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Global economic shakeout

Analysis and Comment (35)

Satyajit Das: “I think the democratic process and the politics of the world relies on a very fragile construct. One is trust. And trust relies on economic growth.” Satyajit Das: “I think the democratic process and the politics of the world relies on a very fragile construct. One is trust. And trust relies on economic growth.” Supplied

Satyajit Das: Europe will have far-reaching consequences for everybody

Welcome to the latest in our In Conversation series, between risk analyst and author Satyajit Das and Kevin Davis, Research Director of the Australian Centre for Financial Studies. Satyajit Das is an internationally-known…
Markets responded positively to the central banks' credit lifeline, but serious problems lie ahead. Markets responded positively to the central banks' credit lifeline, but serious problems lie ahead. AAP

Central banks' credit lifeline will keep global economy liquid, but not afloat

For European banks threatened by a looming credit squeeze, the US Federal Reserve’s move to cut the cost of obtaining US dollars rescue hasn’t come a moment too soon. The Fed’s decision to engage in quantitative…
The Irish have seen their booming economy implode. Is it a good lesson for Australia? The Irish have seen their booming economy implode. Is it a good lesson for Australia? AAP

The lessons Europe forgot are the ones Australia will do well to remember

When Treasurer Wayne Swan finger-wagged at the recent set of G20 events, scolding his European colleagues and telling them to get their act together, he had more of a point than perhaps the Australian…
Greek Prime Minister George Papandreou will use the referendum to try to win a mandate for austerity measures. Greek Prime Minister George Papandreou will use the referendum to try to win a mandate for austerity measures. AAP

Pain or more pain? The political gamble behind Greece’s debt referendum

Greek Prime Minister George Papandreou has taken the bold step of planning a referendum on the country’s EU-imposed austerity measures, in a bid to claim a mandate for his efforts to avoid a default on…
After the global financial crisis, a more restrained and open-minded approach to economics is needed. After the global financial crisis, a more restrained and open-minded approach to economics is needed. AAP

Time to accept economic known unknowns? The case for ‘pluralism’

Confidence in economics has been dented by the global financial crisis. But what is reasonable to expect of economists? People joke about economists disagreeing, but is it feasible for there to be one…
Euro banks have been urged to reinforce their balance sheets. Euro banks have been urged to reinforce their balance sheets. AAP

Can ‘living wills’ protect the banking system?

Eurozone leaders have moved to address liquidity fears, with the European Central Bank announcing new measures to head off a credit crunch. Britain has also announced quantitative easing measures. Outgoing…
London trader Alessio Rastani has told the BBC he “dreamed” of recession. But traders often don’t know how they’ll react to losses. London trader Alessio Rastani has told the BBC he “dreamed” of recession. But traders often don’t know how they’ll react to losses. YouTube

‘Dreaming’ of recession: what to make of market makers and their noise?

Trading in financial securities has sometimes been regarded as a “black box”. This is particularly the case in markets where there is increased uncertainty. The current world economy is a prime candidate…
Is a partial default one of the steps to recovery for Greece? Is a partial default one of the steps to recovery for Greece? AAP

Defend or default? It’s the three trillion euro question

Will Greece default and exit the Eurozone? The best-case scenario is a managed, orderly, partial default with the European Financial Stability Facility (EFSF), a fund created in 2010 to manage Eurozone…
World Bank chief Robert Zoellick and IMF head Christine Lagarde have doubts about global growth. World Bank chief Robert Zoellick and IMF head Christine Lagarde have doubts about global growth. AAP

Spooking the markets: should financial leaders keep quiet during crises?

Global markets have tumbled again this week, following the downgrading of Italy’s debt rating and a series of negative comments from leaders of the world’s financial institutions. International Monetary…
Italy’s Silvio Berlusconi wants closer ties with China - but Europe shouldn’t believe this will save the EU. Italy’s Silvio Berlusconi wants closer ties with China - but Europe shouldn’t believe this will save the EU. AAP

Why China won’t – and can’t – save the Eurozone

Earlier this week, reports emerged that Italian finance officials had held talks with their Chinese counterparts regarding the possibility of China making significant purchases of Italy’s public debt…
If Greece’s economy collapses, it could easily lead to a breakdown of civil order. If Greece’s economy collapses, it could easily lead to a breakdown of civil order. AAP

What will happen if Greece defaults?

