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Monday, 02 March 2015

BREAKINGVIEWS

A woman rides past the headquarters of the People's Bank of China, the Chinese central bank, in Beijing, April 3, 2014.

China rate cut shows back-to-front monetary policy

02 March 2015

The clip to borrowing costs won’t much change life for credit addicts or for savers. The central bank’s move is little more than a signal from on high that planners are up with events. When it comes to managing the Chinese economy, official interest rates play a limited role.

Indian Prime Minister Narendra Modi (R) listens to Finance Minister Arun Jaitley during the Global Business Summit in New Delhi January 16, 2015.REUTERS/Anindito Mukherjee

India's infrastructure push could be envy of West

02 March 2015

The government has pushed back its deficit reduction target in order to boost spending on roads, rail and power. New Delhi is now unmistakably pursuing a public investment-led growth strategy. It’s an opportunity that rich nations, which can borrow far more cheaply, are missing.

The Airbus A380 departs JFK International Airport in New York en route to Chicago O'Hare International airport  March 20, 2007.

U.S. airlines throwing stones from glass hangars

27 February 2015

Delta, United and American want trade deals changed, arguing Gulf rivals are unfairly subsidized. That’s rich, given the bailouts, antitrust exemptions and other goodies these three enjoy. Blowback from domestic peers may persuade them that whining to Uncle Sam won’t fly.

An aircraft is silhouetted by the sun.

Weak euro can lift Airbus profit further

27 February 2015

The European aircraft maker pleased investors with higher-than-expected operating profit and a 60 pct dividend hike. Higher profitability was driven by a weaker euro. With that currency tailwind likely to persist, the annual results give a foretaste of future improvements. 

Passengers travel on an overcrowded train on the outskirts of New Delhi February 26, 2015. India will increase investment in its overloaded railway network to 8.5 trillion rupees ($137 billion) over the next five years, the government said on Thursday, pr

India goes back to future with $137 bln rail push

27 February 2015

The government’s ambitious plan will require finesse in raising money. But the investment case is strong. India’s British rulers reaped huge productivity gains by building out the railways 150 years ago. Modernizing the dilapidated network could produce even better returns. 

Current gas prices are shown at a Shell gas station in Encinitas, California October 10, 2014.

Oil finally percolating toward a level price

26 February 2015

U.S. light crude has rallied 12 pct from last month’s six-year low but is still shy of where shale drillers can profit. Higher demand and less capital spending may push prices up while steady output from Saudi Arabia and others limits their rise. About $60 a barrel looks likely.

A worker checks books in a library

Simpler is better for Reed Elsevier

26 February 2015

The dual-listed media giant is fixing a baroque corporate setup. That should lure new investors and cut the discount on its Dutch shares. A simultaneous rebrand as “RELX” is ungainly – but at least this helps distance the largely digital group from the printed past.

Graduates celebrate receiving a Masters in Business Administration from Columbia University during the year's commencement ceremony in New York in this May 18, 2005.

U.S. student loans could need $500 bln bailout

27 February 2015

Borrowing for education has soared over the past decade, ballooning to $1.2 trln and growing far faster than GDP. With serious delinquencies at 11 pct and Washington on the hook, there’s a mess in the making. A Breakingviews calculator shows how big Uncle Sam’s exposure could get.

Combination photo shows Greek Finance Minister Yanis Varoufakis (L) and German Finance Minister Wolfgang Schaueble at the start of an extraordinary euro zone Finance Ministers meeting (Eurogroup) to discuss Athens' plans to reverse austerity measures agre

Europe can afford to cut Greece some slack

27 February 2015

Athens wants to slice its primary fiscal surplus to one-third of the level agreed in its current bailout programme. That might leave debt too high for comfort – yet there is room for a compromise that Greece’s euro zone partners could afford.

Signage is seen at the front of a branch of Lloyds TSB bank, in the City of London.

Lloyds investment case hinges on its next dividend

27 February 2015

The UK bank’s first payout since 2008 is an encouraging milestone. But it’s largely symbolic. The critical valuation issue is whether Lloyds’ pledge to pay out at least half its future earnings represents a floor or a ceiling - and whether the regulator allows fatter payouts. 

Cables of optical fibre of Telecom Italia are seen in a telephone exchange in Rome, December 20, 2013.

Verizon taps out unwise riposte to new web rules

26 February 2015

Regulators are giving consumers a boost by preventing broadband providers from offering favorable treatment to certain clients. But the telecoms giant expressed its discontent in Morse code and then in old typeset. Disagreeing is fine. Taunting your overseer, though, is a risky move.

Logo of Europe's biggest insurer Allianz is pictured in Tokyo

Never mind Bill Gross: Allianz is thriving

26 February 2015

The star investor’s acrimonious departure from Pimco caused huge outflows and hurt operating profit at Allianz, the German owner of the U.S. bond-fund firm. That obscures Allianz’s real strength. Annual results underline the insurer’s renewal under outgoing CEO Michael Diekmann.

A sign outside the headquarters of JP Morgan Chase & Co in New York, September 19, 2013.

JPMorgan pruning could help fees sprout anew

26 February 2015

The U.S. mega-bank may trim some Wall Street operations if returns don’t improve. It’s bad news for smaller rivals if one of the biggest players in rates and derivatives can’t make money in some areas. But if clients end up paying more, bank investors will eventually benefit.

Videos

Columns

Rob Cox

Rob Cox: Welcome to the new, global Tangentopoli

26 February 2015

Corruption is causing trouble for elites from Sao Paulo to Virginia and Santiago to London. Inequality can be a tolerable byproduct of free-market capitalism, but not when the winners are profiting from a rigged system. As a new book argues, such gains encourage radicalism.

Andy Mukherjee

India in depth: Time for big ideas in tight budget

25 February 2015

This week’s federal budget is likely to put a squeeze on public spending. But it also needs to strike a strongly pro-business note. Investor enthusiasm for Prime Minister Narendra Modi’s policies is starting to wane. Big-ticket reforms could give “Modinomics” a credibility boost.

Features

Peter Thal Larsen

Review: Building HSBC's sprawling, flawed empire

27 February 2015

The Hong Kong bank grew into one of the world’s biggest financial institutions. But poor results and a furore over Swiss tax make for an unhappy 150th anniversary. A new history shows how hands-off management and breakneck M&A under former chairman John Bond are partly to blame.

Martin Hutchinson

Cheap oil highlights multifaceted resource curse

24 February 2015

Commodities-dependent nations got more bad news, as BHP warned on iron ore prices. To survive, many will need to turn their economies upside down. Resources prevent long-term strategies, dull the good and bad governance gap and ultimately cloud voters’ views of who’s responsible.