Category : Currency Markets

(FT) Wolfgang Münchau–Europe puts future at risk by playing it safe

…look where Greece has ended up after five years of crisis resolution. It has had one of the worst performances in economic history; yet we have just concluded an extension of the same policy.

Can this be sustainable? The pragmatists in Europe’s chancelleries say they can roll over loans indefinitely at very low interest rates. Economically, this is the equivalent of a debt writedown; yet politically it is easier to deliver because you do not need to recognise losses. The equivalent statement in a military conflict would be: if you renew a ceasefire often enough, you end up with peace.

This type of argument is not only immoral and dishonest. It also does not work. While you play this game of ex­tend-and-pretend, the real economy implodes: austerity has caused a meltdown in income and employment. Monetary policy mistakes caused a fall in eurozone-wide inflation rates that made it impossible for Greece and other periphery countries to improve the competitiveness they lost in the early years of monetary union.

If the EU deals with Ukraine in the same way it dealt with Greece, you can expect to see a parallel development in a few years.

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Posted in * Economics, Politics, * International News & Commentary, Credit Markets, Currency Markets, Defense, National Security, Military, Economy, Euro, Europe, European Central Bank, Foreign Relations, Greece, Politics in General, Russia, The Banking System/Sector, Ukraine

(Reuters) China cuts rates again in face of weak demand, deflation risk

China’s central bank cut interest rates on Saturday, just days before the annual meeting of the country’s parliament, in the latest effort to support the world’s second-largest economy as its momentum slows and deflation risks rise.

The central bank said the 25 basis point cut in the benchmark interest rate to 5.35 per cent – its second cut in just over three months – and a 25 basis point cut in the benchmark saving rate to 2.5 per cent would be effective from Sunday.

“The focus of the interest rate cut is to keep real interest rate levels suitable for fundamental trends in economic growth, prices and employment,” the People’s Bank of China (PBOC) said in a statement on its website.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Asia, China, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Foreign Relations, Globalization, Politics in General

Negative Mortgage rates? In Europe, Bond Yields and Interest Rates Go Through the Looking Glass

At first, Eva Christiansen barely noticed the number. Her bank called to say that Ms. Christiansen, a 36-year-old entrepreneur here, had been approved for a small business loan. She whooped. She danced. A friend took pictures.

“I think I was so happy I got the loan, I didn’t hear everything he said,” she recalled.

And then she was told again about her interest rate. It was -0.0172 percent ”” less than zero. While there would be fees to pay, the bank would also pay interest to her. It was just a little over $1 a month. But still.

These are strange times for European borrowers, as if a wormhole has opened up to a parallel universe where the usual rules of financial gravity are suspended.

Read it all from the NYTimes Dealbook.

Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Anthropology, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Denmark, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, History, Personal Finance, The Banking System/Sector, Theology

(FT) Washington urges eurozone leaders to compromise with Athens

The Obama administration is pushing eurozone leaders to compromise more with Athens as fears grow that a protracted stand-off could damage the global economy, say senior EU and US officials.

The US lobbying comes amid mounting concern in Brussels and Washington about the hardline stand taken by some eurozone governments, particularly Germany, that Greece must press on with budget-cutting commitments made under its existing €172bn bailout regardless of last month’s election, which brought anti-austerity party Syriza to power .

“This is a conversation we’re having with people,” said a senior US official involved in the talks.

“There isn’t a special initiative. I don’t think our attitude has changed but what’s changed is that suddenly the situation in Greece is looking more problematic.”

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Posted in * Economics, Politics, * International News & Commentary, America/U.S.A., Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Foreign Relations, Politics in General, Theology

(FT Editorial) Syriza’s electoral win is a chance to strike a deal

It is easy to see why Syriza put debt repudiation at the heart of its electoral campaign. John Paul Getty once opined that “if you owe the bank $100, that’s your problem; if you owe the bank $100m, that’s the bank’s problem”. Greece’s predicament may ultimately force creditors to the negotiating table. To service its debt burden would require Greece to operate as a quasi slave economy, running a primary surplus of 5 per cent of GDP for years, purely for the benefit of its foreign creditors. Even the IMF has dropped hints in favour of some debt forgiveness.

