MSI

February 1, 2021

February 17, 2021

March 2, 2021

March 8, 2021

March 14, 2021

March 25, 2021

China’s merchandise sales to the U.S. increased last January to an annual rate of $470 billion. During the same period, U.S. sales to China nearly doubled from the year earlier at an annual rate of $155 billion. That may sound like an auspicious pickup of U.S. exports to China, but we still have a long […]

April 1, 2021

April 13, 2021

April 21, 2021

April 29, 2021

A quarter of last year’s China GDP growth of 2.3% is estimated to have come from the rest of a deeply depressed world economy. This year, nearly 2% of China’s economic growth of about 8% is expected to originate in its net exports. The U.S. will remain the largest single contributor to China’s stellar performance. […]

France has done it before. In May 2005, 55% of the French cast their ballots against the proposed EU Constitution on a voter turnout of 69%. But that was underestimating the EU elites. Four years later, they found a “workaround” (a fudge) in a Lisbon Treaty, to resuscitate the key provisions of a costly and […]

Recent American attempts to establish more productive U.S.-China relations hit a new impasse because Washington insisted on discussing Beijing’s well-known – and repeated ad nauseam -- red lines without bringing any new ideas that would be of interest to China. That’s what the world witnessed during a blistering on-camera confrontation during the meeting of top […]

President Joe Biden has been America’s distinguished public servant since January 1973. At the age of 30, he was one of the youngest senators in U.S. history. During 36 years, he held key posts in the U.S. Senate, including the chairmanship of the Foreign Relations Committee. Biden resigned from the Senate in 2009 to serve […]

One of Germany’s influential (conservative, and government-friendly) daily newspapers ran a headline last Tuesday that the French President Emmanuel Macron wanted to play the “EU’s first violin.” That says volumes about the French-German reconciliation, and the myth of the two-countries’ engine of the “European project,” a sort of mission impossible to transform a customs union […]

America’s key European allies seem unwilling to join Washington’s call for democracies to confront Russia and China. Germany says it does not need a “reset” in its relations with Russia. And, reflecting the views of its powerful business community, Berlin is clearly signaling that it won’t compromise €96 billion of its annual sales to China, […]

Fresh from a hollow U.S.-Russia summit in Geneva, and a failed attempt to round up European allies to confront Moscow and Beijing, the White House is reportedly planning to set up a U.S.-China summit on the margins of a G20 meeting in Italy next October. Washington’s obsession with summitry is a weird notion of national […]

Recent public statements of the U.S. Federal Reserve (Fed) that labor market indicators will play a prominent role in its future policy settings are nothing new. By its charter, the Fed is bound to aim at “maximum employment” and “stable prices.” Practical and doctrinal issues with this policy mandate are still hotly debated. Starting with […]

“(The German Chancellor Angela) Merkel will not be deciding who will live in Hungary” was a warning by the country’s Prime Minister Viktor Orban. Germany took that as a lèse-majesté of sorts at a time when Merkel was trying to rescue her disastrous open-door immigration policy in 2015 by dumping on the EU massive migrant […]

Systemic financial market changes in Western economies during the 1980s were routinely called “Big-Bang reforms.” That long, and still unfolding, process started in London and continued, in a much more radical fashion, in Paris, Frankfurt, Madrid, and many other European capitals to make possible the EU’s single market and the introduction of the common legal […]

Washington’s recent efforts to restore and invigorate close relations with Germany are an important part of a new architecture of Western world order. Accounting for one-fourth of the EU economy, and for nearly a third of the trans-Atlantic trade flows, Germany is an economic powerhouse that sets the pace to demand, output and employment in […]

The U.S. Federal Reserve (the Fed) is misleading the public with statements that sharply accelerating price increases (aka price inflation) in the American economy are due to temporary and reversible external shocks. The subtext here is that this undeclared form of taxation is not caused by serious errors of the Fed’s monetary policy. Don’t believe […]

“To be rich is glorious,” is a simple summary of dialectic materialism offered by China’s Paramount Leader Deng Xioping to a relentlessly prodding Mike Wallace during the CBS News “60 Minutes” interview in September 1986. Looking at his puzzled interviewer, Deng went on to amplify on his mirabile dictu by saying that “there is no […]

“The West messed up East Asia …” To this day, many economists and people from the political elite in that region believe that’s what the West (read the U.S.) did during the Asian financial crisis in late 1990s, without providing any proof or reason for such a colossal mischief. Many years later, I had to […]

A very strong 13% rebound of EU’s economic activity in the second quarter, after a 3% decline during the previous three quarters, is mainly the result of more relaxed sanitary limitations and a powerful support of an easy monetary policy. That surprisingly fast and vigorous response reflects a forward momentum in the four largest economies […]

Legions of greenback naysayers go back a long way. In the immediate post-WWII years, the Europeans were bitterly complaining that chronic dollar shortages (sic) were sapping the recovery of their war-ravaged economies. And when Washington moved to help with more liberal provisions of dollar liquidity, the French began adding up Uncle Sam’s debts to show […]

Continuing a long tradition of driving the global business cycle, America gave 1.6% of its domestic demand during the first half of this year to support economic activity in the rest of the world. America continued to buy more goods and services than it sells to its global trade partners. That is called a trade […]

The idea that the U.S. is withdrawing from the world and abandoning its key foreign policy objectives is manifestly false. Anybody capable of reading mainstream media can see that every day. There is a change, though. Gripped by binding fiscal and monetary constraints, the U.S. is just looking for more affordable, and – hopefully – […]

