I have tried this line on German (and Dutch) policy makers. Don't think it worked.

But Sander's point is absolutely accurate. Bund supply is well under global holdings of euro reserves ...

Indeed! China will remain limited imo as long as it doesn’t liberalise its financial markets and opens up its capital account. So there is a lot of pent up demand buy Bunds if only Germany would provide them.

So a cheeky observation. Germany just doesn't issue enough debt to satisfy demand for core eurozone bonds.

So when someone starts screaming 'why is there no market discipline on France?' you can just tell them that the best fix may be...

...a higher German deficit.

Yup, France is worth mentioning. Its public debt has been on a steady, relentless upward trajectory for a long time now, with few signs of a reversal.

But the 🇺🇸 and 🇫🇷 satisfy safe assets demand at scale. The US = the US. France in part because there just aren't enough Bunds.

Nice crisp 'big picture' piece by Mark on the history of the IMF and where we seem to be going from here.

Including, of course, the question whether the IMF is embarking on mission creep by veering into climate/ gender etc. or whether these issues are truly macro-critical.

Fascinating. This graph illustrates better than long analyses the extent to which the global economy has changed in less than 20 years.

Genau

We were joined by Ian Bond, deputy director of the CER who warned that Trump was 'subservient' to Putin - which is a threat to America's European allies.

buff.ly/3PU7unQ

Very useful post.

Eurozone wage-price spiral anyone? 🧐

Very good thread on the Russian economy under sanctions.

Hmm, is China exporting deflation to Europe? Nope. While it would arguably help with inflation (although goods inflation is tamed already as supply bottlenecks unwound and demand is weak), it would undermine the already battered EU industry.

.Iain Begg wrote an excellent primer for us on the major dilemmas facing the EU budget: reconciliation of the regular budget with off-budget borrowing, the need for increased resources, and securing political legitimation for the budget process. Do read!

Just out, my essay for CER with thanks to Sander Tordoir and colleagues for editing suggestions cer.eu/insights/dilem…. Key message is that kicking the can down the road can no longer be the answer, especially if a 'big bang' EU enlargement is a realistic prospect. LSE European Institute

There is now a bit of pushback against concerns about Chinese overcapacity. That is in part because the notion of overcapacity is itself poorly defined (capacity v domestic demand, v global demand or v the demand needed for decarbonization)

But there is a real issue imo

1/x

Sure! My view is that Italy’s budget deficit is larger than desirable. It’s taken longer than expected to bring it down following the Covid support. Same can be said about several other countries, including US and France
Markets trust Italy will get it done, partly because of EU

Other disciplines are economists' friends here: carbon pricing is efficient, but big, rapid changes in energy prices are unpopular and very painful for poorer people, as the 1970s and 2022-3 periods tell us. So policy-makers have to use all three instruments.

If you're thinking faster payroll gains necessary means the Fed will hold higher for longer, listen to the Fed chair himself.

Shoutout to Jeanna Smialek for asking about this last month.

US jobs growth has been blistering compared to post-2008. But apart from big fiscal the nature of the shocks were different. Recoveries from financial crises tend to be sluggish and take long. The pandemic was a demand collapse / rotation where macro policy had real traction.

.Jean Pisani-Ferry : « Laisser dériver la dette publique serait très dangereux »
l'Opinion
👇👇
lopinion.fr/economie/jean-…

Exactly - US crisis response
policy has on balance been better than Europe’s in 2011-2013 and again today.