But Greece’s EU creditors have equally strong reasons for refusing. Caving to Syriza’s demands would come at a high political cost, particularly for Germany’s Angela Merkel, who is harried by the eurosceptic AfD on her right. Other struggling countries would find their own radical parties emboldened by Syriza’s success. No country deserves to live beyond its means indefinitely.

Back in 2011, Greece posed an existential threat to the eurozone. Today, Berlin and Frankfurt are no longer as frightened by the prospect of Greece leaving the single currency. Yet for the Greek people this would be a catastrophe: a giant economic step backwards and a blow to living standards just as severe as any endured under austerity.

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Posted in * Economics, Politics, * International News & Commentary, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Foreign Relations, Greece, Politics in General, Theology

Predictions suggest Greece's radical left-wing Syriza party is 1 vote short of absolute majority

The leader of the left-wing Syriza party Alexis Tsipras has said Greece is “leaving behind disastrous austerity”, after his party claimed victory in the country’s general election.

And the 40-year-old told jubilant supporters the “Troika” of the country’s lenders “is finished”.

He was speaking after the Greek Prime Minister Antonis Samaras, who heads the conservative New Democracy party, conceded defeat to Mr Tsipras.

Partial election results suggest Syriza has secured 36.5% of the vote, compared to 27.7% for the New Democracy party.

Read it all from Sky news.

Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Foreign Relations, Globalization, Greece, Politics in General, Theology

(Project Syndicate) Making Sense of the Swiss Shock by professors Markus Brunnermeier & Harold James

The SNB was not forced to act by a speculative run. No financial crisis forced its hand, and, in theory, the SNB’s directorate could have held the exchange rate and bought foreign assets indefinitely. But domestic criticism of the SNB’s large buildup of exchange-rate reserves (euro assets) was mounting.

In particular, Swiss conservatives disliked the risk to which the SNB was exposed. Fearing that eurozone government bonds were unsafe, they agitated to require the SNB to acquire gold reserves instead, even forcing a referendum on the matter. Though the initiative to require a fixed share of gold reserves failed, the prospect of large-scale quantitative easing by the European Central Bank, together with the euro’s recent slide against the dollar, intensified the political pressure to abandon the peg.

Whereas economists have modeled financial attacks well, there has been little study of just when political pressure becomes unbearable and a central bank gives in. The SNB, for example, had proclaimed loyalty to the peg just days before ending it. As a result, markets will now hesitate to believe central banks’ statements about future policy, and forward guidance (a major post-crisis instrument) will be much more difficult.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, History, Politics in General, Switzerland, The Banking System/Sector, Theology

(PS) Raghuram Rajan–Is the Global Economy Bracing for Stagnation?

As 2015 begins, the global economy remains weak. The United States may be seeing signs of a strengthening recovery, but the eurozone risks following Japan into recession, and emerging markets worry that their export-led growth strategies have left them vulnerable to stagnation abroad. With few signs that this year will bring any improvement, policymakers would be wise to understand the factors underlying the global economy’s anemic performance ”“ and the implications of continued feebleness.

In the words of Christine Lagarde, the International Monetary Fund’s managing director, we are experiencing the “new mediocre.” The implication is that growth is unacceptably low relative to potential and that more can be done to lift it, especially given that some major economies are flirting with deflation.

Conventional policy advice urges innovative monetary interventions bearing an ever expanding array of acronyms, even as governments are admonished to spend on “obvious” needs such as infrastructure. The need for structural reforms is acknowledged, but they are typically deemed painful, and possibly growth-reducing in the short run. So the focus remains on monetary and fiscal stimulus ”“ and as much of it as possible, given the deadening effects of debt overhang.