Japan is a big disappointment for China. In spite of incredible atrocities and material destructions Japan committed during its war with China between 1931 and 1945, Beijing accepted to talk about peace, friendship, trade and investments with its eastern neighbor in late 1970s. Over the following four decades, China became Japan’s most important export market […]

A strong recovery from the monetary union’s deep recession in the middle of last year has generated very little price inflation in labor and product markets. That now makes it possible to withdraw an exceptionally large monetary stimulus without compromising a gradual return to growth rates that are compatible with the economy’s long-term noninflationary potential. […]

With a bilateral trade volume of €586 billion, China last year edged out the U.S. to become the EU’s largest trade partner. That trend was significantly amplified in the first seven months of this year. During that period, the EU trade with China was running 7% ahead of its trade business with the U.S. The […]

After a violent clash in Himalaya’s Galwan Valley between Indian and Chinese border patrols in June 2020, large parts of India’s business community decided to boycott trading with China. In spite of that, China last year displaced the U.S. as India’s largest trade partner. India’s bilateral trade with China increased 5.5% to $86.4 billion, while […]

Bill Clinton got us into African, Balkan and East European quagmires, and Bush (W) finished it off with unwinnable Iraq and Afghanistan military adventures. Obama continued to struggle with that difficult legacy -- adding a Libya civil war of his own -- before experiencing an epiphany and telling the nation about it on June 22, […]

The first official estimate indicates that consumer prices in the 19 countries of the European monetary union rose last September at an annual rate of 3.4% -- marking a strong acceleration from minus 0.3% during the same month of 2020. Excluding energy prices, the inflation was a relatively tame 1.9%, given the fact that this […]

The outgoing German Chancellor Angela Merkel is a lucky lady. Despite presiding, during her 16 years in office, over the sinking fortunes of two European unions, she remains a media darling and a revered leader for most of her EU colleagues. The center-right union of German CDU/CSU parties she led lost the election with a […]

Putting the Covid-19 pandemic and the climate change at the center of the Rome’s G20 agenda was a diversion from the organization’s core concerns. A quick reminder will clarify that puzzling forum attribution. The G20 (an organization of world’s 20 largest economies) was created in 1999 as a talking shop of finance ministers and central […]

American lawmakers have taken a lot of mystery and guesswork out of the Federal Reserve’s interest rate policies. Public disclosure rules and Congressional testimonies now provide the information and the time horizon of a decision process about a fundamental variable driving key economic and political events in the United States. The interest rate we observe […]

Disastrous public finances, a relentlessly accelerating inflation, the sinking consumer confidence and a presidency struggling with falling approval ratings are all the U.S. media headlines. That the dollar is not getting a cheer is perhaps normal, because even well-informed and sophisticated New Yorkers would be hard put to tell you what the greenback was doing […]

Taiwan and the Ukraine are the most absurdly debated global casus belli. China does not need to invade its own province to protect the territorial integrity of internationally recognized One-China borders. Beijing has other means of doing that. And people irresponsibly and disingenuously egging on Taipei hotheads will not initiate a nuclear Armageddon in the […]

Compared to America’s 12.4% of GDP budget deficit for the fiscal year 2021, the euro area’s narrowing budget gap to 6.9% of GDP in this year’s second quarter looks like a paragon of virtue. Indeed, something to cheer about, because the monetary union’s deficit was nearly halved over the previous twelve months. Even the area’s […]

The U.S. and euro area inflation rates are high and accelerating, leaving no room for complacent and implausible forecasts of temporary and reversible price pressures. The U.S. Federal Reserve has come around to the view that the annual consumer price increase of 6.2% last October (4.6% corrected for food and energy prices) is taking place […]

Major East Asian economies are sound, well balanced and advancing at steady and sustainable growth rates. The data for the third quarter of this year indicate that those economies are growing in the range of 1.2% and 4.9% set by Japan and China, with Indonesia and South Korea in the upper part of that interval. […]

Official claims of “benign” and reversible price inflation dynamics in the U.S. and in the euro area are vacuous debating points among financial markets and short-term forecasters at the monetary authorities in Washington and Frankfurt. For the time being, markets are gun-shy and following the Wall Street’s old adage: “Don’t fight the tape …” – […]

Asia’s Regional Comprehensive Economic Partnership (RCEP) -- the world’s latest and by far the largest free-trade area -- enters into force on January 1, 2022. It consists of the ten countries of the Association of Southeast Asian Nations (ASEAN) plus China, Japan, South Korea, Australia and New Zealand. This important trade pact is the ASEAN’s […]

In the coming months, the global economic growth and employment creation will be driven by an exceptionally strong monetary and fiscal stimulation in the trans-Atlantic community. China will continue to be the main trade beneficiary of the turbo-charged Western economies. With an inflation rate of only 2.5%, Beijing will also have plenty of room to […]

The global demand for the Japanese currency has been on a steady downward trend ever since Tokyo chose in 2012 to invigorate its export-driven economy with an unending avalanche of yen liquidity. Over the last nine years, the yen has lost 35.4% of its trade-weighted value. Nearly one-third of that exchange rate loss occurred during […]

That is the key – and unassailable – tenet of monetary theory. The corollary is that the fiscal policy’s long-run impact on economic activity is zero, or even negative. The rejoinder, offered by the British economist, John Maynard Keynes, the proponent of government spending (to fill the void of the weakening household consumption, business and […]

