Central Banking Deflowered
After the European Central Bank announced on May 9 that it would buy the government bonds of Mediterranean countries experiencing severe fiscal strains, critics complained that the Bank had "lost its virginity."
China's FX Reserve Accumulation Slowdown in Q2 Due to Weak Euro, Hot Money Outflows
However, the official announcement by PBOC to de-peg with US dollar on June 20 may have contributed to renewed expectation of RMB appreciation, contributing to a decline in money outflow to about US$ 4.2 bn in June.
Fiscal Fibs and Follies
Across the globe, the debate over fiscal consolidation has the distinct sound of two sides talking past one another.
China's Slowdown, U/ L Shaped Recovery, and Roubini's "Double Dip Days"
A scenario in which US growth slumps to 1.5%, the eurozone and Japan stagnate, and China's growth slows below 8% may not imply a global contraction, but, as in the US, it will feel like one. And any additional shock could tip this unstable global economy back into full-fledged recession
So, as the optimists' delusional hopes for a rapid V-shaped recovery evaporate, the advanced world will be at best in a long U-shaped recovery, which in some cases – the eurozone and Japan – may be long enough to stretch into an L-shaped near-depression. Avoiding double dip recession will be difficult.
China's Growth Revised down and Policy Growth-Supportive
In light of moderation in growth and receding inflationary pressures, we believe the policy cycle has troughed and will likely turn growth-supportive by 4Q10.
Chinese Leaders Hint Economic Policy Softening
"there is visible softening in policy tone as we have predicted, and the emphasis is placed on 'maintaining policy stability' as the policy theme going forward."
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