Readers Question: Why is the current recession in Europe so bad? The recession in the Eurozone is one of the deepest recessions on record. For example, Greece are expecting 2013 to be the sixth consecutive year in recession (with on and off quarters of recovery)- this is one of the longest recession on record. Output …
Readers Question: There just seems to be many paradoxical actions taking place in markets and economies at the moment. How do we explain? Paradoxes of UK economy Low interest rates have not increased spending / economic growth Despite recession, inflation has been above target. Despite recession and depreciation of Pound, current account deficit increased in …
What are the Global Imbalances? US ran a large and persistent current account deficit (imports higher than exports) of up to 6.5% of GDP in 2006 Diagram of Current Account Surplus / Deficit in US and rest of world source: (1) 2. China ran a large current account surplus, accumulated foreign reserves, kept Yuan undervalued …
Readers Question: Why can’t a debt-crippled and deficit-induced state, go on with its most normal economic activities (by borrowing the needed money to make sure that no or at the most, unproductive spendings are curbed, no tax rates up, and no austerity measures) in a bid to emerge out of debt & deficit potholes sooner …
A look at why the value of the Euro is relatively strong despite the serious economic problems that the Eurozone faces. Readers Question: We keep getting told we face an imminent crisis. The Euro will fail, recession looms yet the stock markets soar after a sticking plaster is attached and the Euro remains high on …
General government gross debt is a definition of government borrowing used by the EU. Generally, UK government debt is published as ‘public sector net borrowing’ – There are two measures of this public sector net borrowing – one which includes financial sector intervention, and another which excludes. see: UK National Debt source: Stats on UK …
Readers Question: Every country’s economy has their own dynamics. Competitiveness is more or less adjusted by appreciation and depreciation of individual currencies in free economies. Then why is EU pressurizing Greece to stay in Eurozone? Except borrowings at a cheap interest rate, what are other real advantages of Euro? There are a few advantages to …
Readers Question: If the markets decide the UK is not such a safe haven and bond yields rise will pension funds heavily weighted in Gilts tend to fall? Yes. If investors feel that the UK is not a safe haven (they feel increased risk of UK government default). Then investors will sell UK bonds, this …