To reassure Germans that the new European currency – the euro -- will be under Berlin’s control, Germany’s former finance minister Theo Waigel said at the time the euro was launched (January 1999) that “Der Euro Spricht Deutsch” (the euro speaks German). That was an arrogant swipe at fellow Europeans by a reunited Germany (October […]

Being the dollar’s main competitor, the euro does not have good press. Ill-informed financial market analysts continue to question the euro’s finality. They don’t understand that the European currency is the irreversible legal tender of an economic and political union weaved around a deeply integrated French-German policy making. Those analysts are now recommending developing economies’ […]

Economic historians know all about inflationary finance to pay for wars and power politics. In the post WWII period, French analysts argued that Anglo-American efforts to sustain their global dominance led to the subversion and death of the gold standard. That, they claimed, ushered in uncontrollable inflation engines – the gold-exchange standard, followed by the […]

Financial markets are being drawn into an intensifying whirlwind of information warfare with Russia and China. The alleged Sino-Russian “aggression” against the Western world order has not caused a sharply accelerating U.S. inflation with the exploding public debt and budget deficits. But that’s what the mainstream media are now peddling to “explain” America’s rising interest […]

After months of implausible assertions that an accelerating inflation was a “transitory and reversible” event, the U.S. and Eurozone monetary authorities have finally recognized that increasing price pressures were stronger and more deeply rooted than they thought. The implication of that radically revised inflation outlook is that American and euro area economies are now on […]

A legendary investor is now betting against the U.S. and the rest of world economy. Warren Buffet, a man presiding over a $714 billion fortune of Berkshire Hathaway, is holding cash because he finds nothing to buy -- after raising his wealth 26.8% last year. Many people will find Buffet’s market pessimism hard to take […]

Some of you might say that this is a strange – or downright wrong – policy position to take at a time when the country is facing accelerating core inflation pressures. But that’s what I think. Yes, I believe that the U.S. should manage inflation with specifically targeted structural measures, instead of solely relying on […]

Washington is now blaming America’s soaring inflation on rising energy prices caused by the war in Ukraine that started on February 24, 2022. The mainstream media agree, but Americans know that their large losses of purchasing power over the last twelve months have nothing to do with the Ukrainian disaster. Over in Europe, the splendors […]

“The war in Ukraine has rendered all election programs totally obsolete.” That’s the warning issued last Friday (March 18) by France’s former president François Hollande to put a new perspective on the country’s next month general elections. Most probably, China’s economic strategists would not disagree with that radical view when they take another look at […]

Democrats need three things – in order of importance -- to hold on to legislative and executive power in next November’s mid-term Congressional elections, and in the presidential contest in November 2024. One, the economy must stay clear of any major growth slowdown. Two, Donald Trump should be running again for the White House. Three, […]

“Do we want to destroy our national economy with our eyes wide open?” That’s the question asked by Martin Brudermüller, the CEO of BASF, a German owned world’s largest chemical company. His interview was prominently displayed for five consecutive days by Germany’s most influential center-right daily. The answer by the governing Green Party seems to […]

The Phoney War (aka “Drôle de guerre” in France and a “Sitzkrieg” in Germany) was a strangely quiet eight-month interval between the French and the British declaration of war against Germany on September 3, 1939, and the German invasion of France, Belgium and The Netherlands on May 10, 1940. Here is what that means, transposed […]

By selling last year $485.8 billion more than it was buying, the European Union acted as a huge drag on global economy. And with a $2.2 trillion in net foreign trade income over the last five years, the Europeans showed they could live well off their trade partners. But that’s only part of the damage […]

That area produces 40% of global GDP and accounts for half of world population. At a time when we are facing a depressing economic outlook for the trans-Atlantic community, it is pleasing to note that major Asian economies offer growth prospects ranging from 2% in Japan to a sizzling 8% plus in India and possibly […]

Since the U.S. announced its strategic rebalancing to Asia (aka “Pivot to Asia”) in 2012, China has pocketed a net income of $3.3 trillion on its American merchandise trades. China’s net exports have also greatly benefited from America’s recent economic recovery. After a marked slowdown in 2020, Beijing’s trade surplus with the U.S. increased 15% […]

Acts of Germany’s unconditional surrender signed in Reims on May 8, 1945, and in Berlin on May 9, 1945, have always been instruments of armistice rather than a lasting peace. The West’s tenuous alliance with the U.S.S.R. during the war was just a thinly veiled cover for a deep mistrust and hostility that led the […]

Based on data for the first quarter of this year, China’s trade with the 15 countries of Asia’s Regional Comprehensive Economic Partnership (RCEP) rose at an annual rate of 6.9% to a total of $440 billion. Over the same period, Japan, China’s most vocal Asian competitor, booked only $228.5 billion of merchandise sale transactions with […]

The accelerating inflation in the trans-Atlantic community is an unusually delayed reaction to long years of an extraordinarily excessive credit creation. But here we are. At the center of the unfolding economic crisis is a terminal unraveling of an unsustainable 78-years old global financial “arrangement.” The “arrangement” in question was an outgrowth of the Bretton […]

Those two Asian giants are in the top five of world economies. They account for 35% of world population and for one-fourth of global economic demand and output. Last year, China and India economies soared, respectively, at annual rates of 8.1% and 8.9%. Estimates for this year call for more modest growth rates. Still, India […]

The U.S. and euro area monetary authorities are facing an extremely difficult task of avoiding recessions while slowing, and reversing, their strong inflationary flareups. How they got themselves in that situation is a vacuous, blame-game argument. Suffice it to say that inflation is always, and everywhere, a monetary phenomenon. It follows, then, that inflations and […]

