Big Reads on Economics Show Battle Lines Drawn on Climate Action
German manufacturing, South Korea exports, and U.S. consumer confidence were among the weak data reported.
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Warring visions of how to handle the deleterious effects of climate change on the global economy are being cast in sharper relief, adding to a basket of growing challenges that are dividing policy makers.
The climate debate was front-and-center in New York this week, where world leaders weren’t exactly “united” as they gathered for the United Nations General Assembly. “Patriot” forces lined up against “globalist” proponents, drawing more battle lines about how to revive the global economy.
German manufacturing, South Korea exports, and U.S. consumer confidence were among the weak data reported -- adding urgency to debates over what roles governments and central banks should take on in efforts to avert the next economic downturn.
To get a better sense of what’s going on, here is a collection of this week’s analysis and enterprise from Bloomberg Economics:
Climate change has spooked central bankers who already have a lot on their plates these days. Jill Ward writes about how it’s been a long time coming for Bank of England chief Mark Carney, who warned of a “tragedy of the horizon” four years ago as he argued that policy makers were underestimating the climate risks to global financial stability. Natasha Doff, Ilya Arkhipov and Yuliya Fedorinova track how Russian President Vladimir Putin has come around to climate action while remaining a staunch skeptic on the science.
In an old phrase turned new again, variations of “helicopter money” are making a comeback as policy makers dust off the stimulus playbooks. Enda Curran and Ben Holland write this week that proposals from the likes of billionaire Ray Dalio and monetary policy maven Stanley Fischer share a vision of central bankers taking a more junior role alongside more collaborative governments. We’re already seeing how Mario Draghi’s favoritism of helicopter money-like policies is spurring intense debate across Europe.
Shawn Donnan takes a deeper look at the state of Alabama, where businesses fear that a collapse in grain exports on the sidelines of the U.S.-China trade war is only the start of their local troubles emanating from stop-start negotiations between Washington and Beijing. With tensions also brewing between the U.S. and European Union, Alabama -- which counts the EU as its largest foreign investor -- stands to lose further.
China’s not rushing to slash interest rates or pump out fiscal stimulus to recharge its economic growth, making it an outlier among the three biggest economies, Kevin Hamlin writes. Whereas the Communist Party has traditionally been quite aggressive in protecting its growth forecasts, this time it’s managing a slowdown that elevates stability over stimulus -- especially with a fear of debt repercussions.
Masses of stranded crates holding the superfood are emblematic of the mess many businesses are in as they await more certainty around Brexit, as Lucy Meakin explains from London. Firms are unlikely to hoard as much leading up to the Oct. 31 deadline as they did ahead of the March delay -- lending less of a temporary boost to GDP figures.
The shock in the repo market last week -- and the Federal Reserve’s unusual efforts to stabilize the short-term money markets -- was a decade in the making, Liz Capo McCormick, Matthew Boesler and Craig Torres explain. There’s reason we should all pay more attention to the repurchase agreements, Rich Miller shows: It’s a more-than-trillion-dollar market that’s been overshadowed by the much smaller federal funds market, which holds claim to the Fed’s benchmark interest rate.
Vietnam is looking to defuse Trump’s ire around its trade-war gains with a $5 billion plan around buying American. In another angle on how supply chains are being reworked across Asia, the Bangkok bureau measured growing Chinese interest in Thai manufacturing sites. And Colombia is looking to boost trade with Asian countries as it seeks to protect itself amid ongoing tariff tensions, President Ivan Duque told us in an interview.
A range of Bloomberg-created graphics are lending caution to the economic outlook for China, India, and global trade. Chinese early indicators are on the cooler end of the scale for a fifth month amid worsening in trade, factory prices and small business confidence. India’s growth looks to be little revived from a six-year low. And German business expectations are the latest gauge to turn south on our Trade Tracker.
To contact the reporter on this story: Michelle Jamrisko in Singapore at mjamrisko@bloomberg.net
To contact the editors responsible for this story: Simon Kennedy at skennedy4@bloomberg.net, Zoe Schneeweiss
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