Understanding Global Inequality: Interview of B.Milanovic

Fascinating interview of Branko Milanovic on income inequalities, within countries and between countries, and on globalization after the referendum on Brexit and the election of D.Trump. Worth reading.


Where is the next black “Swan”?

The deep drop in the oil price since mid-2014 reveals imbalances that could be the catalyst of future fractures for the global economy. That’s what suggest Marcello Minenna when he looks at Saudi Arabia’s behavior.
In 2011, its budget surplus was at 20% of GDP, its foreign reserves were at USD 700bn and its public debt was null. In 2015, the surplus became a budget deficit of 16%, its foreign reserves are below USD 600bn and its public debt is circa 10% of GDP.
Can we expect a strategy in which the oil price could creep up while the global economy is not on a strong momentum?

The interesting answer from Marcello Minenna
Saudi Arabia: The Next Black “Swan” for The Global Economy

Just two weeks ago, the Saudi government announced that in September it will hit the international bond markets with a Dollar denominated issue. In the Kingdom’s history, this is the first foreign debt issue. Incredible though it may appear, the sheiks, holders of the world’s largest oil reserves, appear cash-starved. The Saudi monarchy that in 2011 was achieving an astounding fiscal surplus of 20% of GDP with zero public debt and sitting on over $700 billion of foreign reserves, has markedly seen its fortunes go into reverse since the oil price collapse in mid-2014. In 2015 the surplus morphed into a nasty deficit of up to 16% of GDP, public debt climbed to 10% while the currency reserves declined to below $ 600 billion. The Kingdom enacted even a few cuts in public expenditures, a measure unheard-of in the land of a guaranteed lifetime employment in the government sector.

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