Washington’s China wooing is a long succession of “strategic ambiguity,” naivety, huge policy errors, and a current impasse dressed up at a NATO summit on June 28-30, 2022, as a “strategic competition” where Beijing presents a “challenge” to West’s “interests, security, and values” and seeks “to undermine the (West’s) rules-based international order.” A spectacular failure […]

Originally established by the trans-Atlantic community in 1999 to deal, at the ministerial level, with debt issues and financial stability, the G20 (i.e., The Group of Twenty) has served, since 2008, as an annual summit of global economic governance. That was supposed to be a final step in closing the gap left by the Bretton […]

Exhilarated by chasing Trump out of office, the victorious Democrats celebrated their control of legislative and executive power by offering an excessive and manifestly unaffordable fiscal stimulus, financed by an even more extravagant “free money” policy. Predictably, early signs of rising costs in tightening labor markets were blissfully ignored. And so was the relentless flareup […]

With inflation rates driven to two-digit territories by soaring energy and food prices, the U.S. Federal Reserve (the Fed) and the European Central Bank (the ECB) are still in very early stages of their belated and hesitant efforts to restore price stability in their economies. That is a very difficult policy process that inevitably leads […]

During the first and second quarters of this year, the U.S. economy declined at seasonally adjusted annual rates of -1.6% and -0.9%, respectively. That is a textbook case of an economic recession. Undeterred, the U.S. government is denying a recession, grasping for all sorts of red herrings to argue that an economy seriously eroded by […]

The European “sleepwalker” theorists are out. They want people to believe that nobody is responsible for the looming nuclear holocaust, but that, somehow, the world is just slipping toward the end of humanity. They are just parroting around the arrant nonsense of a “sleepwalking hypothesis” that supposedly led to World War I, causing 40 million […]

Foreign trade plays a very important role in supporting China’s economic growth. Last year, the country’s trade surplus contributed 2 percentage points to a strongly rebounding GDP at an annual rate of 8.1%. This year, a 10.4% increase in China’s foreign trade during the first seven months will also help to reverse the slowing economic […]

Looking at never ending financial crises should lead one to ask who is responsible for all that mayhem, with excessive price inflations, unstable economic growth, staggering public debt and the dollar’s eroding position as a reliable store of value? The answer that Democrats or Republicans take that responsibility by losing elections during major cyclical downturns […]

After eight years of negative interest rates and an average annual GDP growth of 1.3%, the European trade bloc is firmly on course of a recession induced by a virulent inflation. Negative interest rates are part of a history of monetary policy blunders in response to Germany’s resolve “to teach a lesson” to Southern spendthrifts […]

The six largest east Asian economies account for one half of global demand and output. With big domestic markets of 2 billion people – one fourth of world population – and increasingly free intra-regional flows of commerce and finance, this is a huge community whose public policy is genuinely devoted to peace and economic development. […]

There was a time, not long ago, when Nicolas Sarkozy and Angela Merkel (former French and German political leaders) successfully plotted the demise of Silvio Berlusconi, Italy’s longest serving post-WWII prime minister. And then, Italy’s promising former Prime Minister Matteo Renzi, a savvy political operator, a noted reformer and a feared opponent (with a nickname […]

The most recent direct investment flows to China provide an unambiguously positive answer. In the first eight months of this year, those investments came in at $138.4 billion, marking a 20% increase from the same period of 2021. Of particular importance is the fact that, during that interval, business investments in China from South Korea, […]

Various United Nations agencies (UNCTAD, IMF, World Bank) are unanimously forecasting a global economic recession and big problems for emerging and developing countries. It is certainly true that the unfolding cyclical contraction in the United States and in the European Union could set back economic development in Africa and Latin America. Chronic difficulties with poverty […]

America’s high and rising inflation is a serious indictment of its monetary policy. After decades of extraordinarily loose credit conditions, rising interest rates are now converting a “technical” recession into a downturn of unknown amplitude and duration. As a result, in addition to having caused losses of dollar’s real purchasing power, the monetary policy will […]

Operating in an economy where the foreign trade sector accounts for 88% of the GDP, Germany’s business community is firmly determined to defend its growing export and investment market shares in China and in the rest of a rapidly developing east Asia. That vitally important part of Germany’s national interest has been recently overshadowed by […]

More than half of U.S. third quarter economic growth came from private consumption as households drove their savings rate down to 3.3% -- the lowest reading in the last 17 years. Other growth sources, such as defense spending and export sales, are equally tenuous as a result of binding budget constraints and flagging external demand. […]

China has reached a point in its economic and political development that requires an important adjustment of America’s view of the world. The first step in that direction is acceptance of China as it is – and as it wants to be. Attempts to oppose China’s sovereign choices of society, and of its own future, […]

That’s how the leaders of a ten-country Southeast Asian Association (ASEAN) defined their development objectives during last week’s summit in Phnom Penh, Cambodia. And then, India’s Prime Minister Narendra Modi inaugurated last Tuesday his country’s 2023 G20 presidency with an appeal for universal unity: "One Earth, One Family, One Future." Delhi pledged to host 200 […]

The U.S.-led and underwritten crusade for a “rules-based international order” has been founded on the idea that the rest of the world would finance the venture by investing its savings in American debt instruments. That “deal” has produced a dollar-dominated world economy where the U.S. owed $16.3 trillion to its overseas creditors at the end […]

