TOSHIFUMI KITAMURA/AFP/Getty Images
By Jonathan Soble
Sermons from the IMF tend to make Japanese leaders fidget nervously in their pews – all fire and brimstone about budget deficits and the need for austerity. But Christine Lagarde’s warning about the evils of deflation is more likely to elicit a full-throated “amen”.
Successive Japanese administrations have promised to end deflation – the “ogre”, in Ms Lagarde’s description, that has menaced the country’s economy since the late 1990s. But under Shinzo Abe, prime minister since December 2012, and his central bank governor, Haruhiko Kuroda, deflation-fighting has become the overriding priority.
They have been getting results so far: prices of consumer goods excluding fresh food are rising nearly 1 per cent year-on-year, thanks to the Bank of Japan’s ultra-accommodative monetary policy and the related plunge in the value of the yen, which has pushed up the cost of imports. Read more
♦ Zhou Yongkang, a former security chief and member of the Chinese Communist party’s Standing Committee of the politburo, looks set to pay the price for defending Bo Xilai as China cracks down on corruption.
♦ Although Ireland has been lauded for its austerity programme and is about to leave the EU and IMF bailout, concerns persist that its recovery will run out of steam.
♦ Michael Goldfarb at the New York Times thinks the London property market “is no longer about people making a long-term investment in owning their shelter, but a place for the world’s richest people to park their money at an annualised rate of return of around 10 percent.”
♦ Take a look at these photos: the Mark Twain branch of Detroit public library is another casualty of the city’s bankruptcy.
♦ Yassin Al Haj Saleh, who was jailed for 16 years under the Assad regime and whose family was jailed by Islamist rebels, says a poignant goodbye to Syria. Read more
A protestor outside the Greek parliament (Milos Bicanski/Getty Images)
It’s no secret in Athens that austerity-weary Greeks would like to see a grand coalition emerge from Sunday’s elections in Germany. The participation in government of Peer Steinbrück and his Social Democrats, say café pundits, could bring a softening of the “keep-them-on-the-reform-treadmill” approach associated with Angela Merkel’s previous term as chancellor. Read more
Chief justice Adly Mansour is sworn in as interim president the day after Mohamed Morsi is ousted (Getty)
Among Egyptians of all political stripes, there is a pervading conviction that talented and top-notch specialists who know their jobs well can help fix the nation’s myriad problems. The interim government installed by the military after the overthrow of Mohamed Morsi’s Islamist-dominated government has begun a flurry of appointments of so-called technocrats to key government posts.
It has appointed economist Hazem Beblawi as prime minister and named another noted economist, Ahmed Galal, as finance minister. It has begun assembling a constituent assembly that will be filled with experienced judges and legal experts. Mohamed ElBaradei, the former UN nuclear chief and Nobel laureate, has been sworn in as a vice-president for foreign affairs.
But the belief that a government of competent, cleverly-placed and politically neutral technocrats can solve problems as deeply entrenched as those Egypt faces is at best questionable and at worst fantasy. Read more
♦The US National Security Agency and the FBI are tapping directly into the central servers of nine leading internet companies. Glenn Greenwald, who broke the story for the Guardian, has been focused on government surveillance for years and the article is expected to attract an investigation from the justice department.
♦ Turkey is having its 1969, writes Ben Judah, and now it needs its Charles de Gaulle.
♦ Recep Tayyip Erdogan’s absence in Turkey this week has highlighted the difference in style between him and Abdullah Gul, the president.
♦ Ollie Rehn, the European Commission’s economic chief, has lashed out at the IMF’s criticism of the first Greek bailout, accusing the fund of revisionist history.
♦ What are the choices for Syrian citizens now? They are all grim and make the Geneva talks more urgent than ever, says Charles Glass.
♦ The humanities division at Harvard University is attracting fewer undergraduates amid concerns about the degree’s value in a rapidly changing job market. Read more
♦ Why was the Turkish media’s coverage of the protests so inadequate? – it is a “compromised media sector that is largely the property of conglomerates with wide-ranging interests, and a Turkish state that exercises particular sway over business life.”
♦ The protests have shaken Turkey but will not topple the prime minister, says Turkish journalist Mustafa Akyol.
♦ Protesters are using gaming lingo in their fight against the government.
♦ Poetry magazine has dedicated their June issue entirely to poetry composed by and circulated among Afghan women.
♦ The IMF admits to errors in its handling of Greece’s first bailout. Here’s some context from FT Alphaville’s Joseph Cotterill.
♦ Take a look at the BBC’s view from Qusair, of a city that has disappeared. Read more
Friday’s events from the World Economic Forum feature an address by Mario Draghi, president of the European Central Bank, and sessions looking at the challenges faced by, and presented by, the fast-changing Arab world. Reports from FT writers in Davos and by Ben Fenton, Lina Saigol and Lindsay Whipp in London
17.03: The Davos Live Blog is closing down now but for more reading and insight on today’s events, please visit the FT’s in depth page on the World Economic Forum.
16.41: Gideon Rachman, titular proprietor of this blog, has written his surmise from the earlier session on Syria.
16.16: Asked by the Amercian moderator of his panel session about corruption and banking regulation, Nigeria’s central bank governor Sanusi displays a little frustration:
He said: “We are the only country which has taken people out of banks and put them in jail. No bankers in your countries have gone to jail.”
16.12: Martin Wolf has recorded his view on the politics and economics at play in a “low-intensity” Davos this year:
There was a big kerfuffle in October when the IMF made a point of saying that it (along with a bunch of other forecasters) had underestimated the effect of fiscal tightening on European economic growth over the past couple of years, with obvious implications for the troika’s austerity programmes for the likes of Ireland, Greece and Spain.
The admission got some predictable pushback from troika members who have drunk deep from the austerian well. It was also questioned by my colleague Chris Giles, who pointed out that the results were highly sensitive to the inclusion in the sample of outlier countries – especially Germany (which, despite its frugal prescription for others, has itself followed expansionary fiscal policy and enjoyed good growth) and Greece (the opposite) – and possibly the exclusion of the Baltic states, which followed aggressive fiscal tightening to better effect than Greece. Read more
With friends like these…. Jean-Claude Juncker and Christine Lagarde. (AFP)
It’s not as if the troika of eurozone rescue lenders never falls out, but usually it takes a not-in-front-of-the-children attitude to airing its rows. A refreshing change on Monday night, as my colleagues Peter Spiegel and Josh Chaffin report, when the eurogroup summit, while not actually deciding anything substantive, made sure it would stand out from the dozens of other such gatherings by hosting a very public argument between the eurogroup’s Jean-Claude “We all know what to do, we just don’t know how to get re-elected after we’ve done it” Juncker and the IMF’s Christine Lagarde.
The actual substance of the spat looks laughably trivial. It’s about whether Greece hits its 120 per cent of GDP debt target in 2020 or in 2022, which, given the huge uncertainties in forecasting debt dynamics, is about as precise as a Florida election count. The 120 per cent target is itself pretty arbitrary, apparently based on what seems to be sustainable in Italy, which is a very different country with a more flexible economy and captive domestic investor base for government bonds. Read more
Saul Loeb/AFP/Getty Images
Yesterday, I was all “the emerging markets have a point about running the IMF”. Read more