Economic news

World policymakers see darkening outlook

Reuters

From Seoul to Washington, policymakers are increasingly worried about the outlook for the global economy.

Central banks in Europe and Asia took a more cautious stance on Thursday and Brazil said the deteriorating world economy prompted its surprise rate cut last week.

U.S. Federal Reserve Chairman Ben Bernanke said the central bank would do what it can to boost growth and reduce unemployment, but offered no details on what that would entail.

"It is clear that the recovery from the crisis has been much less robust than we had hoped," Bernanke told the Economic Club of Minnesota.

It is against this backdrop that finance ministers and central bankers from the Group of Seven industrialized nations will meet on Friday.

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OECD warns German economic output could fall

The German economy could contract by 1.4% in October to December, the Organisation for Economic Co-operation and Development (OECD) has warned.

BBC

The OECD said Germany could be most affected by a downturn in global trade, but said high uncertainty surrounded all its latest estimates for the G7 group of the world's largest economies.

It added that its German estimate may be out by up to 2.1 percentage points.

It expects 0.1% growth in the UK during October to December.

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‘Desperate’ Haven Rush to Boost Norway Krone

Bloomberg

8 September, 2011

Norway’s krone will gain further as investors “desperate” for protection against a deepening European debt crisis turn to one of the few haven markets that isn’t overvalued, said Deutsche Bank AG, the world’s biggest currency trader.

The krone rose more than any other major currency against the franc on Sept. 6, when the Swiss National Bank said it will defend a target of 1.2 against the euro with “utmost determination.” As Swiss efforts to shut the door on franc appreciation force investors to turn elsewhere, the krone will be one of the currencies to fill the vacuum, said Henrik Gullberg, a London-based strategist at Deutsche Bank.

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Now This Is Happening: A Bank Funding Crisis in China?

Wall Street Journal

7 September, 2011

As if we didn’t have enough to worry about, there are signs of a bank funding crisis in China.

Bank of America Merrill Lynch rates and currency strategists raise the red flag (of warning, not of China) this morning, appending this fairly unnerving chart of the spread between Shibor and the PBoC bill rate, which is the equivalent of our Libor-OIS spread, measuring the anxiety banks feel about lending money to each other in the short term.

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