Topic Category: Economy

When President Barack Obama nominated Federal Reserve vice chairman Janet Yellen to take over as Fed chairman after Ben Bernanke departs in January, the markets purred a sigh of relief. The Fed’s adherence to ultra-low interest rates and quantitative easing to boost risk taking and asset prices is now expected to continue for at least another year and most likely until the end of 2015. This could prove costly.

Since the global recession began in 2008, Europe has struggled. For example, last year the European Union (EU) which is comprised of 27 countries with a consumer base of approximately 500 million, registered -0.2 percent growth. Although its economy has improved, it remains vulnerable. Nonetheless, there is a considerable upside not reflected in these figures.

The average home price in 20 major cities rose 12.1 percent over a 12 month period ending in June, according to the S&P/Case-Shiller Home Price Indices, a leading measure of the U.S. real estate industry. But this trend may be coming to an end as the increase in home prices appears be slowing partly due to rising mortgage rates. But the bigger picture sheds light perhaps on a more difficult issue.

Reacting to the 2008 collapse of Lehman Brothers, which portended a further implosion of banking, The Wall Street Reform and Consumer Protection Act (Dodd-Frank) was enacted in 2010. As this financial catastrophe reaches its third anniversary, a recent bipartisan panel from the American Enterprise Institute characterized the Dodd-Frank Act for what it is: "a failure." This is one forgettable anniversary.

The broad coalition government formed in the aftermath of two snap elections held in May and June 2012 has not held up well under the strain of implementing a painful austerity program demanded by the EU and the IMF as a condition for two packages of bailout loans. The coalition was already leaking support when the Democratic Left, the smallest partner, abandoned the government in protest over the enforced closure of the state broadcaster, ERT.

President Enrique Peña Nieto has managed to enlist the backing of both the conservative PAN and the left-leaning PRD for the reform agenda of his PRI administration. The unprecedented tripartite alliance, dubbed the “Pact for Mexico,” has agreed to steer a total of 95 reform initiatives through the 500-member Chamber of Deputies, and has already delivered in the areas of education, labor-market rules, and telecommunications.

President Park Geun-hye has suffered a number of political setbacks since taking office in February. This includes the forced withdrawal of four prospective Cabinet nominees from consideration owing to various transgressions or questionable affiliations, allegations that agents of the National Intelligence Service engaged in illegal political activity on behalf of Park’s presidential campaign, and accusations that her top aide committed sexual assault during a state visit to the U.S. in April.

The Bangladesh coalition government led by Prime Minister Sheikh Hasina Wazed’s AL remains broadly stable. It also maintains a narrow lead over the opposition BNP in opinion polls despite weeks of labor unrest and political violence that have begun to take a toll on the economy. AL’s attempts to enhance its electoral advantage by rallying secular voters behind the war-crimes prosecutions of top Islamist figures will heighten domestic tensions.

People’s trust in government erodes when there is no genuine rule of law to limit the power and scope of the ruling elite. The latest breach of trust in China is the discovery that more than 40 percent of the rice supply in Guangzhou was tainted with cadmium, a toxic metal. The socialist idea that “power resides in the people” is a mantra without substance.