22 January 2015   Leave a comment

King Abdullah of Saudi Arabia has died at age 90.  His half-brother, Prince Salman, is expected to succeed him so there is little likelihood of immediate turmoil in the kingdom.  But Saudi Arabia is a critical state in the Middle East, and King Abdullah oversaw one of the most dramatic transformations in the global petroleum market in recent months and there is no obvious end game to that gambit.  Moreover, the whole region is in turmoil, and any hint of instability in Saudi Arabia will have tremendous repercussions.

The European Central Bank has announced a presumably massive plan to purchase government and corporate bonds in Europe in an effort to flood the markets with extra money in the hope that the additional funds will stimulate economic growth and higher prices and wages.  The process is called “quantitative easing” and is the current policy of the US Federal Reserve and the Japanese Central Bank.  The process has had only limited success in both the US and Japan, and there are reasons to believe that it will be even less successful in the European economy.  Nonetheless, the plan is a signal of how serious the economic slowdown in Europe is.

Recent polls have indicated that the left-wing party, Syriza, is building a lead heading into Sunday’s elections in Greece.  Syriza has promised to end the policies of austerity that have depressed economic growth in Greece to levels worse than those of the Great Depression.  A Syriza victory would definitely change the political climate in Europe, but would also likely lead to great economic instability.


Posted January 23, 2015 by vferraro1971 in World Politics

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