In a televised-address on February 17, Venezuelan President Nicolas Maduro delivered some crushing news to his country.
To address the fiscal crisis facing the country, the government decided to raise fuel prices by more than 6,000 percent. While that may sound dramatic, it will still leave Venezuela with some of the cheapest fuel in the world. Prices for 95 octane gasoline at the pump will jump from 0.097 bolivars to 6 bolivars. It was the first increase in fuel prices in 20 years. Continue reading
ZURICH — The Swiss central bank is ready to intervene in the currency markets again to weaken the franc if necessary, the bank’s head said, just two days after the removal of a cap on the franc triggered a surge in the currency’s value. Continue reading
Three of the world’s largest banks have warned that the flood of “hot money” into China is at risk of sudden reversal as the yuan weakens and the US Federal Reserve brings forward plans to raise interest rates, with major implications for global finance.
A new report by Citigroup told clients to brace for a second phase of the “taper tantrum” that rocked emerging markets last year, but this time with China at the eye of the storm.
“There’s a dangerous scenario in which the combination of rising US short-term rates and a more volatile RMB (yuan) could lead to a rather large capital outflow from China,” said the report, by Guillermo Mondino and David Lubin. Continue reading
The world is one financial downturn, one major terrorist attack or one regional war away from collapse. 9/11 happened when the U.S. was on the brink of another economic bubble whereas the downturn of 2008 was a bubble created during the Clinton years in which it was only a matter of time before it popped.
As matters stand, the next recession will push the Western economic system over the edge into deflation
Half the world economy is one accident away from a deflation trap. The International Monetary Fund says the probability may now be as high as 20pc.
It is a remarkable state of affairs that the G2 monetary superpowers – the US and China – should both be tightening into such a 20pc risk, though no doubt they have concluded that asset bubbles are becoming an even bigger danger. Continue reading