Indian central bank: In his three years as governor from 2013 to 2016, Raghuram Rajan restored calm to Asia’s No. 3 economy, William Pesek writes. In short order, the former IMF economist tamed inflation, stabilized the rupee, worked to reduce bad loans in the banking system and talked credit-rating companies out of downgrading New Delhi. And then, in September 2016, Rajan, who’s often listed among Nobel Prize candidates, was out of a job. The popular excuse: he was too slow to cut interest rates. Prime Minister Narendra Modi opted instead for Urjit Patel, Rajan’s deputy. Fears that Modi had hired a yes-man seemed confirmed by the demonetization debacle of November 2016. Dozens literally died scrambling to exchange their life savings as 86% of currency in circulation was suddenly ruled useless. Dismal logistics cratered national growth rates and dented Modi’s reputation for competence. It remains to be seen whether Patel can turn things around and rehabilitate the Reserve Bank of India’s credibility. READ THE STORY HERE
Pakistan investment climate: On October 4, the Karachi Stock Exchange 100 index closed at 40,461 points, touching as low as 39,869.88 intraday, Kunwar Khuldune Shaid writes. The market had lost 1,948 points in three days as selling pressures took their toll. However, the tumble in the markets was just the tip of the iceberg. While investors and market analysts feel that the Pakistani government is “distracted,” they are also worried about taxation policies. Altogether, they anticipate that this is going to start hurting the economy and the country’s investment climate. The main driver behind all of this is the ongoing political turmoil in the country following the ouster of Nawaz Sharif as prime minister in July. He had been serving for a third time before his disqualification by Pakistan’s Supreme Court. The KSE-100 Index shed 1,670 points (3.6%) in the immediate hours after the apex court’s verdict. READ THE STORY HERE
CHINA'S NEW CENTRAL BANKER & A REVIEW OF WHAT CHINA ACHIEVED TO NORMALIZE ITSELF TOWARD A MARKET BASED ECONOMY
China’s top banker: Next week’s 19th National Congress in Beijing is President Xi Jinping’s party, but the real focus of the conclave is likely to be on who will replace outgoing People’s Bank of China governor Zhou Xiaochuan, William Pesek writes. Zhou, who turns 70 in January, is a tough act to follow. Over the past 15 years, he’s been Beijing’s most consistent and forceful reformer, its economic face across three presidencies and the longest-serving governor among the top 20 economies. During that time, he scrapped China’s dollar peg, modernized monetary-policy tools, ended caps on deposit rates and engineered the yuan’s elevation toward reserve-currency status. Who might replace Zhou? Speculation often centers on Jiang Chaoliang, party secretary in Hubei Province. Political heavyweight Guo Shuqing, chairman of the Banking Regulatory Commission, gets mentioned, as does Yi Gang, one of Zhou’s deputies. READ THE STORY HERE
KEVIN WARSH, NEXT FED CHAIR FROM STANFORD UNIV., REVEALS THAT FEDERAL RESERVE HAS FAILED & THE SHORT LIST REPLACING YELLEN
The next Fed chair will be handed a big stick of dynamite with a short fuse
Desmond Lachman | The Hill
Asian manufacturing output: Factories cranked up activity in September as a synchronized upswing in growth globally pointed to solid consumption of manufactured goods heading into the lucrative end-of-year shopping season, Shri Navaratnam writes. However, pockets of weakness in regional economies are likely to keep Asian central banks slanted towards more accommodative monetary policy, even as their Western counterparts move to scale back stimulus. China’s central bank on Saturday cut the amount of cash that some banks must hold as reserves for the first time since February 2016 in a bid to encourage more lending to struggling smaller firms and energize its lackluster private sector. READ THE STORY HERE
FRAGILE BY DESIGN: 2008 BANKING CRISIS EXPLAINED & THE FED'S PHILLIPS CURVE MANDATE REMAINS FLAWED FOUNDATION FOR NATIONAL MONETARY POLICY
Fragile by Design: The Political Origins of Banking Crises and Scarce Credit (The Princeton Economic History of the Western World) by Charles W. Calomiris and Stephen H. Haber.
"Why are banking systems unstable in so many countries--but not in others? The United States has had twelve systemic banking crises since 1840, while Canada has had none. The banking systems of Mexico and Brazil have not only been crisis prone but have provided miniscule amounts of credit to business enterprises and households.
"Analyzing the political and banking history of the United Kingdom, the United States, Canada, Mexico, and Brazil through several centuries, Fragile by Design demonstrates that chronic banking crises and scarce credit are not accidents. Calomiris and Haber combine political history and economics to examine how coalitions of politicians, bankers, and other interest groups form, why they endure, and how they generate policies that determine who gets to be a banker, who has access to credit, and who pays for bank bailouts and rescues.
"Fragile by Design is a revealing exploration of the ways that politics inevitably intrudes into bank regulation."
North Korea exists because of China’s money-laundering. Joshua Stanton @gordongchang @freekorea_us
“…North Korea has nothing to fear from any U.S. move to broaden sanctions aimed at cutting it off from the global financial system and will pursue "acceleration" of its nuclear and missile programs, a North Korean envoy told Reuters on Tuesday.
This includes developing a "pre-emptive first strike capability" and an inter-continental ballistic missile (ICBM), said Choe Myong Nam, deputy ambassador at the North Korean mission to the United Nations in Geneva.
Reuters, quoting a senior U.S. official in Washington, reported on Monday that the Trump administration is considering sweeping sanctions as part of a broad review of measures to counter North Korea's nuclear and missile threat. (For Monday's story, click reut.rs/2n9HZ5a)…”