“The last time major central banks shifted gears together, it was a cooperative move to keep the financial crisis of a decade ago from becoming a full-bore, worldwide depression.
“Now, a new round of global ratecutting risks taking on a competitive edge as policymakers try to stay ahead of rising trade tensions, a volatile investment climate, and a shift in the political mood from shared support for globalisation to a more zero-sum battle over a slower-growing world economy.
“It’s a situation that has created deep internal divisions at the European Central Bank, the Bank of Japan and the U.S. Federal Reserve as officials debate how to confront a global slowdown with limited room to cut interest rates, and with elected officials pursuing policies that may be doing harm, at least in the short run…
““The worst thing that could happen is a global race to the bottom,” among central bankers in Tokyo, Frankfurt and Washington, said one official familiar with the BOJ’s thinking, who spoke on condition of anonymity.”
“Increasing signs of a slowdown in global demand have made Japanese central bankers less confident about an early pickup in global growth…
“Deepening negative interest rates will be among key options if the BOJ were to ease, although the central bank may need to accompany that with measures to mitigate the pain any such move could inflict on financial institutions, the sources said.”
“The European Central Bank is about to turn the screws again on financial institutions by diving even deeper into negative interest rates.”
“”In the current circumstances, it’s no [to a Brexit extension],” said Foreign Minister Jean-Yves Le Drian over the weekend, speaking with France’s Europe 1 radio broadcaster. “We are not going to go through this every three months.” And that is still the government’s stance today, the Foreign Ministry has confirmed to DW.
“Prime Minister Edouard Philippe has said the country is prepared for the UK to leave the European Union at the end of October.”
“Fears are rising of a recession in Germany, Europe’s biggest economy and long-time powerhouse of the eurozone.
“The latest data does not look good – the following eight charts show why a recession looks likely and why Germany must act to avoid a prolonged downturn.”
“Historically, once the U.S. yield curve (10-year minus three-month) inverts, the ISM enters contraction an average of seven months later. The “10-year minus three-month curve went negative on March 22, and here we are (almost right on time) five months later watching the ISM contract…
“The Federal Reserve can go sell the idea that the economy expanded at a modest pace through the end of August to the perma-bulls, but I ain’t buying.”
“Fannie and Freddie are less equipped for a downturn now than they were before the crisis, Senate Banking Chairman Mike Crapo (R-Idaho) said.
“Before 2008, he said, the companies held 45 cents in capital for every $100 in mortgages; today that figure is 19 cents.”
“Indexes and data show that the US-China trade war is hurting both sides. Additionally, US economic growth is cooling off due to lower corporate spending, among other factors. Businesses are holding back on capex amid trade war uncertainty.”
“The South Korean economy is closely watched because its exports are said to be a lead indicator of global economic activity…
“Now, according to data released last week, the Consumer Price Index (CPI) in South Korea decreased by 0.04% in August from a year earlier. It is the first time that South Korea has experienced consumer price deflation since statistics began to be compiled in 1965.”
“…existing predictive models and monetary policy tool kits are turning increasingly ineffective in either understanding or addressing the actual reasons for the slowing down of productivity growth…
“It is entirely plausible that we are now entering an era of low economic growth and a higher rate of deflation being the norm, especially within spaces where capital is very cheap and interest rates extremely low.”
“After months of denial, India’s Narendra Modi government is finally conceding that the economy is in trouble. The country’s GDP in the April-June quarter of this financial year grew at a meagre 5%—the lowest in six years…
“What is alarming, though, is that even this 5% growth may be an overestimation given the many infirmities in India’s revised GDP estimation methodology introduced four years ago.”
“South African factory output contracted for the second consecutive month in July as the output of petroleum and chemical products and basic iron and steel continued to shrink.
“Manufacturing production declined 1.1% from a year earlier.”
“Argentina has fallen back into crisis for the simple reason that not enough has changed since the last debacle.
“As such, the country’s economic and financial foundations have remained vulnerable to both internal and external shocks.”
“Debt was the medium that sucked the world into the vortex of the global financial crisis in 2008.
“And more debt was the mechanism used to get out of it.
“No one knows when the music will stop.”