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Fed Must Consider the World and All U.S. Employment
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Kaushik Basu, economist at Cornell University, and Chief Economist at the World Bank, says the U.S. Federal Reserve should consider the current low labor participation rate and low inflation in its rate policy setting decisions in 2015. Basu points out that in the recent past unemployment has gone below the current 5.5% without increasing the risks of inflation. He cites the period from July 1997 to August 2001 when inflation was below 5%, and at some points below 4%, yet inflation in 2002 was close to 2%. The large number of discouraged workers in this economic cycle has placed the unemployment rate below what it really is, says Basu.
Expert opinion on U.S. Federal Reserve rate increases in 2015- views in emerging markets (2)
04/09/2015
Grouped Articles
Fed Must Consider the World and All U.S. Employment
Wall Street Journal 04/09/2015
The Economist on the Brazilian economy's perilous situation in 2015-2016
04/05/2015
Dollar debts for Brazil went up from $100 billion in 2010 to $250 billion in 2015, according to BIS data. Even more in local currency terms which went up from 210 billion reais to 650 billion reais. BNDES and Caixa Economic Federal, 2 state owned banks made up 35% of bank loans in Brazil in 2009, by 2015 this went up to 55%, making Brazil's banking system a fiscal operation overly dependent on the state. With rates as high as 16%, the state banks provide subsidized loans to firms at 5.5%. Monetary policy is difficult for the central bank as increasing rates to shore up the declining real would hurt the economy, which is expected to contract by 1.5% by official estimates, but higher according to other private estimates. The declining real, drought affecting hydroelectric generated power prices, and lower export revenues, in addition to high debt interest payments exceeding 6% of GDP, are leading to low or no economic growth for 2015-2016. This comes at a time of corruption issues and ratings one notch above junk for state oil company Petrobras, which itself needs government support.
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Brazil’s coming recession: The crash of a titan
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Fed Must Consider the World and All U.S. Employment
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The Federal Reserve's monetary infusion and inflation risks.
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The anxiety over the Fed's monetary infusion and the increase in rates on the 10 year Treasury and in the corporate bond markets. The actual risks as manufacturing capacity utilization drops to 68% in May 2009, and as auto manufacturing continues to take a big hit in 2009.
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Fed Must Consider the World and All U.S. Employment
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Brazil and India are expected to call for the U.S. Fed to keep emerging markets slowing growth in mind as it reduces bond purchases. Yet the U.S. Fed will continue to focus on U.S. economic conditions.
Grouped Articles
U.S. to Face G-20 Pressure Over Bond-Buying Cutbacks
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Fed Must Consider the World and All U.S. Employment
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DW.COM 11/30/2018
The risk of dollar denominated loans in Turkey, India, Brazil, S. Korea and other emerging markets as local currencies depreciate- 2013-2015
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As currencies in emerging markets, the real in Brazil, the rupee in India, the lira in Turkey depreciate in value, it becomes more difficult for borrowers in these countries to pay back loans denominated in dollars. During the period of quantitative easing policies of U.S. Federal Reserve chairman Bernanke following the financial crisis of 2008-2009, low U.S. interest rates and strong local currencies made it cheaper to borrow in dollar denominated loans than pay the higher interest for local currency loans in reals, rupees or lira.
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Istanbul Skyline Reflects Cheap Dollars Now Growing Scarce
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New York Times 08/22/2013
Emerging Stocks' Emerging Problems
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Brazil Struggles With Weakening Currency
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Expert opinion on U.S. Federal Reserve rate increases in 2015- views in the U.S. (1)
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Grouped Articles
Fed Must Consider the World and All U.S. Employment
Wall Street Journal 04/09/2015
A delicate balancing act for the Federal Reserve to withdraw support that puts a dark cloud over the economy..
10/01/2009
Incrementally withdrawing support where and when possible will be a tough act for the Fed, after the Fed has committed $1 trillion so far as support to debt securtization markets that breathe life into the USA economy. Shiller says these markets are dead, we are stuck, and no one knows what will happen if they are hobbled for corporate real estate, mortgages, auto loans.
Grouped Articles
Wall Street Journal 08/01/2013
Fed Must Consider the World and All U.S. Employment
Wall Street Journal 04/09/2015
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Paralysis in the Debt Markets Is Deepening the Credit Drought
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The risks of the Federal Reserve's reinflation policy in 2010-2014
10/11/2010
A rise in commodities prices is one serious risk, leaving consumers drowning in the reinflation.
Grouped Articles
Inflation Below Fed Target for 22nd Month in a Row
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Risk of Deflation Feeds Global Fears
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Fed's Reflation Bet Could Hit Consumers Before It Helps
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Wall Street Journal 10/25/2010
Wall Street Journal 10/26/2010
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08/06/2013
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Grouped Articles
Rajan Has Limited Rupee Options
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Rupee Throws Oil on India's Subsidy Problem
Wall Street Journal 08/21/2013
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