Euractiv – Jorge Valero / ECB admits negative effect of monetary stimulus on German and Spanish banks
- In its annual report for 2017, published yesterday, the European Central Bank (ECB) admitted some negative effects of its extraordinary measures adopted since 2014, including low interest rates, negative rates and the bond-buying programme. But “the negative aspects have, to date, been generally offset by the positive effects,” stressed the report.
- In the case of Italian banks, the return on assets slightly increased mainly thanks to the improvement of credit quality. The impact of the policies was broadly neutral in the case of French banks, but it was negative for German and Spanish banks.
- Despite the positive effects of its monetary stimulus, the ECB admitted that the eurozone banks’ outlook looks gloomy as it is reflected in their market value.
- The ECB recommended that the banking groups continue with the consolidation, more digitalisation of their activities and cross-border mergers and acquisitions.
Financial Times – Peter Navarro / Donald Trump is standing up for American interests
- Since its WTO accession in 2001, China has broken every rule in the fair trade book on the way to expanding its annual gross domestic product from $1.3tn to $11.2tn. Meanwhile, the US economy lost more than 60,000 factories and millions of manufacturing jobs.
- The US economy is beginning to renew its strength thanks to President Trump’s four-point growth plan: historic tax cuts, constructive deregulation, the unleashing of America’s energy sector and progress on a number of trade fronts.
- However, the US trade deficit in goods with China has grown from $347bn in 2016 to $375bn during Trump’s first year in office.
- China is assaulting American technology and intellectual property, and is trying to capture emerging high-tech industries. If China captures these industries, the US simply will not have an economic future.
- Trump seeks only a shared prosperity based on trade peace. His vision is that of a global trading system free of the imbalances and unfair practices that now hold growth back, not just in the US but around the world.
Project Syndicate – Joseph S. Nye / Asia after Trump
- A frequently heard question in Singapore is: Will US leadership in Asia survive the Trump years? The answer is probably yes, as long as the US relearns the lessons of using power with others as well as over others, and its openness survives.
- As for the rise of China, the US retains important power advantages – in terms of demography, geography, energy, technology, higher education, and the role of the dollar – that will last longer than even an eight-year presidency, should Trump be reelected.
- The US retains not only the power advantages described above, but also its alliances with Japan and South Korea, which North Korea is trying to weaken.
- The US and China are not destined for war. Neither poses an existential threat to the other. The two countries have time to manage their many conflicts and need not succumb to hysteria or fear.
Brookings – Homi Kharas & Brina Seidel / New insights into the distribution of world income
- While elements of Christoph Lakner and Branko Milanovic’s original “elephant graph” (based on data from 1988 to 2008) have been confirmed by other data in other contexts, the elephant shape itself may be an overburdened and inaccurate depiction of what is really going on in the world economy.
- In an updated version of the chart (based on data from 1993 to 2013), there is limited evidence that the global poor have been seriously left behind. The rise of the global middle class remains unchanged. People between the 70th and 90th quintiles in the world income distribution have made more gains than previously thought. And the top 5% have gained less, which is partly because the rich fared poorly in the post-recession period.
- According to household survey data, far more countries show improvements in the Gini coefficient this century than a worsening. Only in developed countries is there systematic worsening of income distribution.
- The world seems to be a better place for more and more people, and the real global story is now one of improvement in global income distribution; between-country and within-country convergence both appear to be widespread in the global economy. But the lack of comparable data means this will continue to be a debate that may never be satisfactorily settled.
The selected pieces do not necessarily reflect the views of Javier Solana and ESADEgeo. The summaries above may include word-for-word excerpts from their respective pieces.