Drop the QE3 talk. Ruchir Sharma in the Financial Times says the Federal Reserve’s actions burst the commodities bubble and increased the wealth gap. “…the poor are hit hardest by rising commodity prices… This link between monetary easing and inequality is a byproduct of the new liquidity link between stock prices and oil prices.”
The West has outsourced its “new normal” to India. Niranjan Rajadhyaksha in Mint writes that the land once dreaming of double-digit GDP growth might have to settle for as low as 6%. Still, the difference between actual and potential growth has not widened much, which means large interest-rate cuts might not be on the horizon. “Getting out of the trap of lower growth will require fiscal discipline as well as policy reforms.”
Putin’s style is invoking memories of Stalin. Alexander Golts in the Moscow Times says Russia’s president is trying to boost private-sector spending in defense as modernization has passed the country by. “Let us all hope that Putin has no intention of copying Stalin’s method of industrialization. The Soviet dictator’s forced collectivization campaign drove millions of peasants from the countryside to industrial cities to provide the labor force for his gigantic industrial and construction projects.”
Did Mario Draghi just kill democracy? Gideon Rachman in the Financial Times on how the European Central Bank’s bond-purchase plan strikes at each country’s economic sovereignty. “…the ECB, an unelected body that prides itself on its independence from government, has just taken a decision that has profound implications for German taxpayers – but one that they cannot challenge or change.”
M is for Mao. China tries to influence curriculum in Hong Kong classrooms to make children more “patriotic.” The plan was overturned but William Pesek in Bloomberg finds the meddling troublesome and a sign of rocky relations to come. Said one engineering student, “It’s so offensive that China thinks we are this stupid. …Most mainlanders don’t even know about Tiananmen Square or the millions who died thanks to Mao Zedong’s policies. They don’t know a thing about their government’s real history. And now China wants to keep us in Hong Kong in the same darkness?”