Finance & Economics
Finance & Economics
Fair Observer's analysis of important economic and financial issues, events and trends in global markets and the world economy.
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By Trevor CohenBrazil has not only taken a leading role in Latin America but continues its economic rise globally, already leaving behind well-established western economies. Background Just five years ago, the economy of the UK was more than three times larger than that of Brazil. But by 2011, the Brazilian economy had surpassed the UK as the world’s sixth largest. Over the next three years, Brazil is set to overtake France. By 2030, it is predicted that Brazil’s economy will eventually rise above Germany and Japan. In the last ten years, 40mn poor Brazilian’s have joined the middle class, the minimum wage has risen by 60%, malnutrition and infant mortality are down to 73% and 45%...
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360° Analysis / China / EU / Finance & Economics / Africa / AsiaChina’s economic relation with Africa is forcing the EU to rethink its strategy towards the continent. China and the European Union: Relations and Perceptions with Africa Sino-African trade relations are becoming stronger by the day - this is now an indisputable fact. However, because there is a discrepancy between their interests and positions, the concerned parties all view and evaluate this fact very differently. The Chinese government believes “that this new type of Sino-African strategic partnership relation is the result of the passing of the torch of traditional Sino-African friendship and, in accordance with Chinese and African basic mutual interests, conforms to...
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By Gunnar BeckThe German Constitutional Court passes a judgment to support Chancellor Merkel’s position on the European Stability Mechanism Treaty but the Bundesbank opposes European Central Bank’s unlimited bond buying programme. As I predicted in the Wall Street Journal in July,the German Constitutional Court last week deferred to the German government and approved the European Stability Mechanism (ESM) Treaty subject to minor qualifications. Since the passing of the judgment, markets and politicians throughout the euro zone have been in a jubilant mood. Even the German ambassador in London let down his guard when, in an interview with The Guardian newspaper, he boasted that there...
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Conspiracy theory or legitimate threat? Solomon Appiah says that loopholes in the global financial system exist and need to be taken seriously. Countries have long used Economic Warfare to meet national interests by employing commerce and shipping tactics like blacklists and blockades. One could even argue that policies like structural adjustment programs and inequitable international trade policies fall under the definition of Economic Warfare. Today, with the battlegrounds shifting from the physical to the digital, Economic Warfare is used to exploit loopholes in the global financial system. For instance, in a 2008 electronic bank run the US economy was drained of $550 billion within just...
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In his first term, President Obama has sustained the policy of “creative ambiguity,” mixing firm criticism with calm engagement. While talk of a 'G2' may have been overblown, the Washington-Beijing relationship may now be the world's most important bilateral relationship. As China continues to grow, some have called for a harsher policy; Vice-Presidential candidate Paul Ryan told a crowd in Ohio on August 16th that “President Obama said he would stop [economically unfair] practices...Instead, they are treating him like a doormat.” The problem in evaluating American foreign policy is that the 'grading criteria' is hard to define. Some may state...
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By Andrew Sheng and Geng Xiao China must balance institutional innovation with orderly reforms to preserve the integrity of its economic foundations and emerge from the forthcoming slowdown in good shape. During three decades of favorable global economic conditions, China created an integrated global production system unprecedented in scale and complexity. But now its policymakers must deal with the triple challenges of the unfolding European debt crisis, slow recovery in the United States, and a secular growth slowdown in China’s economy. All three challenges are interconnected, and mistakes by any of the parties could plunge the global economy into another recession. To assess the...
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By Yu Yongding Faced with an economic slowdown, China can no longer enjoy both higher growth and efficient structural adjustment. It must choose between them. China’s annual GDP growth slowed to 7.6% in the second quarter of 2012, down from 8.1% in the first quarter and the lowest growth rate since the second quarter of 2009. The newly released growth data may have dispelled fears of a hard landing for China, but have nonetheless prompted many to argue that China must stimulate its economy further to guarantee 8% annual growth. Since early 2010, in order to contain inflation and property bubbles, the Chinese government has tightened monetary policy. As a result, in June inflation fell...
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By Sanjay SatheHow Technology can be used to curb unemployment in the US. The sea of joblessness hindering a recovery by the US economy is even deeper than many realize. Long-term unemployment is running at historically high levels, and until we get more Americans back to work, we are unlikely to see real recovery. Fortunately, we have at our disposal technologies that can help. All we have to do is use them. History tells us that the deeper a recession the stronger the recovery, but it has been more than three years since the end of the most-recent recession, and the American economy continues to languish. Two statistics shed light on why: The first is Total Unemployment. While US unemployment is...
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By Gunnar BeckGunnar Beck argues that the European Stability Mechanism represents a clear breach of both of the EU Treaties and the German Constitution. The European Stability Mechanism (ESM) is the permanent rescue fund that may grant loans to struggling euro zone governments by issuing bonds. These bonds are guaranteed collectively by the euro zone members, with Germany assuming the largest potential liability. The ESM is currently subject to legal challenges in the German Constitutional Court and in the European Court of Justice. For political reasons, neither Court is likely to kill the bailout fund. However, a closer look at the small print of the ESM Treaty suggests that in legal terms both...