The world is now staggering through a growing confrontation of nuclear-armed sworn enemies. The humanity’s survival is in the hands of military officials working their emergency communication channels to prevent fatal errors and miscalculations. None of the main actors is backing down or calling for a negotiated and peaceful modus vivendi. All we hear is […]

Estimates based on the most recent data indicate that the growth of American and E.U. economies (41% of global GDP) will slow down from 1.9% this year to a sharp decline and a slow recovery in the next two years. That’s all one can say now because the trans-Atlantic recession is driven by energy and […]

Last Thursday, the European monetary authority raised its key lending rate by 50 basis points to 2.75% in a belated effort to tame an energy-driven inflation rate of 10%. Further rate hikes were also announced to nearly halve the inflation next year, and then bring it close to its medium-term target of price stability (about […]

Sporting bomber jackets and a raised glass of American beer, the newly elected Bill Clinton was hosting Japan’s young Prime Minister Morihiro Hosokawa, with a dire warning that Tokyo’s systematic and excessive trade surpluses on U.S. trades would not be tolerated – unless those surpluses were recycled in purchases of American assets, goods and services. […]

For the United States, incendiary encounters of American and Chinese naval assets in the South China Sea are “freedom of navigation operations” in international waters, but for Beijing they are unacceptable violations of its sovereignty and territorial integrity. Diplomacy has failed to resolve the issue of China’s contested maritime borders, forcing Washington to seek crisis […]

Sharply declining real disposable personal incomes and rising credit costs are driving the trans-Atlantic community – an estimated 42% of the global GDP – into a growth recession. Decades of an excessively fast credit creation and the recent flareup of energy and food prices have led to an accelerating inflation. The raging war in Europe […]

After massive U.S. hedge funds bets on China’s assets, the celebration of the Chinese Spring Festival – the Lunar New Year – moved uptown last Friday to the 86th Floor Observatory of the Empire State Building, with lanterns, blossoms, floral urns and traditional Chinese treats. A far cry from what China sees as a hostile […]

The most difficult problems facing the U.S. economy are physical constraints to the noninflationary growth of its demand, output and employment. Those physical constraints are the stock and quality of human and (physical) capital. They are also called factors of production which determine the boundaries of potential economic growth under conditions of stable prices. Here […]

At a time of a raging war in Europe and increasingly hostile environments in east Asia and in the Middle East, it is understandable that the American and European monetary authorities are gun-shy to beat inflation at the cost of declining output, jobs and incomes. Abandoning their ill-judged claims that accelerating inflation was a “temporary […]

Having unsuccessfully tried to drive a wedge between Russia and China, geopolitical strategists have now turned their attention to an enigmatic odd couple of the world’s largest democracy and a rapidly developing communist superpower. To that end, the Indo-Pacific region has been invented as a new geostrategic concept to include India, with clearly stated political, […]

Driving down America’s consolidating core inflation in the runup to an election year is a no-win scenario. That’s the story the gullible politicians don’t want to hear. But they will have to, because there is no way of escaping a growth recession after decades of unbalanced monetary, fiscal and foreign trade policies that led to […]

The meeting of the G20 finance officials in India last week is an ominous reminder that this potentially useful venue of international economic policy coordination is torn apart by irreconcilable ideological and systemic differences of major world powers. Disagreements ran so deeply that, once again, no customary joint communiqué could be issued. The Indian government […]

Some Asian archenemies are coming together, some are spoiling for the fight while diffident fence-sitters dread the economic and political consequences of having to choose sides. Despite deep-seated hostilities and contested territorial claims, Japan and South Korea showed signs this week that they were ready to settle their grievous legacies of occupation, hideous war crimes […]

The governing Democrats have opened a new chapter in the electoral cycle of the U.S. economy. High inflation, wobbly financial system, parlous public finances, slowing economy and far-flung proxy wars make them virtually unelectable. The only thing they have going for them are their weak and unappealing Republican opponents. Hence the Democrats’ apparent readiness to […]

Testifying last week in front of a hostile House Ways and Means Committee, the U.S. Trade Representative (part of the Executive Office of the President) made a startling statement that traditional trade policy instruments had become ineffective. As expected, China was at the center of policy concern as lawmakers kept blasting the government for failing […]

While the growth outlook for developed economies looks increasingly gloomy, forecasts for demand and output in emerging and developing Asian countries are constantly upgraded. The latest estimate puts Asia’s economic growth for this year at 5.3%, indicating vastly different business cycle dynamics compared with those in mismanaged and recession bound U.S. and European economies. China […]

Washington’s attempts to push inflation to the back burner is a manipulative move to stop monetary tightening. The priority now is a return to massive liquidity injections to prevent recession and systemic problems in the trans-Atlantic financial services industry. The outcome of that policy change will be a delayed, deeper and long-lasting recession, with a […]

With a sharply slowing economic growth, and a one-fifth of its population living under poverty line, Brazil is looking up to China as an export market and a source of investments to expand and modernize its resource rich economy. That was the key mission of Brazil’s President Luiz Inacio Lula da Silva during his state […]

With probably minor exceptions in Japan and in some E.U. countries, the entire burden of the G7 macroeconomic stabilization will fall on monetary policies. Traditionally, that is the preferred modus operandi because politicians find their way out by blaming inflations and declining economic growth on nominally independent central banks. The general public, and, sadly, a […]

The last week’s meeting of U.S. and China trade officials in Washington confirmed one more time that commerce and finance between the world’s two largest economies cannot make progress in the context of increasingly adversarial political and security relations. That also showed that the U.S. mantra of open lines of communication with China was no […]

