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As the OECD composite leading indicators show signs of improvement in BRIC and all of the major seven economies, Yves Smith points to sharp falls in London retail sales and asks if the good news is just another withering green shoot. Following news of falling consumer debt, US retailers are seeing a sharp shift away from credit cards to debit cards and cash in a laudable sign of prudence that will further delay the recovery.
Big banks should pay bigger taxes to help offset the disproportionate risk they bring to the financial system, says the BIS, suggesting a methodology just in time for a major speech by Obama today on the financial crisis. This, as the ECB has made a tidy profit from its emergency lending.
Beijing is threatening to levy a tax on imports of US poultry and vehicles following Washington’s decision late on Friday to increase the 4 per cent duty on Chinese tyre imports by a further 35 per cent. Beijing says this act of ‘rampant protectionism’ contravenes WTO rules and G20 commitments. The news has boosted the dollar, especially against commodity-linked currencies, suggesting emerging markets will be hardest hit by any ensuing trade war.
But Martin Wolf is impressed by China’s resilience: he says the growth is sustainable and the wheel of fortune is turning. China’s response is globally significant but currently too small to drive a world recovery.
Contrary to Wolf’s counsel last week, Clive Crook says it’s never too early to worry about inflation:
“it is too soon to worry about inflation in the same way it was too soon in 2005 to be concerned about securitised mortgages and house-price bubbles.”
Tags: banking, BIS, china, currencies, dollar, imports, inflation, OECD, protectionism, retail sales, stiglitz, tax, trade
Leading economists discuss topics raised by Martin Wolf, the FT's chief economics commentator, and others.