Financial Markets Turmoil Roils Britain once Again

Bremmer denied Musk’s denial. “elon musk told me he had spoken with putin and the kremlin directly about ukraine. he also told me what the kremlin’s red lines were,” Bremmer tweeted.

Does it matter? Yes, Bremmer argued in his newsletter, where he also eschews capital letters: “given that elon musk now looks increasingly likely to buy twitter, at which point he’ll reinstate the former president, you’ll have those same views with trump and his full political base behind it, potentially leading the united states to become fundamentally divided on the issue.” Musk in his last tweet on the matter was a little more personal: “Nobody should trust Bremmer.”

Blaming the Fed

Top economic officials are gathering this week in Washington for the annual meetings of the International Monetary Fund and World Bank. Atop the agenda: How to bring down inflation and revive a slowing global economy to ensure the turmoil doesn’t mushroom into the next global financial crisis.

Look for central banks, and specifically the Fed, to get some of the blame for economic volatility, which has spilled into the financial markets. Yesterday, economists at the I.M.F. said in its World Economic Outlook report that the Fed’s aggressive efforts to crush domestic inflation, primarily by rapidly raising interest rates, had turbocharged the dollar’s value, increasing the odds of an international debt crisis. That follows a United Nations agency warning that the Fed’s interest rate policy would ultimately deprive developing nations of $360 billion in “future income,” and “signal more trouble ahead.” Josep Borrell, a foreign policy chief for the E.U., was just as blunt, saying U.S. monetary policy risks creating “a world recession.”

With criticism mounting, Vincent Reinhart, a former top Fed economist who is now at Dreyfus and BNY Mellon, said “it’s very possible that the view that it’s all the Fed’s fault could emerge as the consensus by Friday.”

The big worry: The Fed could be pressured to rein in its inflation-fighting efforts, even if tomorrow’s Consumer Price Index report shows tough measures are still needed to stabilize prices. It puts the Fed in a tough — and possibly misunderstood — spot, particularly as supply-chain disruptions and a global energy crisis continue to roil the global economy and undermine the Fed’s inflation-fighting efforts. “Central bankers around the globe have a huge set of headaches,” said David Wilcox, a senior fellow at the Peterson Institute and the director of U.S. economic research at Bloomberg Economics. “But are those headaches substantially Fed-driven in origin? The answer to that is no.”

Article source: https://www.nytimes.com/2022/10/12/business/dealbook/britain-markets-turmoil-gilts-pound-andrew-bailey.html