Negative rates, deficits and defaults

Japan’s, the US’s and Europe’s central banks and governments continue to fly by the seat of their pants, since none of their policies restored prosperity since the 2008 crisis.  Incomes stagnate, labor force participation is at historical lows, and though measured unemployment dropped, the fact that there are no pressures whatsoever on compensations suggests that the decline in unemployment rates no longer signals better times.  In Canada, the drastic drop in prices of natural resources and the value of debt backing that industry has brought particular shock-waves to finance, insurance, and other sectors, indirectly backed by these debts leveraged few times over.

...Reuven Brenner holds the Repap Chair at McGill University’s Desautels Faculty of Management.

Read full article: Asia Times, 14 February, 2016