Global Letter – Investment requirements for a 2C world
Dear Colleague, Of the many issues that will be discussed in connection with the forthcoming COP26 meeting, one that need not be is the investment cost of switching to a green economy. The requisite resources will be available: though they seem unlikely to be deployed in time.
World View & Risks
Focus – The three ‘R’s: Recovery, reallocation, and resilience
Dear Colleague, Structural policies determine how readily resources move within an economy, and are an important determinant of economic performance. They are especially important when the structure of demand and supply are both changing fast, as they are now – due to, inter alia, the pandemic, climate change, rapid technological change, and geopolitical pressures. In […]
Analysis – Do not draw false comfort from the IPCC report
Any serious decision-maker may hope for the best, but plans for a most realistic outcome The IPCC report has some scenarios in which temperature rise is contained to below 2 0 C But the politics of China, the US, India, and Russia make such outcomes unlikely A rise of 3 or even 4 degrees seems […]
Analysis – What to infer from inflation outliers
Price shocks, or ‘outliers,’ raise general inflation if they ‘infect’ core prices and wages This happened in the 1970s and early 1980s, on the occasions of the two big oil shocks However, it has not happened (in ‘advanced’ economies) since the mid-1990s Current conditions do not seem ripe for a 1970s-type response to current outliers
Trimmed Means
The ‘Core’ measure of US inflation has risen misleadingly: it seems unlikely virulently to ‘infect’ other prices.
World View & Risks
Please find attached our foundation document, World View & Risks. Published quarterly, it presents: In two concise summary pages our judgement about the likely behaviour of the principal drivers of the world economy and financial markets over the year ahead; the most important risks; and what to watch for. Multi-page supporting evidence, argumentation, and references […]
Focus – Current account imbalances
Current account imbalances, such as between the US and the EU, serve a purpose. But it is possible to have too much of a good thing. The longer the imbalance stays large, the greater the likelihood of a reaction. That could come either from US or European politicians, or from markets.
Economic recovery and resilience
The rate to which economic growth settles down will depend on countries’ investment response, including to going digital and green, and the quality of their structural policies.
Analysis – Monetary policy and the value of the public debt
Pressure is set to mount on governments to start to reduce their national debt Yet paradoxically US and UK post-crisis monetary policy practice stands to increase it Changes in the operating procedures of these two central banks seem likely One way could be sterilisation of some QE-generated commercial bank excess reserves
