Political Economy

Global Political Developments Take Center Stage

The major central banks have placed down their markers and have moved to stage left.  There are the late-month high frequency data, which pose some headline risks in the week ahead.  The focus for most investors will be on several political developments.

Japan's LDP could Use Some Competition

For close to 40 years after 1955, the Liberal Democratic Party (LDP) dominated Japan’s competitive party system. Opposition parties were not able to mount a successful challenge to LDP rule at the national level, but they had an important impact on policy and the political process. Japan had one dominant party but not a one-party system.

Do the Capital Markets have a Political Limit?

In our age of disparity, it may be easy to accept that all time is not equal.  Touch a hot surface; time seems to move slowly.  Time doing an enjoyable activity goes by lickety-split.  

Another inequality of time is inflection points.  These are non-linear jumps, breaks in time series or investors’ reaction function--how they respond to news.  Is bad fundamental news good for stocks and bonds?  Is a stand pat Fed bad for the dollar?  Is easing by the BOJ positive or negative for the yen?

Eurozone Finance Ministers to Iberia: No Fines for You

The Eurozone finance ministers have accepted the EC's recommendation that Spain and Portugal not be fined for their fiscal excesses.  A few weeks ago, the EU Commissioner for Economic Affairs, Moscovici explained that punitive actions would strengthen anti-EU sentiment.  However, that consideration did not prevent the EU from threatening to cut off part of the European Structural and Investment (ESI) funds for next year.

Women Running for High Office, this One in Tokyo

On 31 July, just over 11 million voters in Tokyo will be asked to return to the ballot boxes to vote for a new governor. This will happen just three weeks after the conservative Liberal Democratic Party (LDP) government under Shinzo Abe was returned to power in the upper house.

Fiscal Stimulus Questions Force Abe's Hand

As uncertainty over Japan's fiscal stimulus roiled the yen and domestic equities, Prime Minister Abe was forced to announce his fiscal intentions earlier than he initially intended.  The JPY27 trillion (~$265 bln) package.  

The details are far from clear, which may help explain why the dollar is in the middle of the two yen range (~JPY104.65-JPY106.55).  Note the high for the week was set on Monday near JPY106.70.  An unspecified part of the spending will be included in fall supplemental budget, which Japan regularly introduces.