Politics in Washington are notoriously unpredictable – but for anyone gaming whether or not the US will face a government shutdown on March 18 – here are a few good reasons why it won’t happen.
The most likely scenario at this point appears to be another short-term extension of the budget – somewhere between two and four weeks – that would give all sides a bit more time to negotiate.
Republicans in the House of Representatives are currently putting together a bill along those lines – and the Obama administration may well be open to accepting it. The White House has already suggested $6.5bn in cuts that could be applied towards that short-term extension without causing too much political furore.
There are some signs that companies and consumers are starting to borrow again in the latest flow of funds and that supports what we have seen in the GDP data. But there is little sign that the financial sector has stopped running down its balance sheet and the federal government is still the only real borrower in town.
The European Central Bank should open its doors to economists from outside the European Union, according to an external audit of its research operations. “The central banking world has become increasingly global and competitive, with many central banks hiring economists who are not citizens of their own country,” says the report published on the ECB’s website.
Currently, the ECB only employs citizens of the 27 EU countries. That means it employs, for instance, Brits and Swedes (even though their countries are outside the eurozone), but not Americans (although there are possibilities to bring in outsiders on exchange trips). “The ECB should also hire citizens of other countries in the same way that central banks of many other countries are prepared to hire EU citizens,” the report says.
It is hard to see how the ECB could object to such an idea.
“We are in the midst of a turning point in German economic history,” writes Andreas Rees, economist at Unicredit in Munich, southern Germany, somewhat grandly, in a research note issued on Thursday. On his calculations, German companies shipped more to China in December than to the US.
The rising relative importance of China as an export destination for Europe’s largest economy has been one of the features of the post-Lehman world. By the end of last year, China (including Hong Kong) was Germany’s third biggest export market after France and the Netherlands, according to Unicredit.
Persistent inflation and rising housing prices have prompted a further rate rise from Seoul. The key seven day repurchase rate is now 3 per cent, a level last seen fleetingly at the end of 2008. The Bank held rates at their last meeting in February but signalled rate rises ahead.
Some have criticised the Bank for being behind the curve tackling inflation, which rose to a two-year high of 4.5 per cent in February, above the 2-4 per cent target but below expectations in some quarters of 5 per cent inflation.
Inflation has prompted another rate rise in Serbia – but a much smaller one than of late. The key policy rate now stands 25 basis points higher at 12.25 per cent.
Food and oil prices have driven inflation, though the effect of rising import prices has been tempered by the strengthening dinar.
As most pundits expected: another hold decision from the Bank of England. The base rate remains at 0.5 per cent and the stock of QE assets stays put at £200bn.
Until March 23, when minutes are released, we won’t know whether the 3-6-1 vote has altered. Consumer price inflation rose to 4 per cent – double the Bank’s target – in the year to January. February inflation is due March 22.
The benchmark rate in New Zealand is back to its record low of 2.5 per cent after the Christchurch earthquake prompted a half point rate cut from the Reserve Bank. The move is intended to lessen the economic impact of the quake, stimulating the economy until the rebuilding phase begins.
“Even before the earthquake, GDP growth was much weaker than expected through the second half of 2010,” said the Bank. Consumers remained cautious, and the export sector, while benefiting from higher commodity prices, had been repaying debt rather than spending. Then came the earthquake. “Signs that the economy was beginning to recover early in 2011,” said the Bank, “have been more than offset by the Christchurch earthquake.”