With a brisk 7.2% GDP growth last year, India was running at twice the rate of the world’s largest G20 economies. And with a 6.1% growth in the first quarter of this year, India -- now the fifth largest world economy -- will be a shining example of economic performance when it hosts the G20 […]

A war with a nuclear armed China is an option no sane person would even contemplate. America’s current policy of “strategic and systemic competition” with China is potentially equally dangerous. It’s an adversarial relationship marred with inevitable security errors and miscalculations that could instantly lead to an irretrievably MAD (Mutually Assured Destruction) outcome. The alternative […]

America’s extraordinarily loose monetary policy continues to fuel excess demand, price inflation and financial asset valuations. That shows that raising the U.S. Federal Reserve’s policy interest rate – the effective federal funds rate – from 0% to 5.07% since January 2022 is just a way station in the process of restoring price stability. One could […]

Unable – and unwilling – to accept and respect each other’s red lines, the U.S. and China are urged to talk, talk, talk – and to keep all political, security and military lines of communication open and readily accessible. This initiative mainly comes from the U.S. That seems to be Washington’s way of crisis prevention […]

Pessimism about the course of public policies and leadership’s quality, weak economy, socio-political divisions, unstable alliances and multiple hybrid war precipices are unusually challenging issues to tackle while seeking the country’s highest office. Public opinion surveys show that an overwhelming majority (about 75%) of Americans believe the country is on a wrong track, the president’s […]

The monetary policies of the U.S. Federal Reserve and of the European Central Bank are data driven. Those two central banks are, therefore, part of a huge community of short-term economic forecasters. Hence the derisive comment that interest rate forecasts are “a dime a dozen.” The corollary is that reading stories about the timing of […]

At some point, historians will write about the dismal failure of generations of world leaders to heal the festering wounds, and to effectively deal with the WWII legacy of a profoundly divided global community. After eight decades of muddling through the widening East-West divide, mismanaging the Bretton Woods system of world economy, and squandering the […]

Economic research and the collective financial market wisdom agree: An American business cycle downturn is inevitable over the next twelve months.             Financial markets’ proposition is based on the yield curve analysis. Wall Street rainmakers get huge (six figure) salaries for producing a line that plots the yields (i.e., interest rates) of bonds of […]

The idea that the world connected through trade and technology is coming to an end is seriously at odds with evidence and common sense. That extravagant pessimism about the historical process of globalization is mainly a result of deepening security fault lines between the U.S.-led West and the developing world of Global South. A legitimate […]

In one of his expansive speeches, President Xi Jinping assured his audience that “China’s economy is an ocean …” I was often reminded of that moment while looking at vacuous claims that some cyclical or structural problems would sink the economy that is home to nearly one-fifth of humanity. China’s naysayers are impervious to the […]

An instrument of power is bound to break down in a community of sovereign nations pursuing irreconcilably hostile geopolitical objectives. The just finished G-20 summit in India showed – once again -- that “strategic and systemic rivalry,” sweeping sanctions, hybrid and proxy wars are incompatible with multilateralism, respect for different socio-political systems, peaceful coexistence, and […]

Current estimates show that the limping American economy will still make a trillion-dollar contribution to world’s demand and output this year and next. North America (Canada and Mexico), European Union and China are the largest beneficiaries of the U.S. foreign trade. In the first seven months of this year, those economies accounted for 67% of […]

After more than a decade of excessively loose policies, the U.S. monetary authorities (the Fed) decided early last year to “normalize” credit conditions and restore price stability. During that period, the policy interest rate – formally known as the effective federal funds rate -- has been raised from 0% to 5.33% at the close of […]

Economic and financial relations are always a mirror image of social and political interactions between governments or trading blocs. That state of affairs may not obtain at any particular point in time, but it always, and everywhere, ends up in a perfect correspondence between economic and political interests. The period of 2017 to 2022 of […]

Transition to a new world order was never going to be quick, smooth and easy. Acquired and long-held positions of power and privilege will not be given up without a long, costly and exhausting confrontation. American bankers see that much better than the Beltway’s political establishment. Despite toping Wall Street profit expectations and feasting on […]

Errors of monetary policy have established an inflation-recession reasoning about the growth patterns of American economy. The good part is that such reasoning explains the error and points the way to avoid it. The error stems from an old axiom of monetary theory positing that recessions and inflations are created by maintaining monetary restraint (stimulus) […]

Washington has been very successful in convincing China to participate in a flurry of high-level meetings and working group consultations while side-stepping fundamental disagreements on core red lines and world order issues. This weekend’s hottest media headlines are that American and Chinese top diplomats have agreed, “in principle,” about a summit meeting on the sidelines […]

Getting kudos from Wall Street is a very rare feat. But that unrivaled trading place conceded last week that the Fed won the bet on U.S. economy. Traders drove the S&P 500 in a breathless climb that accounted for nearly half of the year-to-date gain on the iconic stock index. The rest of the world […]

China’s long-delayed official announcement of a summit meeting on the sidelines of APEC proceedings in San Francisco November 11-17, 2023, speaks volumes about Beijing’s view of the bilateral relations between the world’s two largest economies. Apart from an obvious intention to make Washington appear as a supplicant, China’s official media thought there was nothing new […]

The best outcome of last week’s APEC (Asia-Pacific Economic Cooperation) meeting in San Francisco is that it produced enough of a consensus to come up with a joint statement. Some member countries apparently wanted to stay away from geopolitics and keep the agenda tightly focused on trade and economic development. That’s a significant departure from […]

