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Both the UK and Japan would like to see sustained economic recoveries but, until recently, the recoveries they craved were fundamentally different in nature. The UK ideally wanted an export-led recovery supported by plenty of productive investment. The financial crisis provided the perfect opportunity to wean the UK off the housing-led, debt-financed consumer booms of old. Japan, meanwhile, hoped to see a shift towards a consumer-led recovery, helped along by an end to the deflationary curse which had persuaded the Japanese to hoard cash and repay debt. Continue reading »
As economist Robert Triffin explained more than 50 years ago, the development of an international reserve currency requires that the issuing country or area records a current account deficit. This partly explains why the yen and the Deutschmark did not develop an equivalent role to the dollar, in spite of the relative strength of the Japanese and German economies. The eurozone economy is now in the same position.
The eurozone countries have adjusted, during the financial crisis, from running a broad external balance, which prevailed until 2010, to a rising surplus (2.7 per cent of gross domestic product in 2013, up to 3 per cent in 2015). Continue reading »
Beijing’s declaration last week of a special air defence identification zone above disputed islands in the East China Sea and the surrounding waters claimed by Japan and China is a clear escalation of an already dangerous situation. It might be tempting for commentators at this stage to digress into describing the torturous history of the disputed Chinese or Japanese sovereignty over these uninhabited rocks, to provide context for how the two great nations of Asia have virtually drawn daggers over barren island territories in a distant corner of the Pacific Ocean. Yet, the deeply unwise and provocative new Chinese decree of unspecified military measures in the event of unauthorised entry into this airspace has served to dramatically broaden the regional context of this bilateral stand-off. Continue reading »
One system believes in limiting how much power money can buy and imposes redistribution mechanisms to counter inequalities of opportunities and outcomes. The other throws the weak out of the premier stratum of society, and uses large income distribution to perpetuate dominance and power structures.
No, I am not referring to the socioeconomic systems pursued by different countries. Nor am I referring to some grand academic experiment to test whether high growth with redistribution is indeed feasible. Instead, I am talking about the contrast between professional sports on the two sides of the Atlantic Ocean. Continue reading »
The Americans and Europeans designed this interim agreement with American and European – not Israeli or Saudi – goals in mind. None of these governments wants an Iran armed with nuclear weapons, but there has always been much more at stake in these talks than that. That’s why one government’s good deal can still become another government’s nightmare. Continue reading »
The setting was as bizarre as it was stunningly beautiful – a luxurious seven star resort and spa built on the edge of the Empty Quarter – one of the largest deserts in the world where sand dunes are as high as mountains, falconry is a reactionary sport, dune buggies whizz you around the three-mile-long estate and the seafood is fresh from Gulf waters just two hours away. Continue reading »
The latest IFOP poll gives François Hollande an approval rating of 20%, the lowest for any president since the poll began in 1958. Even François Mitterrand’s lowest rating was 22%. Another poll, by YouGov, puts him down at 15%, only 3 per cent of voters expressing a strongly positive view. It will take more than an impromptu visit to a football match for Hollande to raise his game. Continue reading »
Significant reforms are needed to fix the country’s problems. The coalition should take the opportunity of recent splits in several parties to force an agreement on a detailed series of measures that could turn around the economy, making it competitive again. Continue reading »
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