A real risk.
1. A new Yahoo News/YouGov poll shows that most Democrats (55%) and Republicans (53%) now believe it is “likely” that America will “cease to be a democracy in the future” — a stunning expression of bipartisan despair about the direction of the country. Half of all Americans (49%) express the same sentiment when independents and those who do not declare any political affiliation are factored in, while just a quarter (25%) consider the end of U.S. democracy unlikely and another quarter (25%) say they’re unsure. (Sources: news.yahoo.com, scribd.com)
2. Federal Reserve Chair Jerome Powell took a step toward assuming the mantle of inflation slayer Paul Volcker, all but acknowledging that reining in run-away price pressures may result in a recession. Declaring that it’s essential to bring inflation down, Powell yesterday engineered the central bank’s biggest interest-rate increase since 1994 and held out the distinct possibility of another jumbo three-quarter percentage point increase in July. He openly endorsed for the first time raising rates well into restrictive territory with the aim of cooling off the labor market and pushing joblessness up -- a strategy that in the past has often resulted in an economic downturn. (Sources: bloomberg.com, ft.com)
3. The European Central Bank has sought to tackle fears that the eurozone is on the cusp of another debt crisis, saying it would speed up work on a new policy tool to counter surging borrowing costs in the region’s weaker eurozone economies. After an emergency meeting on Wednesday, the central bank’s governing council pledged to accelerate plans to create a “new anti-fragmentation instrument” — a nod to the widening gap in the cost of borrowing between more stable sovereigns such as Germany and more vulnerable member states. Bond yields of countries such as Italy and Spain shot up to their highest level for eight years after ECB rate-setters last Thursday announced plans to stop buying more bonds and start raising interest rates. The surge in borrowing costs has revived fears about a potential repeat of the damaging debt crises in 2012 and 2014 that nearly tore the eurozone apart. (Source: ft.com)
Keep reading with a 7-day free trial
Subscribe to News Items to keep reading this post and get 7 days of free access to the full post archives.