Topic Category: Economy

It should not have come as a surprise that the majority of Greek voters opted not to accept more externally-imposed austerity by voting “no” in the Sunday, July 5th referendum. The election pollsters once again were proven wrong. It was not a close race with Greeks who wanted to remain in the Eurozone and add more to the country’s obviously untenable debt burden.

For years, China has been accused of being a “currency manipulator” by deliberately undervaluing its currency to spur exports. Official bodies like the International Monetary Fund softened the language by using the term “misaligned currency” and used sophisticated techniques to gauge how far the yuan was from its fundamental equilibrium value.

Economic sanctions have long been used as the foreign policy tool of choice for nations where diplomacy has failed to yield desired results. Although widely used and despite the fact that some sanctions have remained in place for years, they generally fail to achieve their objectives. In fact, one of the most definitive studies covering 1915 to 2006 indicates comprehensive sanctions are effective no more than 30 percent of the time.

We are still in the grip of the Great Recession. Economic growth remains anemic and below its trend rate in most parts of the world. What’s more, this state of subdued economic activity has been with us for more than seven years. True to form, central bankers have steadfastly denied any culpability for creating the bubbles that so spectacularly burst during the panic of 2008-09.

In this low interest rate environment, the search for yield is sending investors of all stripes to far flung places and uncharted territories looking for a decent return. These days, a “decent” return implies the investor has uncovered some form of magical alchemy that has enabled him or her to not only beat the market, but to serve as an early funding source of the next big thing.

Manny Mencia, senior vice president for international trade and development at Enterprise Florida, is the guiding force behind one of America’s leading trade, export development, and foreign direct investment organizations. Mencia attributes much of Florida’s international success over the past two decades to the state’s decision to privatize its economic development activities.

For the first time in recorded history, many European countries, plus Japan, have experienced negative interest rates. Government bond yields on short-term debt, as well as debt up to 10-year maturity, have turned negative in many countries, including Austria, Denmark, France, Germany, Finland, Switzerland, Sweden and Japan. More than 25 percent of European sovereign bonds sell with negative yields.

A snap election held in late January produced a decisive victory for Syriza. This leftist party pledged to force the IMF, the EU, and the European Central Bank — the so-called “troika” — to renegotiate the terms of agreements made by previous governments to obtain emergency loans totaling $280 billion, and gave its blessing to the write-off of about one-half of the country’s near $400 billion public debt.

A number of pundits continue to say how well the economy is doing, that inflation and unemployment are under control, that jobs are being created at a rapid and consistent pace, and that our economy is growing at rates not seen in more than a decade. Depending on your statistics and perspective, that may seem true.