And yet, the efficacy of such policy advice remains to be seen.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Asia, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Europe, European Central Bank, Federal Reserve, Foreign Relations, Globalization, India, Personal Finance, Politics in General, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The U.S. Government, Theology

(Bloomberg) Switzerland Ambushes the Global Economy

The Swiss National Bank’s shock move today to stop intervening in the foreign exchange market all but guarantees the European Central Bank will finally introduce quantitative easing when it meets Jan. 22. Switzerland is surrendering before a wave of post-QE money fleeing the euro threatens to make a mockery of its currency policy. It’s also capitulating as slumping oil brings global deflation ever closer.

t’s an astonishing U-turn. Just two days ago SNB Vice President Jean-Pierre Danthine told Swiss broadcaster RTS that “we’re convinced that the cap on the franc must remain the pillar of our monetary policy.” He added, though, that it was “very possible” that QE would make defending the threshold more difficult. It seems highly probable that the ECB has winked about its policy intentions to its Swiss counterparts.

The ensuing whipsaw in the currency market is unprecedented. The franc immediately appreciated almost 30 percent against the currencies of the Group of Ten industrialized nations, and surged to a record against the euro…:

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Globalization, Stock Market, Switzerland, The Banking System/Sector, Theology

(Bloomberg) The Collapse of Putin's Economic System

The ruble meltdown and accompanying economic slump marks the collapse of Putin’s oil-fueled economic system of the past 15 years, said an executive at Gazprombank, the lender affiliated to Russia’s state gas exporter. He asked not to be identified because of the sensitivity of the issue.

The higher interest rate will crush lending to households and businesses and deepen Russia’s looming recession, according to Neil Shearing, chief emerging-markets economist at London-based Capital Economics Ltd.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Anthropology, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Defense, National Security, Military, Economy, Ethics / Moral Theology, Europe, Foreign Relations, Globalization, Politics in General, Russia, The Banking System/Sector, Theology

The Economist explains What’s gone wrong with Russia’s economy

Russia is in the middle of a currency crisis. On December 15th its currency lost 10% of its value, having already lost about 40% this year. The central bank increased interest rates sharply, but instead of calming the market the hike was seen as a sign of desperation. The following day the rouble was at one point down a further 20% (and ended the day 10% lower). The central bank reckons that GDP could fall by 5% in 2015. Inflation is currently at 10% but is expected to accelerate rapidly. Russians are panic-buying; banks are running out of dollars. What’s gone wrong with Russia’s economy?

The problems were long in the making. Russia is highly dependent on oil revenues (hydrocarbons contribute over half the federal budget and two-thirds of exports) and over the past decade it has failed to diversify its economy. It is horribly corrupt, has weak institutions and no real property rights. The Kremlin distributes oil money via state banks to firms and projects which it selects on the basis of their political importance and their pro-Putin stance, rather than trusting the market to allocate capital to the most efficient firms. If you look at wealth, Russia is the world’s second-most unequal country. Its working-age population is shrinking fast.

Western sanctions imposed in response to Russia’s meddling in Ukraine have dealt a blow to the economy. But the proximate cause of the turmoil of the last few days is concern about Russia’s corporate sector. During 2015 Russia’s firms must repay $100 billion-worth of foreign debt. But as the rouble falls, paying back dollars becomes more difficult.

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Posted in * Economics, Politics, * International News & Commentary, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Energy, Natural Resources, Ethics / Moral Theology, Europe, Foreign Relations, Politics in General, Russia, The Banking System/Sector, Theology

(Telegraph) Ambrose Evans-Pritchard–Russia risks Soviet-style collapse as rouble defence fails

Russia has lost control of its economy and may be forced to impose Soviet-style exchange controls after “shock and awe” action by the central bank failed to stem the collapse of the rouble.

“The situation is critical,” said the central bank’s vice-chairman, Sergei Shvetsov. “What is happening is a nightmare that we could not even have imagined a year ago….”

