Expert Zone
Straight from the Specialists
How QE3 changes commodity prices
(The views expressed in this column are the author’s own and do not represent those of Reuters)
On Sept. 13, the U.S. Fed announced the QE3 program whereby it purchases mortgage-backed securities at $40bn per month with no time limit. It also pushed out guidance on keeping a low funds rate to mid-2015 from late 2014.
Officials also maintained a strong bias toward further easing with the labour market, the key determining factor on whether there will be further monetary easing. If employment does not improve, then the Fed is open to more easing to help lower the unemployment rate.
UBS has been bearish all year, on the view that capital outflows out of emerging markets would force companies there to run their businesses for cash and to destock commodities. Until last week’s QE announcement, we had planned to hold that view until credit stress rose sufficiently in the United States to raise deflationary pressure and then to force QE.
Bashing China won’t fix U.S. economy
(The views expressed in this column are the author’s own and do not represent those of Reuters)
Both ends of the political spectrum seem to be competing to be tougher on China economic issues. They’re both wrong.
What if Greece exits the euro zone
(The views expressed in this column are the author’s own and do not represent those of Reuters)
While the idea of a Greek exit from the euro zone has long been rejected by politicians and deemed nothing more than a “tail risk” by most investors, there has been a clear shift in opinion after the Greek election in early May failed to form a new government. The repeat election on June 17 is therefore critical to the country’s future in the euro zone and to financial markets worldwide. If Greece fails to form a new government, or forms one that rejects its bailout plan with official creditors, the probability of an exit would rise significantly.
Scary oil
(The views expressed in this column are the author’s own and do not represent those of Reuters)
Today’s fragile global economy faces many risks: the risk of another flare-up of the euro zone crisis; the risk of a worse-than-expected slowdown in China; and the risk that economic recovery in the United States will fizzle (yet again). But no risk is more serious than that posed by a further spike in oil prices.
Global Economics: When China is not just China
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The People’s Republic of China’s (PRC’s) relationship with Iran receives a good deal of attention. As the U.S. considers how to stop Iran’s nuclear weapons program short of military action, the PRC is considered vital in ensuring economic sanctions are effective. But it has been difficult to win Chinese cooperation in applying sanctions. One mistake the U.S. may have made is treating China as a unified entity.
Fallout of recession in euro zone
(The views expressed in this column are the author’s own and do not represent those of Reuters)
It will not be before February that the euro zone GDP numbers are out. The available information so far indicates the economy is already in recession. This will have serious consequences for all countries, including India.
There is no place like home
(Paul Donovan is a Managing Director and Global Economist at UBS. The views expressed in this column are the author’s own and do not represent those of Reuters)
Most economists believe that nearly everything in this life can be reduced to an economic explanation.
Too many questions, no convincing answers
(Nipun Mehta is an award-winning private banker with many years of experience across Asia. The views expressed in the column are his own and not those of Reuters)
If one were to evaluate global events of the last four years dispassionately, the subprime mess in the U.S. and the imminent debt default by Greece (and four other countries to a lesser extent) and the resultant crisis in the euro zone have virtually held the global economy to ransom.
Asia and the euro crisis
(Paul Donovan is a Managing Director and Global Economist at UBS. The views expressed in this column are the author’s own and do not represent those of Reuters)
The euro should not exist. More precisely, the euro should not exist in its current form, with its current membership.
Two problems, one strategy for both RBI and the Fed
(The views expressed in this column are the author’s own and do not represent those of Reuters)
The Reserve Bank of India and the U.S. Federal Reserve were confronted with two different problems but used the same monetary strategy for solution. Neither succeeded.