Global markets look set for a rough week amid new concerns that Greece could default on its massive debt. The Australian share market has spent most of the day down 3% after reports that Germany could…
In announcing his $US447 billion stimulus, Obama has his eyes firmly on the US election in 2012. In announcing his $US447 billion stimulus, Obama has his eyes firmly on the US election in 2012.

Obama throws down electoral gauntlet with economic plan

Barack Obama has laid out a US$447 billion (A$421 billion) plan to cut payroll taxes and boost government spending to create jobs, in a bid to “jolt” the stalled US economy back to life. Obama told a joint…
Germany’s Angela Merkel and French President Nicolas Sarkozy: has the need for last resort measures arrived? Germany’s Angela Merkel and French President Nicolas Sarkozy: has the need for last resort measures arrived? AAP

Does Europe need a lender of last resort?

German Chancellor Angela Merkel and French President Nicolas Sarkozy appear to hope their recent Summit will avoid further increasing Euro rescue fund, the European Financial Stability Facility (EFSF…
Nicolas Sarkozy and Angela Merkel believe an FTT can help solve Europe’s debt woes. Nicolas Sarkozy and Angela Merkel believe an FTT can help solve Europe’s debt woes. AAP

Let’s all dance to Europe’s tune and impose a financial transactions tax

French President Nicolas Sarkozy and German Chancellor Angela Merkel have announced a plan to impose a financial transactions tax (FTT) for the Eurozone, as part of an effort stem the bloc’s worsening…
AAP

Should the renminbi be re-valued?

In a speech in Sydney earlier this week, World Bank President, Robert Zoellick, lent his support to an appreciation of the renminbi (RMB). As has become the norm, this support was couched in terms of an…
While the US is finding its footing, China is looking to expand its global economic power by pushing for the renminbi importance in international transactions. While the US is finding its footing, China is looking to expand its global economic power by pushing for the renminbi importance in international transactions. Fotopedia/Philip Roeland

How the West’s money problems could hasten global power shift

The downgrading of US debt by Standard & Poor’s may sound the starting gun for an enduring rebalancing of global economic power. For decades, investors worldwide sought the safety of US government…
The rise of the Chinese economy has been stunning - but it may not translate into world order dominance. The rise of the Chinese economy has been stunning - but it may not translate into world order dominance. AAP

This is evolution of the world economic order, not revolution

A new global economic order is not finally taking shape. Instead, the world economic order has been evolving over time, and it will continue to evolve into the future, more often than not, in unexpected…
German chancellor Angela Merkel and French President Nicolas Sarkozy have outlined a rescue plan for the Eurozone. German chancellor Angela Merkel and French President Nicolas Sarkozy have outlined a rescue plan for the Eurozone. AFP

PIIGs might fly - is a single economic government the way forward for Europe?

German Chancellor Angela Merkel and French president Nicolas Sarkozy have overnight laid out plans for a stronger European integration that seeks to control deficit restrictions on member countries and…
Decades of US wage stagnation lies behind why repeated fiscal stimulus and monetary easing has failed. Decades of US wage stagnation lies behind why repeated fiscal stimulus and monetary easing has failed. AAP

Panic is easing - but this global economic instability isn’t going away soon

The past several weeks on global financial markets has been quite some roller coaster ride. As the US flirted with the prospect of default and Standard & Poor’s downgraded the country’s credit rating…
Australia’s retirees have been buffeted this week but remain unaware of how to manage the risks. Australia’s retirees have been buffeted this week but remain unaware of how to manage the risks. AAP

Dazed, confused and uninformed: self-funded retirees bear the brunt

Two types of footage illustrated news reports of the financial market turmoil last week: the unlucky teams with frozen smiles ringing the start-of-trade bell at the New York Stock Exchange, and confused…
Downward trend: how should Australia respond to this week’s global meltdown? Downward trend: how should Australia respond to this week’s global meltdown? AAP

Returning to surplus in 2012-2013: the case for and against

In the midst of global stockmarket turmoil, talk of a double dip US recession and global downturn, focus is turning to whether the Labor federal government should stick to its promise to return Australia’s…
The climate won’t wait for financial markets, and it doesn’t need to. The climate won’t wait for financial markets, and it doesn’t need to. AAP

Keep calm and carry on: global market chaos shouldn’t affect the carbon tax

The stock market has taken us on a wild ride in recent times. Some, such as BHP Chairman Jac Nasser and Victorian Premier Ted Baillieu, have suggested that in light of the ongoing economic uncertainty…
If we’re facing a downturn, the right thing to do to drop the insistence on returning to surplus. If we’re facing a downturn, the right thing to do to drop the insistence on returning to surplus.

