during the recent World Economic Forum.
China’s success story is one that would certainly go down the chapters of economic history. While the West firefights its debt crisis, many fail to realize that China too has her own fair share of debt. The overinvestment theory has gained greater attention from academics and politicians alike, and China is now looking to boost internal consumption as its engine of growth. However, unless Beijing has new tricks to cover its losses, her bad debt will put downward pressure on consumption growth.
The Japanese Finance Ministry has announced the nation’s first-ever annual trade deficit since 1980, after the March tsunami-earthquake disaster and the strong value of the yen last year saw a massive upswing in Japan’s energy imports while exports took a major hit.
In total, Japan’s annual trade deficit for 2011 was 2.49 trillion yen ($32 billion), said a report by the finance ministry, with imports up by 12.0 percent from 2010 while exports fell by 2.7 percent.
The Year of the Dragon could be a challenging time for Asian countries as uncertainties – from within and without the region – are growing rapidly. As such, a calm, sensible, and prudent approach is needed to ensure Asia’s steady economic and development transformation.
Natural disasters are inevitable, but at every level we have the power to ensure that they do not become unnatural tragedies. According to a recent report released by the World Bank and the United Nations, an ounce of prevention in planning for disasters is worth a pound of cure. So prevention pays, if done right. And that means getting incentives right.
The Big Mac Index is one of the most popular, but informal, ways of measuring global purchasing power parity. By comparing the cost of a Big Mac sold at a McDonald’s in two separate countries, one can supposedly measure whether a nation’s currency is currently under-or-over valued.
