Words of caution

"But when the BIS (Bank for International Settlements) writes that: "Central banks cannot repair the balance sheets of households and financial institutions. Central banks cannot ensure the sustainability of fiscal finances. And, most of all, central banks cannot enact the structural economic and financial reforms needed to return economies to the real growth paths authorities and their publics both want and expect."

Doesn't that seem fair enough? Central banks can buy time for economies, they can resolve liquidity crises, but they are not the most crucial factor in determining long-term growth rates. Those are determined by the make-up and skills of the population, the endowment of natural resources and the society's institutions - rule of law, property rights etc."

http://www.economist.com/blogs/buttonwood/2013/06/global-economy-and-monetary-policy

The debt crisis - Can it be inflated away?

"Regular readers will know the mantra "inflate, stagnate, default" that this writer has perceived to be the three likely outcomes of the debt crisis. Now Marco Valli, the euro zone economist of Unicredit, the Italian bank, has produced a very interesting 27-page note on the issue. To give the game away, the title is "Inflating away the debt overhang? Not an option". Mr Valli argues that a central bank trying to achieve this aim would face three challenges:

1. to create inflation in the current context of large economic slack and private/public sector deleveraging

2 to do so in a way that faster inflation leads to negative real interest rates, thus generating a transfer from investors to the government 

and 3 to deliver negative real rates that are sufficiently large and/or last sufficiently long to allow for a significant reduction of the debt/GDP ratio.

Mr Valli argues that 'it is virtually impossible to satisfy these three conditions in a low-growth, high-public-deficit environment'. Of course, in a strong growth, low deficit (better still, a primary surplus) environment, there would be no need for a central bank to take the risk of attempting to inflate the debt away."

http://www.economist.com/blogs/buttonwood/2013/05/debt-crisis

How does Bitcoin work?

"BITCOIN, the world’s “first decentralised digital currency”, was launched in 2009 by a mysterious person (or persons) known only by the pseudonym Satoshi Nakamoto. It has been in the news this week as the value of an individual Bitcoin, which was just $20 at the beginning of February, hit record highs above $250, before falling abruptly to below $150 on April 11th. What exactly is Bitcoin, and how does it work?

Unlike traditional currencies, which are issued by central banks, Bitcoin has no central monetary authority. Instead it is underpinned by a peer-to-peer computer network made up of its users’ machines, akin to the networks that underpin BitTorrent, a file-sharing system, and Skype, an audio, video and chat service. Bitcoins are mathematically generated as the computers in this network execute difficult number-crunching tasks, a procedure known as Bitcoin “mining”. The mathematics of the Bitcoin system were set up so that it becomes progressively more difficult to “mine” Bitcoins over time, and the total number that can ever be mined is limited to around 21m. There is therefore no way for a central bank to issue a flood of new Bitcoins and devalue those already in circulation."

http://www.economist.com/blogs/economist-explains/2013/04/economist-explains-how-does-bitcoin-work?fsrc=scn/fb/wl/bl/ee/bitcoinwork2

The debt run

"Similarly, when debt levels are many times the value of GDP, a large proportion of GDP needs to be rolled over every year. Say, debt is 400% of GDP and the average maturity of debt is five years; then 80% of GDP needs to be rolled over every year. If creditors become nervous about the debtors' ability to repay - as they will in the face of falling asset prices or stagnant incomes - they they will be unwilling to extend the loan. If debtors are able to pay out of their own resources, they will see a fall in their spending power. If debtors are able to repay by selling an asset, there will be a fall in asset prices. And if they are unable to repay, there will be a hit to the creditors' balance sheet. All three results hurt the economy."

http://www.economist.com/blogs/buttonwood/2013/03/financial-crisis

Credit ratings: The numbers behind the ratings

The Economist przygotował przyjazne zestawienie ratingów poszczególnych państwa wraz z podstawowymi danymi makroekonomicznym: deficytem budżetowym i relacja długu do PKB.

http://www.economist.com/blogs/buttonwood/2013/02/credit-ratings

The roar of ice cracking

Artykuł o gospodarczym i ekonomicznym znaczeniu zmniejszania się powierzchni pokrywy lodowej w Arktyce. 

http://www.economist.com/news/international/21571127-will-asian-countries-consolidate-or-disrupt-arctic-stability-roar-ice-cracking