The Great Debate UK

from The Great Debate:

China risks overcooking the economy

Wei Gu-- Wei Gu is a Reuters columnist. The opinions expressed are her own --

While China has been outspoken in expressing concern about the United States printing too much money, those worries might be better focused at home. No country beats China when it comes to effective monetary easing.

Beijing has scrapped lending quotas, adopted a loose monetary policy and kept interest rates at a four-year low to boost liquidity and promote growth. The policy has worked. China has lent out more money in the first four months of this year than the whole of 2008. Money growth in China is up more than 25 percent this year, versus about 10 percent in the United States.  Click here for a related graph.

Beijing's "monetary emissions" will have major consequences, and China might suffer from inflation before other countries in the world. The flood of liquidity that has been injected will almost certainly overwhelm the country's seemingly indestructible overcapacity. History has shown that China can have inflation even during times of severe overcapacity, such as in 2008.

So far, China remains in a honeymoon period. Cheap money is sloshing about but thus far it has only generated asset price inflation -- the sort of inflation that investors like. Meanwhile consumer prices are still falling -- by 1.4 percent in June versus the same period last year. Factory gate prices were down 7.2 percent.

Shareholder confidence vs. value investing

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Brendan Woods- Brendan Wood is Chairman of Brendan Wood International, a global intelligence advisory firm. Recently, BWI published the World’s TopGun CEOs as ranked by 2500 institutional investors, which provides insight into the executives in whom shareholders feel the greatest confidence. The opinions expressed are his own. -

The Brendan Wood International’s panel of 2500 institutional investors suffered through last year’s markets believing value would somehow prevail. Those value investing “diehards” indeed died hard.

Latvia: Apocalypse (not quite) now . . .

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Morten Hansen

-Morten Hansen is head of the economics department at the Stockholm School of Economics in Riga. The opinions expressed are his own.-

Latvia, with its 18 percent year-on-year economic decline, ruthless budget cuts to meet the demands stated by the IMF-EU bailout package and recurring rumours of devaluation, may be the most written about country in the world right now, at least on a per capita basis.

“Green growth” strategy viable for African economy

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michael_keating -Michael Keating is director of the Africa Progress Panel. The opinions expressed are his own.-

After a decade of solid progress Africa is now facing the daunting task – at a time of economic crisis – of maintaining stability, economic growth and employment, addressing food security and combating climate change. No country on the continent is escaping the impact of volatile fuel and commodity prices, the drop in global demand and trade.

from The Great Debate:

Bernanke’s deficit warning helps Obama

obama-- James Pethokoukis is a Reuters columnist. The views expressed are his own --

Sorry, Larry Summers. It's looking more and more likely that you're going to be stuck in the West Wing for the duration.

See, if your boss fails to reappoint Ben Bernanke as Federal Reserve chairman come January, it would be a public betrayal worthy of the television reality show "Survivor." For President Obama has no greater ally: Bernanke is truly the gift that keeps on giving.

The economy: reasons to be miserable

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Laurence Copeland- Laurence Copeland is a professor of finance at Cardiff University Business School. The opinions expressed are his own. -

Is the crisis over yet?

In the last 3 months, the Dow and the FTSE have each risen by about 25 percent, the Standard & Poor’s 500 by a third. House prices appear to be stabilising in the UK. Stress-tested and backed by seemingly unlimited government funding, the banks are lending again (if only to each other), so that 1-month libor is down to only 0.3 percent.

GM: Chapter 11 or bust

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David Bailey- Professor David Bailey works at the Coventry University Business School and has written extensively on globalisation, economic restructuring and industrial policy, with particular reference to the auto industry. The opinions expressed are his own. -

GM declared itself bankrupt on Monday in one of the largest bankruptcies in U.S. history, in an attempt to seek protection from creditors.

Savers must start becoming investors

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david-kuo_motley-foolthumbnail- David Kuo is director at The Motley Fool. The opinions expressed are his own. -

The Bank of England Monetary Policy Committee decided to leave interest rates unchanged at 0.5 percent in May. This came as no great surprise given that the Central Bank has already slashed interest rates to a level where further cuts would have made no discernible difference to the cost of money.

from The Great Debate:

The recovery will feel familiar: lousy

James Saft Great Debate -- James Saft is a Reuters columnist. The opinions expressed are his own --

The good news that the United States cannot keep contracting the way it has been is not to be confused with a return to robust expansion, a point financial markets eventually will grasp.

Consumers, the mainspring of the U.S. economy, will see the cash from government stimulus slip through their fingers but will still face very ugly personal balance sheets and a brutal job market. Their party is not going to get started again for some time.

Germany’s political and economic phoney war

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paul-taylor– Paul Taylor is a Reuters columnist. The opinions expressed are his own –

Germany is becalmed by a political and economic phoney war five months before this year’s most important European general election. But a lack of real economic debate now risks prolonging the political stalemate and delaying much needed reforms.

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