Opinion: Venezuela’s endless endgame
Bankrupt and in an economic freefall, Venezuela has become the scene of a humanitarian drama. The opposition is finally unified and appears close to being able to push the die-hard Chavista regime out. Much of the outside world, including Latin America, Europe and the United States, is eager to help, but the devil, as always, is in the detail.
The false end of quantitative easing
In June, the European Central Bank made the fateful announcement that it would phase out its bond-buying program – called quantitative easing, or QE – by the end of this year. But putting an end to net bond purchases is not the same thing as ending the ECB’s ultra-lax monetary policy. By leaving the door open to rolling over its massive balance sheet of bonds as they mature, policymakers could keep oxygenating the euro area’s economy for years to come.
Think of the unthinkable
For nearly two decades, the EU’s common currency system has worked wonders for internal trade. The euro has strengthened Europe’s financial position in the world. However, many government and EU leaders, and the European Central Bank have colluded in circumventing the system’s key safeguards. Today, the unmanageable levels of sovereign debt threaten to tear up the eurozone and trigger state bankruptcies.
Opinion: Ready for the next recession?
Economists enjoy delivering bad news. The current favorite being shared by academics and financial experts is that the world is headed for a recession, in 2020 or 2021 at the latest. But we regard this as unlikely, unless there is a major political accident – such as a trade war or turmoil in China. While a slowdown is always possible, especially in Western Europe, that does not make a recession.
The consequences of prolonged low interest rates in Europe
Monetary policymakers are becoming preoccupied with the risks of persistently low interest rates to Europe’s still fragile economic recovery. Ultra-easy credit is creating growing economic distortions and asset bubbles, while reviving volatility and risk in financial markets. The European Central Bank realizes it must “normalize” rates, but it worries that sudden tightening could precipitate a financial crisis that could be as bad or worse than 2008-2009.
GIS Dossier: The strangely resilient euro
The euro has been remarkably stable during its 15-year existence as a major currency. That has not always been a good thing for the European economy. But the real concerns for the single currency hinge on politics and survival.