Despite some 750 military bases in about 80 countries the U.S. is often accused by its European allies, anxious about American protection, of being “inward-looking,” “isolationist” and downright “selfish.” When Donald Trump ran, and won, on a slogan “America First,” Germans fearfully proclaimed -- “we are on our own” -- but spent nothing on defense, […]

Relations with the U.S. being stuck in a fiercely competitive mode, Beijing has been actively working to strengthen trade ties with ASEAN and the European Union. Those are China’s two largest trade partners. They accounted for 29% of Beijing’s total foreign trade during the first 11 months of this year. Over the same period, trade […]

The recently departed former Chinese Premier Li Keqiang knew what he was doing when he chose Germany in May 2013 for his first visit to Europe. Struggling to put an end to China’s smokestack industries and to leap into a new era of smart (IT-driven) manufacturing, Li knew that Germany was his best choice as […]

The G7 (major trans-Atlantic countries plus Japan) and the Global South (the developing world led by Russia, China and India) are pushing their confrontation beyond hybrid and proxy wars. Debilitating economic sanctions, massive supplies of financial support, arms, military instructors, battlefield intelligence, satellite guided attacks, political sponsorships and emphatic vows to destroy challengers of the […]

When the Japan-China Treaty of Peace and Friendship was negotiated in late 1970s, Japan’s Prime Minister Takeo Fukuda asked China’s leader Deng Xiaoping how they should deal with a contested territorial claim over a group of uninhibited islands (Diaoyu/Senkaku) in the South China Sea. Deng did not want that issue to hold up China’s economic […]

Jobs and incomes are America’s principal election issues. This time will be no different, although wars in Europe and in the Middle East, the chaos of illegal immigration and drug smuggling along the border with Mexico will register with American voters. The real election mover, however, will remain Reagan’s iconic one-liner that made all the […]

Almost two-thirds of American foreign trade transactions in the first eleven months of this year took place with friends and treaty allies. Canada and Mexico account for about one-third of the U.S. foreign trade business, and there is every reason to expect that those two countries will remain America’s largest trade partners – regardless of […]

America’s current monetary management is a bright spot in global economic affairs. Struggling with a horrendous legacy of errors that led to the 2008 financial crisis and the Great Recession, followed by a long period of subsequent extraordinary credit creation, the U.S. Federal Reserve (the Fed) is still trying to “normalize” its support to economic […]

There was no economic growth in the European monetary union last year. And, on current evidence, the outlook is for a much worse downturn in the months ahead. The euro area’s monetary policy cannot help. The core inflation of nearly 4% and unit labor costs of 5.5% offer no room for increasing supplies of cheaper […]

The world’s largest archipelago, consisting of 18 thousand islands and islets, is home to 278 millions of Indonesians and an economy that has grown at an average annual rate of 5% since the turn of the millennium. Over the same period, Japan’s economy lost its forward momentum under an increasing burden of unresolved structural problems, […]

Last Wednesday, Brazil’s G20 presidency opened up as a slugfest about global governance – a totally inappropriate agenda item for the world’s only economic forum. Predictably, a gathering of foreign ministers (sic) had nothing to say about the ailing developed economies and their systematic macroeconomic mismanagement. That, clearly, was not their brief. The only thing […]

Trade and investment flows between the U.S.-led West and the Global South – represented by the BRICS – are drying up in an increasingly direct, proxy and hybrid warfare. Ideological and political underpinnings to this epochal change of world economy stems from the U.S. assessment that its “rules based international order” is challenged by Russia […]

The economy is currently held together by a roughly neutral monetary policy that ignores inflation and monetizes an irresponsibly loose fiscal policy. The markets and the mainstream media are supporting the idea that we shall somehow muddle through the next elections in early November. After that – we shall see. Some might even say, like […]

Ever since China’s paramount leader Deng Xiao Ping began his relentless drive for economic development in late 1970s, Beijing has been offering a de-risking masterclass on trade and incoming foreign direct investments. And the long march from sweatshops and smokestacks to productive agriculture, hi-tech manufacturing, modern infrastructure, “anti-access, area denial (A2AD)” defenses, moon shots and […]

“We don’t do sanctions …” was a calm response, with a disarming smile, of an ASEAN (an association of ten Southeast Asian nations) official to western demands to punish and expel one of its member-countries allegedly violating a democratic code of statecraft. Americans and Europeans were also startled when ASEAN refused to yield to western […]

It will take quite a bit of revenue raising and spending cuts just to stop the progression of America’s current $1.7 trillion budget deficits -- accounting for 6.3% of GDP. No political party contending for power in next November’s elections has made this national emergency part of its campaigning platform. But the strictly nonpartisan Congressional […]

A peaceful and prosperous East Asia is coalescing around a steadily growing Chinese economy and the region’s determination to foster cooperation and amity. ASEAN (ten Southeast Asian countries) and China now represent one-fourth of the world population and one-fifth of the global GDP. That huge and increasingly compact economic area follows its own business cycle […]

Military confrontations unfolding in Europe, Middle East and East Asia all come down to one crucially important bilateral relationship. Unable to put an end to those rapidly spreading wildfires, Washington is turning to Beijing for cooperation while leveling allegations that China is using “non-market” practices to manipulate the world system of commerce and finance. That, […]