Lars Christensen, from Danske Bank, said the Kremlin’s actions have led to the “absolutely worst possible outcome” since the botched move is enough to do grave damage, without solving anything. “They should have let the currency go rather than killing the economy. Investment is in freefall, and I fear this shock is going to be even bigger than in 2008-2009. Nothing suggests that oil is going to rebound quickly this time,” he said.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Credit Markets, Currency Markets, Defense, National Security, Military, Economy, Energy, Natural Resources, Ethics / Moral Theology, Europe, Foreign Relations, Globalization, History, Politics in General, Russia, The Banking System/Sector, Theology

(FT) Scott Minerd–Europe must act now to avoid ”˜lost decade

The much heralded asset-backed securities purchase programme will only yield about €250bn-€450bn in assets over the next two years. More LTRO (or the newer targeted LTRO) will prove a challenge as sovereign bond yields in Europe are so low that a large balance sheet expansion through this means seems impractical. Perhaps there is another €500bn-€750bn to do over the next year or two. Outright purchases of sovereign debt would prove politically difficult, as many would interpret such purchases as violating the ECB’s mandate and the matter would probably end up in the European courts.

The bottom line is that none of the tools currently on the table will get the job done. There are not enough assets to purchase or finance and the timetable to get anything done is too long. Policy makers do not have the luxury of a year or two to figure this out. The ECB balance sheet shrinks virtually daily and as it shrinks, the monetary base of Europe is contracting and putting downward pressure on prices. Europe is clearly in danger of falling into the liquidity trap, if it is not already there. The likelihood of a “lost decade” like that experienced in Japan is rapidly increasing. The ECB must act and act quickly.

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Posted in * Economics, Politics, * International News & Commentary, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Foreign Relations, Politics in General, The Banking System/Sector, Theology

(Economist) The world’s biggest economic problem–Deflation in the euro zone is all too close

The world economy is not in good shape. The news from America and Britain has been reasonably positive, but Japan’s economy is struggling and China’s growth is now slower than at any time since 2009. Unpredictable dangers abound, particularly from the Ebola epidemic, which has killed thousands in West Africa and jangled nerves far beyond. But the biggest economic threat, by far, comes from continental Europe.

Now that German growth has stumbled, the euro area is on the verge of tipping into its third recession in six years. Its leaders have squandered two years of respite, granted by the pledge of Mario Draghi, the European Central Bank’s president, to do “whatever it takes” to save the single currency. The French and the Italians have dodged structural reforms, while the Germans have insisted on too much austerity. Prices are falling in eight European countries. The zone’s overall inflation rate has slipped to 0.3% and may well go into outright decline next year. A region that makes up almost a fifth of world output is marching towards stagnation and deflation.

Optimists, both inside and outside Europe, often cite the example of Japan. It fell into deflation in the late-1990s, with unpleasant but not apocalyptic consequences for both itself and the world economy. But the euro zone poses far greater risks. Unlike Japan, the euro zone is not an isolated case: from China to America inflation is worryingly low, and slipping.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, History, Stock Market, The Banking System/Sector, Theology

Ireland's Commercial Court: where dark corners of economy dominated the dock

The court, now entering its second decade under Mr Justice Brian McGovern, has shone a light into some dark recesses of Ireland’s financial and business world, exposing greed and human misery on a grand scale alongside some shoddy and dubious, accounting, auditing, banking, business, legal, regulatory and stockbroking practices.

It has heard of property and other deals involving misappropriation, forged signatures, deceit, lies and secret profits; suspect property and money transfers aimed at avoiding repayment; exorbitant expenses for senior bankers; and slipshod and questionable loans, investments and valuations.

It has also shown existing laws provide limited opportunity to penalise some of these practices and revealed gaps in legislation on corporate crime, including the absence of an offence of reckless lending.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Anthropology, Credit Markets, Currency Markets, Economy, England / UK, Ethics / Moral Theology, Ireland, Law & Legal Issues, Personal Finance, Religion & Culture, Stock Market, The Banking System/Sector, Theology

(WSJ) The Federal Reserve Plots a Cautious Course on Interest Rate Rises

The Federal Reserve took two steps toward winding down the historic easy-money policies that have defined its response to the financial crisis, but stopped short of the move markets are awaiting most: signaling when interest rates will start to rise.

