Five Reasons Not to Fear Deflation: Which Ones Make Sense?

In a post earlier this week, I explained why a majority of economists fear deflation. They argue that deflation disrupts the operation of financial markets and labor markets in a way that risks touching off a downward spiral. At the same time, they say, deflation weakens the power of monetary policy to reverse the downward […]

European Doldrums

European economies are faltering.  The German economy contracted in the second quarter, as did those of France and Italy. Growth in Spain and the Netherlands was not enough to offset the slowdown in the Eurozone’s largest members.  An escalation in the confrontation with Russia would send shockwaves rippling from the Ukraine westwards that world worsen the situation. […]

Three PMI Surprises, but France Takes the Show

There have been three flash PMI reports today, and each was surprising.  China and Germany surprised on the downside while the French surprise was on the upside.   HSBC’s flash read on China’s manufacturing sector weakened for the fifth consecutive month.   The flash March reading of 48.1 compares   with the final February of 48.5.  The forward […]

Back to the Future: Euro, Sterling Bid, Dollar-Bloc Heavy

There has been a dominant theme in the foreign exchange market that had seemed to waver in recent days, but has returned in force today.  That theme is about the divergent performance of the dollar, which makes it difficult to discuss the greenback in general.  Essentially, that theme is for the euro and sterling to […]

A Few Last 2013 Developments: France, Italy, Turkey, China

In the last full trading session of the year, the US dollar is little changed against the major currencies and a bit softer against many of the freely accessible emerging market currencies.  Asian equities mostly firmed, with the MSCI Asia-Pacific Index gained a little less than 0.5%, while the Dow Jones Stoxx 600 is little […]

When Iran Negotiations Aren’t About Iran

By the Editors of Premium: Bottom Line: What is important to understand about negotiations with Iran over its nuclear program is that is has less to do with nuclear issues than it does with the back-room diplomatic dance that has Israel, Saudi Arabia and France doing everything in their power to derail Washington’s plans. Analysis: The […]

French Politics and Economics: Le Pen’s National Front Back on the Scene

Understandably overshadowed by the political melodrama in the US, a second round of a local election in France (Brignoles) resulted in a victory by Le Pen’s National Front.  The Socialist candidate had been summarily defeated in the first found and the Le Pen candidate thumped the UMP candidate 54%-46%.  The Socialists have been weakened by the […]

Europe’s Eroding Foreign Investment

Today foreign direct investment (FDI) is driven by emerging nations and the impending unwinding of U.S. monetary stimulus. In Europe, the lingering debt crisis is reflected in the dramatic plunge of FDI inflows. In the postwar era, the degree of global economic integration was still relatively low. As a result, international trade played a vital […]

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