China unveils plan to loosen capital controls

The IMF is nearly always late and nearly always overly optimistic in its assessment of global growth. Today the IMF downgraded its forecast of Portugal, something that should have been obvious six months ago. Via Email (no link available) Barclays Capital offers these comments ... Portugal: 2nd IMF programme review revises down 2012 growth forecasts

Following the improvised and very confused bail-in of the Cypriot banking system in mid/late March, one of the key requirements was to contain the liquidity within territorial Cyprus, and prevent the outflows of critical bank funding liabilities - i.e., deposits - abroad thus causing a waterfall cascade of ever increasing capital needs and bigger and better bailouts. Thus capital controls, which two months after the bailout, are still in place. Judging by just released Cyprus Central Bank data they failed.

Sweeping tax changes will also cut power of state-owned firm

In the shadow of the euro crisis and America’s fiscal cliff, it is easy to ignore the global economy’s long-term problems. But, while we focus on immediate concerns, they continue to fester, and we overlook them at our peril. The most serious is global warming.

On Friday, China’s Ministry of Finance sold only 9.53 billion yuan of government bills, far less than the 15 billion yuan offered.  It was the first failed Finance Ministry auction since July 2011.  To add insult to injury, Beijing had to pay 3.76% on the 273-day bills, higher than the 3.14% yield on similar obligations already in the market. That’s the second failed Chinese auction this month.  The state-owned Agricultural Development Bank of China sold only 11.51 billion yuan of six-month bills in a 20-billion-yuan offering on the 6th.

Chairman Ben S. Bernanke is an optimist when it comes to our long-run economic prospects (i.e. he does not endorse the notion that productivity is slowing). I'm with him. (This is a graduation speech Bernanke gave at Bard College at Simon's Rock, Great Barrington, Massachusetts):

BEIJING — China’s factory output growth was surprisingly feeble in April and fixed-asset investment slowed, rekindling concerns that a nascent recovery is stalling and adding to pressure on policymakers to take action to stimulate the economy. However, China’s already-easy monetary policy and rising home prices complicate the options available to Beijing’s new leadership, leading some analysts to say that any response could be limited to fiscal measures.