With the economy gradually improving, U.S. central-bank officials plan to end the bond-buying program known as quantitative easing after October, hoping to finally stop expanding a six-year experiment in monetary policy that has left the Fed holding more than $4 trillion of Treasury and mortgage bonds.

The Fed on Wednesday also detailed a new technical plan for how it will raise short-term interest rates, something most officials currently don’t intend to do until next year. The central bank has kept the federal-funds rate near zero since December 2008 and offered assurances along the way about rates remaining low, another part of its varied efforts to boost the post-financial-crisis economy.

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Posted in * Culture-Watch, * Economics, Politics, Anthropology, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Federal Reserve, History, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Personal Finance, The Banking System/Sector, The U.S. Government, Theology

(NPR) Will Scotland Vote To Cut The Cord?

In the Edinburgh rain, a striking number of voters have recently changed their minds. Michael Constantine says he and his parents all switched sides.

“My dad, he was a ‘no,’ ” says Constantine, 25. “In the past two months, he’s become a ‘yes.’ And then my mum was a ‘no’ initially. She became a ‘yes.’ ”

All three of them used to support keeping the U.K. intact. Now, they plan to vote for Scottish independence. Constantine says he wasn’t so much drawn to the ‘yes’ campaign; it’s more that unity drove him away.

“The ‘no’ campaign, the scaremongering and the fear they’re putting into people, really upset me,” Constantine says.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Credit Markets, Currency Markets, Economy, England / UK, Ethics / Moral Theology, Foreign Relations, History, Politics in General, Scotland, Theology

(Economist) Ditching the union would be a mistake for Scotland and a tragedy for England

At the heart of the nationalist campaign is the claim that Scotland would be a more prosperous and more equal country if it went solo. It is rich in oil and inherently decent, say the nationalists, but impoverished by a government in Westminster that has also imposed callous policies. They blame successive British governments for almost every ill that has befallen Scotland, from the decline of manufacturing industry to ill-health to the high price of sending parcels in the Highlands. Alex Salmond, Scotland’s nationalist leader, is broad in his recrimination: Labour and the Tories are of a piece, he suggests, in their disregard for Scotland.

But Scotland’s relative economic decline is the result not of southern neglect but of the shift of manufacturing and shipping to Asia. If Westminster has not reversed all the deleterious effects of globalisation and technology, that is because to do so is impossible. The nationalists know this, which is why, sotto voce, they would continue many of Westminster’s policies. Instead they make much of minor adjustments, such as abolishing the “bedroom tax”, a recent measure designed to nudge people out of too-large social housing. To break up a country over such small, recent annoyances would be nuts.

The nationalists’ economics are also flawed. Scotland would not, in fact, be richer alone. The taxes that would flow to it from the North Sea would roughly compensate for the extra cost of its lavish state, which would no longer be funded by Westminster (last year spending was some £1,300 per person higher in Scotland than elsewhere in Britain). But oil revenues are erratic.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Energy, Natural Resources, England / UK, Foreign Relations, History, Politics in General, Scotland, Taxes

(IBD) The Economic and Political Fallout Of A Yes Vote on the Scottish Referendum

The 307-year-old union between England and Scotland has been one of history’s most successful, but a possible split has investors and lawmakers fearing the potential aftershocks.

A “no” vote against Scottish independence was once a foregone conclusion for the Sept. 18 referendum, but a recent narrowing of polls ”” with some putting “yes” in the lead ”” has made the United Kingdom’s biggest constitutional change since the Irish Free State’s creation in 1922 a distinct possibility.

Secession could throw a wrench into the U.K.’s economic recovery, which has been among Europe’s strongest. Scotland’s share of U.K. gross domestic product is around 9.2%, or 148 billion pounds ($238.3 billion). Its 5.3 million residents comprise 8.3% of the total population.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, England / UK, Foreign Relations, History, Politics in General, The Banking System/Sector, Theology

(CNBC) German think tank ZEW — European Central Bank creating ”˜dangerous’ bubbles

Clemens Fuest, from the Mannheim-based organization best known for its widely-watched economic sentiment index – told German business daily Handelsblatt that the euro zone region could be at a “turning point.”

