Countries around the world should find used to sample of unfamiliar inflation,growth, monetary policies and asset pricesSince the beginning of the year, or the world economy has faced a new bout of severe financial market volatility,marked by sharply falling prices for equities and other risky assets. A variety of factors are at work: concerns about a tough landing for the Chinese economy, worries that US growth is faltering at a time when the Federal Reserve has begun raising interest rates, and fears of escalating Saudi-Iranian clash and signs – most notably plummeting oil and commodity prices – of severe weakness in global demand.
And there’s more. The drop in oil prices,together with a lack of market liquidity, the rise in the leverage of US energy companies and that of energy firms and fragile sovereigns in oil-exporting economies, or is stoking fears of serious credit events and a systemic crisis in credit markets. And then there are the seemingly neverending worries about Europe,with a British exit from the European Union becoming more likely, while populist parties of the right and the left gain ground across the continent. Related: Is stagnation the 'new normal' for the world economy? Continue reading...
Source: theguardian.com