Four Recent and Interesting Posts

1.  The populist right appears to be gaining momentum in European politics.  Despite high levels of unemployment, disparity of wealth and income, and dysfunctional elites, the political left is missing in action.  At the same time, a significant minority of Americans want their state to leave the union (federal government).  Is this the crisis of the nation-state?  Is this a serious risk?  

2.  Sterling continues to be driven by interest rate expectations.  Recent data has shown some loss of economic momentum since mid-year.  The pendulum of market sentiment is swinging toward a later rate hike.  Its all about the base (rate).  No trouble.  

3.  Draghi provided more details about the ECB's asset purchase program, but here is a broad discussion of the forces at work, and why what ails the euro area is beyond the scope of monetary policy.   Our preview anticipated most of the outcome, including the lack of specific size of the program, and the failure to hint at a sovereign asset purchase program.  The role of below investment grade assets lacks clarity, but appears that it will be very small compared with the overall expansion of the ECB's balance sheet, for which Draghi soft-pedaled the 1 trillion euro target that he seemed to previous suggest.  We had cautioned against thinking of it as a hard and fast policy goal.  

4. Events in Hong Kong raise the question of the relationship between liberty and freedom. Although the words are often used inter-changeably, there is a significant difference.  Separately, Hong Kong is a part of China, so why do recognize that trade as foreign trade, and consider the use of yuan for this internal trade to be counted as part of the internationalization of the yuan?