Markets: The dangerous politics of central banks | The Economist

According to the Economist, central banks are now major creditors of western governments, guarantors of the financial system, set the cost of borrowing, potentially control access to housing finance (via macroprudential policy) and, at the ECB, mediating between the claims of creditor and debtor governments.

Source: Markets: The dangerous politics of central banks | The Economist

This is a first rate article. But what would we do if the central banks sat on their hands, certainly we couldn’t wait for political leaders to act?

Thoughts

China’s policy failings challenge the Fed | Gavyn Davies – FT

English: The Marriner S. Eccles Federal Reserv...

English: The Marriner S. Eccles Federal Reserve Board Building (commonly known as the Eccles Building or Federal Reserve Building) located at 20th Street & Constitution Avenue, NW in the Foggy Bottom neighborhood of Washington, D.C. Designed by architect Paul Philippe Cret in 1935, construction of the Art Deco building was completed in 1937. Its 2009 property value is $109,029,200. (Photo credit: Wikipedia)

This is an insightful, must-read article from leading macro-economist, Gavyn Davies, writing in his FT blog. Check it out!

China’s policy failings challenge the Fed | Gavyn Davies

Personally, I’m of the opinion that the Fed will delay an interest rate rise. However, if there’s continued volatility in financial markets, the probability of more quantitative easing increases.

Gavyn Davies provides some sound economic policy options for China and it will be interesting to see what transpires.

Thoughts?

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