December 8, 2022
United States:
The Federal Reserve Is Deflating Financial Bubbles, Without a Crash
The Federal Reserve hasn’t had much success so far in wrestling down sky-high inflation, but its monetary tightening campaign is having a major impact in deflating asset bubbles that swelled during the pandemic.
Most importantly – and surprisingly – all this is occurring without upending the financial system.
Europe:
Europe Needs €500 Billion in Cash After Losing Top Bond Buyer
As winter approaches, governments across Europe have been frantically drafting aid programs to protect their citizens from the surge in energy costs triggered by Vladimir Putin’s invasion of Ukraine. There are electricity price caps in France, gasoline discounts in Italy and heating-bill subsidies in Germany.
These measures are costing a lot of money, notching up a tab in the hundreds of billions of euros, and swelling the region’s financing needs well above historical norms for a fourth straight year. The problem with it all is that unlike the past eight years, when the European Central Bank was happy to print money and buy as many bonds as needed, governments will have to find new financiers.
Asia:
China Mulls More Property Easing at Economic Meeting Next Week
Chinese authorities may further soften their stance on property policies at its key economic meeting next week after the Communist Party’s top decision-making body said it will seek a turnaround in the economy for 2023, according to people familiar with the matter.
The annual Central Economic Work Conference, where policy makers discuss next year’s goals including the gross domestic product target and the budget deficit, will start on Dec. 15, according to people with knowledge of the arrangement, who asked not to be identified as the information is private.
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