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Archive for 15. Januar 2020

Democratizing the ECB

Posted by hkarner - 15. Januar 2020

Barry Eichengreen is Professor of Economics at the University of California, Berkeley, and a former senior policy adviser at the International Monetary Fund. His latest book is The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era.

Recent tensions within the European Central Bank’s Governing Council have underscored the need to manage disagreement better. The status quo, whereby the president presents a policy decision as a consensus, after which one or more Governing Council members may issue a dissenting statement, makes everyone look silly.

AMSTERDAM – The European Central Bank is undergoing a changing of the guard: a new president, a new chief economist, and two new Executive Board members. And the ECB’s new leadership is facing a contentious year in 2020.

For starters, former ECB President Mario Draghi’s last policy meeting was marked by disputes over quantitative easing and the president’s role in decision-making, underscoring disagreement within the Governing Council (comprising the Executive Board and national central bank governors) about monetary strategy. Should the ECB retain its point target for inflation but make that target symmetrical, in contrast to the present “below but close to 2%”? Or should it abandon all hope of coming close to 2% and settle for 1.5%?Then there is the assertion by Draghi’s successor, Christine Lagarde, that the ECB should focus on climate change, even though the issue is not part of the central bank’s mandate (and even though monetary policy is not an obvious instrument for tackling it).It is timely, therefore, that the ECB has launched a comprehensive review of its policy strategy.

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Financial Markets’ Iran Delusion

Posted by hkarner - 15. Januar 2020

Nouriel Roubini, Professor of Economics at New York University’s Stern School of Business and Chairman of Roubini Macro Associates, was Senior Economist for International Affairs in the White House’s Council of Economic Advisers during the Clinton Administration. He has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank. His website is NourielRoubini.com.

A restrained reprisal by Iran following the assassination of its top military commander has led markets to conclude that the latest threat to the global economy has been removed. But just because Iran and the United States have so far avoided a full-scale war does not mean that markets are out of the woods.

LONDON – Following the United States’ of Iranian Quds Force commander Qassem Suleimani and Iran’s initial retaliation against two Iraqi bases housing US troops, financial markets moved into risk-off mode: oil prices spiked by 10%, US and global equities dropped by a few percentage points, and safe-haven bond yields fell. In short order, though, despite the continuing risks of a US-Iran conflict and the implications that it would have for markets, the view that both sides would eschew further escalation calmed investors and reversed these price movements, with equities even approaching new highs.

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Protecting Trade

Posted by hkarner - 15. Januar 2020

Raghuram G. Rajan, former Governor of the Reserve Bank of India, is Professor of Finance at the University of Chicago Booth School of Business and the author, most recently, of The Third Pillar: How Markets and the State Leave the Community Behind

Manufacturing jobs have been moving from advanced to emerging economies for decades, but only recently has the challenge posed by emerging economies fueled a broader political response. Elites who long ignored the problem are finally feeling the competitive pressure themselves, and have responded in the most cynical way possible.

CHICAGO – Toward the end of the last decade, globalization – the lowering of barriers to cross-border flows of goods, services, investment, and information – came under severe pressure. Populist politicians in many countries accused others of various economic wrongs, and pushed to rewrite trade agreements. Developing countries have argued for decades that the rules governing international trade are profoundly unfair. But why are similar complaints now emanating from the developed countries that established most of those rules?

A simple but inadequate explanation is “competition.” In the 1960s and 1970s, industrialized countries focused on opening foreign markets for their goods and set the rules accordingly. Since then, the tide has turned. Emerging economies, especially China, got a lot better at producing goods; and the old rules dictate that developed countries must keep their markets open to the now-more-productive producers from elsewhere. Den Rest des Beitrags lesen »

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Trump’s Poodle

Posted by hkarner - 15. Januar 2020

Boris Johnson: Replace Iran nuclear plan with ‚Trump deal‘, says PM

The PM has said the Iran nuclear deal should be replaced with a „Trump deal“.

Boris Johnson said he recognised US concerns the 2015 deal was „flawed“, but there had to be a way of stopping Tehran from acquiring nuclear weapons.

„If we’re going to get rid of it then we need a replacement,“ he told BBC Breakfast. „Let’s replace it with the Trump deal.“

His comments came as the UK, France and Germany triggered a dispute mechanism in the deal after violations by Iran.

There are growing fears for the future of the 2015 Joint Comprehensive Plan of Action (JCPOA), which was abandoned by the US in 2018.

Iran has suspended all limits on its production of enriched uranium, which can be used to make reactor fuel but also nuclear weapons. It has said it is responding to sanctions reinstated by the US.

In a joint statement, the three European powers said Iran was not „meeting its commitments“ and it was referring the issue to the body which enforced the agreement to try and ensure Tehran returned to compliance as soon as possible.

„We do this in good faith with the overarching objective of preserving the JCPOA,“ it added.

‚Need a replacement‘

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