Worthwhile Canadian Initiative: Banks are special because the medium of exchange is special
“If we used cows as media of exchange (if we bought and sold everything else in exchange for cows), would you say that dairy farming is a special industry that is macroeconomically important?
I would. Because if we used cows as media of exchange, then what happened on dairy farms would affect the supply of media of exchange, and I think the supply of media of exchange is macroeconomically important in explaining short-run recessions.”
Lira hits new low as EM concerns intensify – FT.com
“Against the Turkish currency, the dollar climbed 1.1 per cent to TL2.0550, having touched a record TL2.0730.
The lira has lost a more modest 3.5 per cent this week but still a heavy bout of selling in currency terms.
Turkey’s central bank on Tuesday said it would not raise its main interest rate again this year, following a half-point rise to 7.75 per cent earlier this month, in spite of inflation, which in July was running at 8.8 per cent.
The lira has also come under pressure in recent sessions as tensions mount in the region concerning Syria and the rising threat of military intervention from the west.”
Spaniards Fleeing Jobless Scourge Seek Jobs in Morocco – Bloomberg
“Barcelona-born architect Jean-Pierre Monguard Estragues says it’s much easier to find clients and projects in Marrakesh than back home in Spain.
“The money isn’t the best pay I’ve ever had but it allows me to live and send some home,” says Monguard, 40, whose friends paid for his flight to Morocco nearly two years ago as he drowned in bills after losing his job. “Experience and know-how are much more appreciated here than they are in Spain.”
Spain’s population fell last year for the first time in at least four decades”
Mortgage applications fall as rates hit 2013 high: MBA | Reuters
“Applications for U.S. home loans fell for a third straight week as average mortgage rates hit their highest level this year, although demand for purchase loans increased, data from an industry group showed on Wednesday.
The decline came as 30-year mortgage rates rose 12 basis points to 4.80 percent, the highest they have been so far this year, according to MBA data.”
Dutch Budget Deal to Impose More Austerity Despite Resistance – WSJ.com
Austerity is not over in Europe.
“The Dutch government reached a deal on an austerity package for 2014 in a bid to meet European Union budget requirements despite fierce resistance to more belt-tightening at home and concerns that it could further harm the already struggling economy.
The coalition government struck a deal on €6 billion ($8 billion) in tax increases and spending cuts, Finance Minister Jeroen Dijsselbloem said Tuesday. “
Vodafone in Talks With Verizon Over U.S. Wireless Stake Sale – Bloomberg
“The carriers are in advanced discussions about a sale of the holding for about $130 billion, according to people with knowledge of the matter. Verizon is working with several banks to raise $10 billion from each, or enough to finance about $60 billion of the buyout, said two of the people, asking not to be identified because the talks are private. “
BBC News – Brazil’s universities take affirmative action
Emerging market rout is too big for the Fed to ignore – Telegraph
“”They are running down reserves by selling US and European bonds, leading to a self-reinforcing feedback loop,” said Simon Derrick from BNY Mellon.
We are told that emerging markets are more resilient than in past crises because they have $9 trillion of reserves. But any use of that treasure to defend the exchange rate entails monetary tightening, and therefore inflicts a contractionary shock on countries already in trouble.
We are also told that they borrow in their own currencies these days, immune to the sort of dollar squeeze that caused such havoc in the early 1980s and the mid-1990s. This is true, but double-edged. India, Brazil and others will surely be tempted to stop fighting markets, let their currencies slide and inflict the pain on foreigners – that is to say, on your pension fund. “
Merkel Blames SPD’s Schroeder for Greece’s Euro Entry – Bloomberg
““For example, Greece shouldn’t have been allowed into the euro” at the time of its admission in 2001, Merkel told a crowd of about 1,000 supporters. “Chancellor Schroeder accepted Greece in and weakened the Stability Pact and both decisions were fundamentally wrong, and one of the starting points for our current troubles.” “
Why $3.4tn in foreign reserves is not China’s escape hatch | FT Alphaville
“It is true that China dipped into its foreign exchange reserves in the late 1990s to help recapitalise its banks before shifting their bad debts into specially created bad banks.
However, the government cannot now go to the same well to any large extent for a number of reasons.
The first is that any large scale spending of the reserves would amount to a massive money-creation exercise by the central bank.
This is to do with mechanics of how the reserves accumulated.”
Brazil raises interest rates for fourth time since April – Telegraph
“Annual inflation has eased since then, but at 6.27pc remains well above the mid-point of the official year-end target of 4.5pc plus or minus two percentage points. Inflation expectations also remain high for next year. “
Rupee staging a small recovery. Surges 3.6%. Biggest single day gain since 1998.
Documentary BBC – A History of Syria (2013) – YouTube
What is the right way to think about China’s foreign reserves?
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