Widespread market comments that a 5.3 percentage points interest rate differential favoring dollar assets is the main source of the yen’s intractable weakness is a typical simplification of Japan’s enduring and deep-rooted economic problems. The first symptoms of Japan’s deteriorating economic outlook emerged when its public debt as a share of GDP doubled to 80% […]

The wars in Europe and in the Middle East, ongoing military confrontations in the South China Sea and nuclear capable ballistic missile firings on the Korean Peninsula are all part of a global fight between West’s “liberal democracies” and “autocratic societies.” There is nothing “hybrid” or “proxy” here. It’s a shooting war -- with nukes […]

With a focus on Global South, the war in Central Europe, trade embargoes and sanctions, the Group of Seven -- the West’s key economic and political forum -- will deliberate in its standard framework of “liberal democracies vs. autocracies” during the meeting in Italy on June 13 – 15, 2024. Put simply, that will be […]

During an Asian forum last week American and Chinese defense ministers met to discuss their strategic and security problems. And with no progress on any of the issues, they decided to continue to talk and establish contacts between their field commanders to prevent “misunderstandings” and "miscalculations” that could lead to war in the South China […]

Caught up in a war with Russia, and in increasing trade frictions with China, the current European leaders have ignored deteriorating economies at their own peril. Policies to restore the E.U.’s peace and security are nowhere in sight, and the broadening trade conflicts with China could easily get out of control. Epochal socio-political changes are […]

Barring major security problems in the weeks and months ahead, jobs and incomes will stay at the top of people’s concerns in the run-up to November 5 elections. Opinion polls show that those two economic variables, and the quality of economic management, have already determined the voters’ election choices. All that is very different from […]

The role of the dollar as a linchpin of the international monetary system is one of the most debated issues in the post-WWII global economy. Agreements on world trade and finance, adopted at Bretton Woods in July 1944, quickly proved inadequate. The system of fixed (but adjustable) exchange rates, and the fixed price of gold, […]

None of the currently active war theaters is nearing a peaceful conclusion. Sadly, they are becoming intractably expanding bloodbaths or uncompromising fields of confrontation. It has been decades now that the Middle East war ceased to be synonymous with Arab-Israeli fighting. The Iran-Iraq war in the 1980s lit up the fuse that led to American […]

A badly mismanaged U.S. economy is now going through a cyclical adjustment marked by an extremely expansionary fiscal policy, price rigidities and trade flows in a world split along increasingly bellicose security fault lines. That is the general setting in which the policy making committee of the American central bank (the Fed) has to make […]

That’s the reaction I got in late 1980s from one of my Wall Street contacts. Armed with a reasonably good knowledge of economics, money and banking theory and some common sense, I argued that the U.S. Federal Reserve System (the Fed) had no reason to cut interest rates to please Wall Street traders. At this […]

During most of the last decade, there was a perfect correspondence between the annual averages in the growth of world economy (3.4%) and the global trade transactions (3.4%). Last year, that relationship broke down: the world economy grew 3.3% while the volume of world trade declined 3% to a total of $31 trillion. The fact […]

Washington has blissfully ignored decades of systematic and excessive trade deficits on its merchandize trade with China. And during that time, Beijing has tirelessly lectured Washington to embrace the mantra of the “win-win cooperation” instead of a “zero sum game” of another era. Here are some numbers to show what’s at stake. Over the last […]

A 25-basis points interest rate cut this week is in the bag. But, as always, financial markets’ greed is pushing for more, prodding the Fed to “go big” -- with another quarter point bonanza. Traders have already taken some key U.S. money market rates in that direction. Will the Fed cooperate? Anything can happen in […]

And when that moment comes, Washington and Beijing will not be reinventing the wheel of a peaceful and productive modus vivendi. The two countries’ presidents talked -- and apparently agreed – about all those key issues during their meeting in Bali, Indonesia, on November 14, 2022. The same bilateral problems were reviewed, and updated, during […]

An excessive and totally unnecessary U.S. interest rate cut last September has stored a problem of price instability for the next American government facing a runaway public debt, huge budget deficits and unprecedented challenges to world peace and security. The Fed’s procyclical move is a major policy error. A credit easing of the magnitude usually […]

Trade has been the foundation of a European peace project after Germany led Europe twice during the last century to largest losses of lives the humanity has ever known. A fledgling customs union of six nations, founded by the Treaty of Rome on March 25, 1957, followed a successful European Steel and Coal Community – […]

After a 6% economic growth last year, this part of the developing world -- consisting of China, India, Indonesia, Malaysia, the Philippines, Thailand and Vietnam -- remains the fastest growing segment of global economy. And that will also be the case this year. Despite an expected slowdown to a 5.5% growth, the developing East Asia […]

A key currency open economy, with a third of its GDP generated in the external sector, cannot rebalance aggregate demand on a steady and sustained growth path by restricting its participation in global commerce and finance. America’s incoming administration is facing excessive budget deficits (8% of GDP), a runaway public debt ($36 trillion, 123% of […]

Barring an inflation flareup, or an unlikely sudden weakness of the U.S. economy, the next interest rate change should wait until the meeting of the Federal Reserve’s (Fed’s) policy setting committee on March 18-19, 2025. That would give enough time to incoming legislative and executive authorities to decide on the future course of fiscal policy […]

Cutting U.S. budget deficits, maintaining price stability and running a steadily growing economy is impossible under conditions of intensifying military operations in Europe, widening Middle East hostilities and dangerously rising tensions in East Asia. Europe is the best place to start untangling that Gordian knot. And in this epochal confrontation between the U.S. and its […]