- Interest rates (a key tool of monetary policy) are a fundamental driver of where the global savings that swish around the planet are parked.
- Industrial world interest rates have been zero or close to zero for a while now - the US will be the first to raise rates.
- So already have seen a global move towards buying US$ assets, hence US$ stronger - a rate rise will reinforce this trend.
- Big commodity exporter hence suffering as commodity boom has ended (due to weak demand from China).
- So most Australia macroeconomic variables looking cloudier.
- Growth slower, budget deficit up, unemployment up.
- Yes - desire for order, feeling that society has gone too far to the side of liberalism & individualism.
- Roots lie in economic woes of former socialist president François Mitterrand's two terms (1981-1995).
- Amplified by recent terrorist attacks and fears of immigrants.
- President Zuma seems to be messing things up.
- Recently fired respected finance minster and replaced him with an inexperienced yes man, thus putting under question the independence of the country's financial & macroeconomic policy-making institutions.
- Backdrop a trajectory corruption, cronyism, weak economic performance and sovereign credit rating downgrades.
- US remains engine of global growth.
- Europe recovery gaining momentum.
- Emerging markets stay weak as China growth slows.
- Yes - economic crisis continues.
- Political crisis continues too - Rousseff hugely unpopular.
- Petrobras corruption scandal moving closer to her as investigators arrest corporate, financial, judicial & political grandees.
- Recession ending but growth still slow: PM Shinzo Abe’s plans (Abenomics) for reviving the economy have had mixed results.
- Minuses: Government debt remains large and a problem, so budget reform urgently required, but apparently not happening fast enough.
- Pluses: Positive consumer sentiment, exports healthy despite global wobblies as China slows.