The Fed blinks, Rising Risk of US Recession, Brazil’s China Bet Goes Wrong, Europe Fractures

What I’m listening to.

Alster Overture Suite in F Major: Die Hamburgischen Glockenspiele

The Fed comes to the rescue by doing nothing.

Telegraph -- Dollar tumbles as Fed rescues China in the nick of time

The central banks of Europe and Japan discover that it is impossible to stave off deflation by debasing their currencies when everybody is playing the same game

 

Road to recession.

New York Times -- If There Is a Recession in 2016, This Is How It Will Happen

More and more news headlines and stock market analysts’ reports have started predicting, or at least insinuating, that a recession could be near in the United States.

Quote --  “What we’re dealing with isn’t just a run-of-the-mill economic slowdown in emerging markets, but the reversal of a 15-year cycle in which capital has flowed into emerging markets year after year while debt grew. Now that’s reversing, and we’re seeing a version of Warren Buffett’s maxim that “you only find out who is swimming naked when the tide goes out.””

(ed’s note: I wonder how many people that jumped into the housing market in Toronto and Vancouver were wearing swimming trucks.)

Related.

Financial Times -- Risk of US recession low but rising

The dollar is falling sharply, while the market bets ever more confidently that there will be no rate increases from the Federal Reserve in 2016. This is driven by a rising belief that the US could be slipping into a recession this year — a possibility that only a few weeks ago was regarded as negligible.

Brazilian economic nightmare.

National Post -- If you thought the economy was bad in Canada, you should see what’s happening in Brazil

Brazil literally bet the farm on Chinese growth this millennium. Its trade with China expanded more than 40 times between 2000 and 2013, making China its largest trading partner in place of the United States. Now, with Chinese economic growth foundering, Brazil is paying the price.

Meanwhile in Europe ...

New York Review of Books -- ‘The EU Is on the Verge of Collapse’—An Interview

The European Union was meant to be a voluntary association of equals but the euro crisis turned it into a relationship between debtors and creditors where the debtors have difficulties in meeting their obligations and the creditors set the conditions that the debtors have to meet. That relationship is neither voluntary nor equal. The migration crisis introduced other fissures. Therefore, the very survival of the EU is at risk.

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Twin Virtues: Inequality of Outcomes & Equality of Opportunity©

Twin Virtues

Ultimately, the most successful societies find the balance between the twin virtues of inequality of outcomes and equality of opportunity.

The new politics must marry the twin virtues of unequal outcomes and equality of opportunity.

When too few get too much everybody loses.

Feminism is about women living their lives on their own terms, marshalling the resources of the society to make that possible, and men embracing this as vital to a successful society and their own liberation.

Can it be that striving for equality of opportunity however imperfect the process not only benefits the individual but also creates benefits for the society that are unintended but wonderful?

Economics must be a 'moral enterprise' as much as politics claims to be. Economic outcomes need to be framed in terms of right and wrong not just efficiency if only because these often align in surprising ways that are good for society and the economy.

My vision of Canada is that any Canadian child from a family of limited circumstance can expect to have a chance at lifetime of unlimited opportunities.

Free trade is a wonderful thing. Time and time again economists have proven that free trade creates enormous wealth for each country 'on the whole'. Historians have shown that free trade is usually associated with rising political, social and cultural liberty. The perennial problem is that free trade always creates tremendous disruption for thousands even millions of individuals often concentrated in one geography, and where the state is idle, not investing in best in class instruments of social justice, free trade can be a permanent ticket out of the middle class, down, not up.

Tax policy should be founded on the principle of generating steady tax revenues sufficient to maximise environmentally sustainable economic growth in order to fund fair government.

Public policy should be designed to decrease inequality before the law and increase equality of opportunity.

Capitalism is not the problem; the problem is what we do with capitalism.

Content is always more difficult to argue than conspiracy.

Let the state regulate and the market operate (most things).

Welfare strategies are best designed as a hand up, not as a hand out.

Political debate should not be fact free fighting.

Explanation lasts longer than eloquence.

Always favour empowerment over dependency.

The most enduring public figures are embraced for the causes they fought for and not the concept of themselves they hoped others would remember them by.

Find your voice and don't be the echo of somebody else.

It is possible to operate on two different levels: the practical, cautious and conservative; and the realm of ideas, open, free, and radical.