Political Economy

The London Mayor Carries the Day


Most prospective prime ministers would be mildly embarrassed if a boost to their chances made financial markets plunge. However, Boris Johnson is doubtless gratified that his backing for Brexit led to the pound’s biggest one-day fall since the aftermath of the financial crisis. Sterling had barely flinched when cabinet ministers including Michael Gove and Iain Duncan Smith made their own interventions a day earlier.

Eastern Europe's Geopolitics Goes Underappreciated


The great British geographer Halford Mackinder invented the term “geopolitics” over 100 years ago. He painted a grand vision of international relations that revolved around one fear: dominance of what he called the “Heartland” of Eurasia. Mackinder believed the road to dominance ran through Eastern Europe. His ideas have remained influential ever since, for as long as the West has concerned itself about the impact of Eurasia on world affairs.

EU not Wanting to Give PiS a Chance


ECB President Draghi made clear at yesterday's press conference that new risks have materialized and the central bank's job to reaching its mandate is far from over. Current efforts may not suffice to achieve its legal prescribed mandate. Monetary policy will be reviews and reassessed at the next meeting in March, when new staff forecasts will also be available.

When Housing Policies Go Bad


Lack of affordable housing is a serious policy concern in many countries. In large prosperous cities such as London, New York, Beijing, or Tokyo, the affordability crisis is particularly acute. In these cities, households often live in excessively expensive and crammed spaces. Homeownership remains an unachievable dream for many.

Building a Bigger Budget Deficit


Christmas came early for Congress this year as politicians from both sides of the aisle came together to pass – by wide margins – a US$1.8 trillion package of tax cuts and new spending.

At year-end, Washington seemed awash in a spirit of holiday cooperation with the president praising new Speaker Paul Ryan. However, does the bipartisan approval of the budget deal really mean that Democrats and Republicans have learned to play together nicely in the Congressional sandbox?

Definitely not.

When Political Risk Trumps Economic


The international media spent 2015 criticising South Korean President Park Geun-hye’s government and its policies, and the criticisms are visibly increasing in frequency. The topics range from history textbooks to excessive use of force by riot police, but they share one theme: serious concern for South Korean political democracy.

The U.S. can Ill Afford a Divided Japan-South Korea


When ‘unthinkable’ events happen, they can change the course of history. The bilateral agreement reached by South Korea and Japan over ‘comfort women’ on 28 December 2015 was one such ‘unthinkable’ event.

South Korea had few incentives to resolve an issue that allowed it to exercise the moral authority of victimhood. In addition, Japan was not shy about expressing its frustration with its neighbour’s criticism of Tokyo’s handling of past wrongs.

So how did they reach an agreement, and what does it mean?

Meanwhile, Congress Battles Among Themselves


The focus of most investors is the rate decision by the Federal Reserve tomorrow.  Since the central bank completed its asset purchase program at the end of last year, a rate hike has been understood as a matter of time.