Asian powers ponder options as America turns inward
With internationalism on the retreat in the United States and Europe, Asia’s two biggest powers find themselves on the spot. Both China and India have spoken in defense of globalization and a multilateral, rules-based order. But neither appears ready to fill the vacuum left by receding U.S. power.
Return of shale? Scenarios for the Trump administration
The first shipments of what promises to be a flood of shale gas from the United States have reached Asia. These exports could dramatically increase U.S. political leverage in the region. Most importantly, they have the potential to forge new bonds with China in a time of stress and help check Russian expansion.
President Trump’s real bet is on tax cuts
President Donald Trump has threatened to erect trade barriers to create jobs and boost wages in the United States. These goals won’t be reached through protectionist measures, which more likely will be used as a geopolitical bargaining chip. Instead, Mr. Trump’s economic policy will hinge on the success of his plan to cut corporate tax rates and weaken the dollar.
The U.S. and China’s ‘free trade’ agendas
The United States and China are not true champions of free trade. Beijing pushes exports but effectively curbs imports through a maze of administrative obstacles. Washington traditionally concentrates on job protection and creation; its trade policies reflect these priorities.
Fed seeks cover in ‘natural’ interest rate
Last summer, commentators began predicting that U.S. monetary policy would no longer aim to avoid deflation and boost growth, but to keep market interest rates close to what economists call the 'natural' rate. The reasoning behind this argument – publicly voiced by Fed Vice Chairman Stanley Fischer, among others – is puzzling. That may be deliberate, as the Fed has plenty of reasons to want a free hand in coming months.
Progress and disillusionment in Mexico
The advent of Donald Trump has not come at a good time for Mexico. After a fast start, the reform-minded government of President Enrique Pena Nieto has bogged down in corruption scandals and a stagnant economy. But tensions with the U.S. may also create opportunities for Mr. Nieto, if he is skillful enough to use them.
Strange bedfellows: Donald Trump and the Fed
President Donald Trump’s incoming administration is about to give the United States Federal Reserve just what it’s been asking for – a significant fiscal stimulus. The problem is what happens next, when inflation expectations, interest rates and the dollar all go up. Tempers will flare in Washington, and the international repercussions could be much worse.
President Trump’s impact on Latin America
We do not know how much Donald Trump does not know about Latin America. If he keeps his campaign promises, the U.S. economy could suffer as much as Mexico’s or Brazil’s, and illegal immigration could get worse. A lot will depend on the new president’s learning curve.
Obama’s monetary diplomacy
The protectionist views of U.S. President-elect Donald Trump are well known, but there has already been a drift in that direction under the Obama administration. One of its favorite tools has been currency monitoring – a way to strong-arm trading partners into adopting tighter monetary policies.
After the Brexit vote: a benchmark scenario for Europe (part 2)
There has been much talk but little planning for Europe’s life after Brexit. Yet proposals to make the EU more accountable, competitive and flexible have been on the table for almost a year. This report outlines a compromise scenario for an economically sensible, “soft” Brexit that could provide a broader framework for relations between the EU and its neighbors.