Should we return to surplus by 2012-2013? The case against

In the face of the global financial crisis of 2008-09, the Australian Government’s overall fiscal policy response was both well-timed and well-calibrated (even if some of the specific programs within that…
Julia Gillard’s government needs to keep its promise to deliver a surplus. Julia Gillard’s government needs to keep its promise to deliver a surplus. AAP

Should we still run a surplus in 2012-2013? The case for a balanced budget

In late 2008 the federal government was under some considerable pressure to abandon any plans of delivering a budget surplus in that year. I wrote an op-ed for the Australian Financial Review arguing that…
China may appear strong now compared to the troubled US, but still lags behind in technology and per-capita wealth. China may appear strong now compared to the troubled US, but still lags behind in technology and per-capita wealth. Flickr/futureatlas.com

Global economic shakeout: China may win this round, but don’t write the US off yet

Europe is on the decline. The US has its own problems. Meanwhile, China and India appear strong. But is it too soon pick the next global superpower? In this Q+A, Professor Geoffrey Garrett, CEO of the…
The only way out of this crisis is to dishonour some of the debt that is weighing down the global economy. The only way out of this crisis is to dishonour some of the debt that is weighing down the global economy. AAP

Ireland, Greece … France? Accepting default is Europe’s only option

The dramatic falls in share prices of Greek debt-laden French banks overnight highlights just how closely tied the current market chaos is to the world’s worsening debt woes. Market crashes like that of…
Unless the US can address structural problems, there no end in sight to this financial crisis. Unless the US can address structural problems, there no end in sight to this financial crisis. AAP

Keep an eye on the underlying economic threat, not market ups and downs

Global share markets were faltering even before the decision by Standard & Poor’s to downgrade the US government’s debt. The slump in share markets over the past week reflects a weaker outlook for…
The share market is often driven back into the black by canny investors looking for a bargain. The share market is often driven back into the black by canny investors looking for a bargain. AAP

Global economic shakeout: the zig-zag market heralds nasty times ahead

After falling by almost 20% in week-long sell-off, the Australian share market has bounced back and began trade today up more than 3.5%. The market’s recovery follows a strong comeback on Wall Street overnight…
The US must “choose between bankruptcy, raising taxes and cutting payouts”. The US must “choose between bankruptcy, raising taxes and cutting payouts”. AAP

Not China, not S&P: why the US has only itself to blame

If the United States thought it could stave off its day of reckoning, it was wrong. Standard & Poor’s prompt downgrade of US credit worthiness late Friday sent stock markets worldwide into a nosedive…
Stock markets around the world plummeted after news of the US credit rating downgrade (EPA/FRANK RUMPENHORST) Stock markets around the world plummeted after news of the US credit rating downgrade (EPA/FRANK RUMPENHORST)

Debt dive: why is the US at the mercy of anonymous credit agencies?

Without the firing of a single shot in anger, a country has been, at least in a sense, brought to its economic knees. The capitalist system, with variations and aberrations, is now reacting. Shares are…
As a new global financial crisis looms, Australia shouldn’t overestimate its dependence on China. As a new global financial crisis looms, Australia shouldn’t overestimate its dependence on China. AAP

Is Australia’s economic stability really made in China?

Amidst the widening global financial turmoil, a strong Chinese economy is certainly one positive for the Australian economy. But should we believe it is only factor that will save the day? The answer is…
Can China continue to float our boats as the global economy teeters? Can China continue to float our boats as the global economy teeters? AAP

Amid global market turmoil, can China keep our economy afloat?

Federal Treasurer Wayne Swan has seized on positive comments about Australia’s economy in an International Monetary Fund report as evidence the country can endure another global financial crisis. The report…
Global markets have fallen dramatically over fear of a US double dip recession and global downturn. Global markets have fallen dramatically over fear of a US double dip recession and global downturn. AAP

Global market carnage: experts respond

The Australian share market has followed Wall street overnight and other global markets, with as much as $60 billion wiped in value throughout the day. The Reserve Bank of Australia has cut the forecast…
Standard & Poor’s could still downgrade the US credit rating, despite the debt ceiling deal. Standard & Poor’s could still downgrade the US credit rating, despite the debt ceiling deal. AAP

Explainer: the role of credit ratings agencies

Washington lawmakers in the US House of Representatives have passed an agreement hammered out between Republican and Democrat leaders designed to avert a US debt default. The move is a further step towards…

Research and News (1)