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Changing governments, changing policies

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The two parties attempting to form the next
    Italian government have published their agreed policies. These include cutting
    income taxes to 15% (20% for incomes over EUR 80,000), and introducing a
    universal income. This is an interesting challenge for fiscal policy. The ECB
    might want to consider how its bond buying program is assisting with this
    fiscal easing.
  • US President Trump announced a policy
    U-turn over Twitter, ordering the Commerce Department to assist the Chinese
    telecoms company ZTE. Policy U-turns are not necessarily unusual, nor are
    policy announcements over Twitter. However, sanctions against ZTE were legally
    inspired, not politically inspired. There is now questionable consistency in
    the sanctions policy towards Iran.
  • Malaysian financial markets opened after
    the opposition won the general election. The ringgit has weakened a little, and
    equities have risen a little – but the reaction is very muted. The new finance
    minister, Lim, is generally regarded positively by investors.
  • Assorted central bankers crowd the agenda
    today. Bullard of the Fed is to speak at a crypto conference. Bitcoin has lost
    roughly USD 1,300 in the past nine days. If a cryptocurrency collapses and
    nobody cares, what does that say about the usefulness of the cryptocurrency?