“I’ve got a bad feeling about this…I am concerned by the danger that the ECB is producing new bubbles with its policy of cheap money,” he told the newspaper.

“We have all the ingredients of a bubble: The prices of real estate and stock markets continue to rise, and on the bond markets, yields are falling despite high risks.”

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Europe, European Central Bank, Globalization, Psychology, Stock Market, The Banking System/Sector, Theology

(Bloomberg) Draghi Takes ECB Deposit Rate Negative in Historic Move

The European Central Bank cut its deposit rate below zero and said it would announce further measures later today as policy makers try to counter the prospect of deflation in the world’s second-largest economy.

ECB President Mario Draghi reduced the deposit rate to minus 0.10 percent from zero, making the institution the world’s first major central bank to use a negative rate. Policy makers also lowered the benchmark rate to 0.15 percent from 0.25 percent.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Globalization, Housing/Real Estate Market, Labor/Labor Unions/Labor Market

Church of England Commissioners announce annual results for 2013

The Church Commissioners’ total return on its investment in 2013 was 15.9 per cent. This means that the Church Commissioners fund has exceeded its target return of RPI + 5 percentage points over the past one year, three years, ten years and twenty years. It has also has performed better than similar funds over the same periods. Details have been published today in their full Annual Report and Account (link below) for 2013.

The Commissioners’ fund is a closed fund, taking in no new money, and has performed better than its target return of RPI +5.0% p.a. and its comparator group over the past, one, three, 10 and 20 years.* The results confirm the fund’s strong long term performance

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Posted in * Anglican - Episcopal, * Christian Life / Church Life, * Economics, Politics, Anglican Provinces, Church of England (CoE), Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Parish Ministry, Stewardship, Stock Market, Theology

(WSJ) Euro-Zone Economy Shows Weaker-Than -Expected Expansion

The euro zone’s economy expanded at a weak pace last quarter despite a strong recovery in Germany, putting added pressure on the European Central Bank to enact fresh easing measures to prevent the region from sliding into a lengthy period of low inflation and economic stagnation.

Gross domestic product grew 0.2% in the euro zone during the first quarter compared with the final three months of 2013, the European Union’s statistics agency Eurostat said Thursday, well short of the 0.4% quarterly gain expected by economists.

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Theology

(FT) Church of England defends plans to boost hedge fund investments

The man responsible for the Church of England’s £6bn endowment has defended plans to increase its investment in hedge funds, arguing that not all of the industry has “devil’s horns”.

Andreas Whittam Smith, First Church Estates Commissioner, told the Financial Times that the Church’s own ethical watchdog sanctioned short selling, providing it was done in a responsible way.

He added that the group “does not have ethical concerns about short selling per se as an investment practice,” and “did not make an ethical distinction between seeking to profit from a rise in the value of a security as against seeking to profit from a fall.”

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Posted in * Anglican - Episcopal, * Economics, Politics, Anglican Provinces, Church of England (CoE), Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Housing/Real Estate Market, Stock Market

(FT) Faith, hope and hedge funds for Church of England

The Church of England is ramping up the exposure of its £6bn endowment to alternative investments such as hedge funds and private equity in a move that will cement its position as one of the UK’s largest single investors in these types of assets.

The Church Commissioners who manage the endowment will meet next month to decide on the fund’s allocations and are set to increase its exposure to alternative investments, which also include residential property and farm land, according to a Church spokesman. Alternatives already account for almost a third of the fund.

Read it all (if necessary another link may be found there).

