Credit Writedowns

By Michael Pettis Last Tuesday the PBoC surprised the markets with a partial deregulation of the currency regime, prompting a great deal of discussion and debate about the value of the RMB. Part of the discussion was informed by a…

By Michael Pettis originally written on 31 Jul 2015 I plan to post a new entry very soon but before doing so I wanted to say a few things about the stock markets, which continue to be insane (but not unexpectedly so) and then repost a…

For several months now, I have been hearing stories about the risk of capital flight and capital outflows out of China. At the same time, perhaps as a result of these outflows, traders have recently been trading CNY/USD at the upper end of…

Yesterday I mentioned markers of economic and financial weakness that I believe show cracks in the facade of benign economic data out of the US and Europe. Today I want to briefly go through a few of these data points and highlight what…

Back in March, I was saying that China would be hard-pressed to maintain its dollar peg if a strong dollar persisted. The deflationary pressures in China are simply too large. Today we learned that it has finally succumbed to that pressure…

I know the title of this post has a somewhat alarmist feel to it. However, I think it is the title that best describes the biggest macro theme now unfolding in the global economy. I have been in Grand Canyon country in the southwest of the…

As Q2 continued along, it became ever more evident that private forecasts above 3% annualized were overly optimistic and that the Atlanta Fed’s GDPNow forecast below 1% would get revised up. We met in the middle at 2.3%. What’s more is Q1…

Last week the Fed admitted to having mistakenly made public forecasts by staff economists which suggested that the Fed is indeed on a 2015 rate hike path. As a result, policy divergence is now set to widen, with the result being a bid for…

There are a lot of competing narratives going around as to why Greece is in such trouble relative to the rest of the eurozone. A lot of this centers on whether Greek fiscal profligacy or poor credit controls by foreign banks was the main…

Now that the Greek crisis has died down, we can return to surveying the global economy for clues as to whether global growth will continue unabated. My sense right now is that the major theme to watch remains policy divergence, with the US…