Japan-style deflation in Europe getting harder to dismiss

February 13, 2014

To most people, the idea of falling prices sounds like a good thing. But it poses serious economic and financial risks – just ask the Japanese, who only now finally have the upper hand in a 20-year battle to drag their economy out of deflation.

A week before emerging-market turmoil, a prescient exchange on just how much the Fed cares

January 30, 2014


The last seven days has been a glaring example of fallout from the cross-border carry trade. That’s the sort of trade, well known in currency markets, where investors borrow funds in low-rate countries and invest them in higher-rate ones. Some $4 trillion is estimated to have flooded into emerging markets since the 2008 financial crisis to profit off the ultra accommodate policies of the U.S. Federal Reserve, Bank of Japan, European Central Bank and the Bank of England. Now that central banks in developed economies are looking to reverse course and eventually raise rates, that carry trade is unraveling fast, resulting in the brutal sell-off in emerging markets such as Turkey and Argentina over the last week.

Why are US corporate profits so high? Because wages are so low

January 24, 2014

U.S. businesses have never had it so good.

Corporate cash piles have never been bigger, either in dollar terms or as a share of the economy.

Ireland: bailout poster child, but hardly textbook

January 23, 2014

Amid the euphoria surrounding Ireland’s removal from junk credit rating status, it’s easy to get swept along by the consensus tide of opinion that the Emerald Isle is the “poster child” for euro zone austerity.

Corporate responsibility: it’s time to start investing those record profits and cash piles

December 3, 2013

Corporate profits and cash piles have never been higher. But it’s not just an economic imperative that firms get spending and investing, it’s their social and moral responsibility to do so.

Beware the bias in euro zone forecasts (again)

October 29, 2013

Next time you ask an economist a question about the euro zone, be sure to enquire where their head office is based.

Fed doves strike back

October 4, 2013

Now that Washington’s circus-like government shutdown has put a damper on hopes for stronger U.S. economic growth going into next year, dovish Federal Reserve officials again appear to have the upper hand in the way of policy commentary.

Why is the Reserve Bank of India so quiet on the rupee?

August 23, 2013


When nobody’s listening, sometimes it pays to shout from the rooftops.

Based on the rupee’s daily pasting, the Reserve Bank of India might do well to look to the European Central Bank’s strong verbal defense of the euro just over a year ago.

Obama’s second chance to reshape the Fed

August 7, 2013

Lost in the bizarre Yellen vs. Summers tug-of-war into which the debate over the next Federal Reserve Chairman has devolved, is the notion that President Barack Obama is getting a second shot at revamping the U.S. central bank.

A Marshall Plan for Greece

July 30, 2013

The spectacular failure of “expansionary austerity” policies has set Greece on a path worse than the Great Depression, according to a study from the Levy Economics Institute of Bard College.