Posted in * Anglican - Episcopal, * Christian Life / Church Life, * Culture-Watch, * Economics, Politics, * International News & Commentary, Anglican Provinces, Church of England (CoE), Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, England / UK, Ethics / Moral Theology, Parish Ministry, Religion & Culture, Stewardship, Stock Market, Theology

(Economist Leader) Argentina–There are lessons for many govts from its 100 years of decline

There are still many things to love about Argentina, from the glorious wilds of Patagonia to the world’s best footballer, Lionel Messi. The Argentines remain perhaps the best-looking people on the planet. But their country is a wreck. Harrods closed in 1998. Argentina is once again at the centre of an emerging-market crisis. This one can be blamed on the incompetence of the president, Cristina Fernández, but she is merely the latest in a succession of economically illiterate populists, stretching back to Juan and Eva (Evita) Perón, and before. Forget about competing with the Germans. The Chileans and Uruguayans, the locals Argentines used to look down on, are now richer. Children from both those countries””and Brazil and Mexico too””do better in international education tests.

Why dwell on a single national tragedy? When people consider the worst that could happen to their country, they think of totalitarianism. Given communism’s failure, that fate no longer seems likely. If Indonesia were to boil over, its citizens would hardly turn to North Korea as a model; the governments in Madrid or Athens are not citing Lenin as the answer to their euro travails. The real danger is inadvertently becoming the Argentina of the 21st century. Slipping casually into steady decline would not be hard. Extremism is not a necessary ingredient, at least not much of it: weak institutions, nativist politicians, lazy dependence on a few assets and a persistent refusal to confront reality will do the trick.

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Posted in * Culture-Watch, * Economics, Politics, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Foreign Relations, History, Politics in General, Stock Market, Theology

(Indpndt) C of E appoints new specialist to review assets portfolio after Wonga embarrassment

The Church of England has appointed a New York-based specialist to screen its portfolio of assets in the wake of its embarrassing Wonga debacle last year.

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Posted in * Anglican - Episcopal, * Culture-Watch, * Economics, Politics, --Justin Welby, Anglican Provinces, Archbishop of Canterbury, Church of England (CoE), Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Globalization, Religion & Culture, Stock Market, Theology

(FT) Prominent Money Manager Leaves his Post because of Grueling Hours and Need for more Family Time

The gruelling hours were even more important, however. In his valedictory emails, perhaps wary of the cliché, Mr El-Erian avoided saying he wanted to spend more time with his family. But that is, in fact, his main reason for leaving, according to people close to him.

One tells me that on an average day Mr El-Erian’s alarm clock goes off at 2.45am. He usually gets to the office by 4.15am, gets home to his family about 7pm, eats, goes to bed by about 8.45pm and does it again.

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Posted in * Culture-Watch, * Economics, Politics, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Globalization, Labor/Labor Unions/Labor Market, Personal Finance, Stock Market

(FT) Delphine Strauss reviews Alan Wheatley's book on Currencies and Power

Frustrations with the dollar’s dominance are growing. The global fallout from the Federal Reserve’s stimulus policies, followed by Washington’s willingness to take budget talks to the brink of default last year, have made many governments reassess their reliance on US economic policy.

There is a general wish to stop the dollar being, as Richard Nixon’s Treasury secretary once told anxious Europeans, “our currency, your problem”. But it is far from clear what the alternative will be.

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Posted in * Culture-Watch, * Economics, Politics, Books, Currency Markets, Economy, Ethics / Moral Theology, Foreign Relations, Globalization, History, Politics in General, Theology

(WSJ) Federal Reserve Dials Back Bond Buying, Keeps a Wary Eye on Growth

Although the Fed expects to keep reducing the program “in measured steps” next year, the timing and the course isn’t preset. “Continued progress [in the economy] is by no means certain,” Mr. [Ben] Bernanke said. “The steps that we take will be data-dependent.”

If the Fed proceeds at the pace he set out, it would complete the bond-buying program toward the end of 2014 with holdings of nearly $4.5 trillion in bonds, loans and other assets, nearly six times as large as the Fed’s total holdings when the financial crisis started in 2008.

Still, officials””worried that investors would quake at the thought of less Fed support””went to lengths to demonstrate that they would keep interest rates low for years to come, even after the bond-buying program ends.
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Posted in * Culture-Watch, * Economics, Politics, Budget, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Federal Reserve, History, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Personal Finance, Politics in General, Stock Market, The Banking System/Sector, The National Deficit, The U.S. Government, Theology