Journalists
Martin Hutchinson covers emerging markets and economic policy from Washington, drawing on 25 years of experience as an international merchant banker. He ran derivatives platforms for two European banks, before serving as director of a Spanish venture capital company, advisor to the Korean conglomerate Sunkyong and chairman of a US modular building company. In Zagreb he established the Croatian debt capital markets and set up the corporate finance operations of Privredna Banka Zagreb. Since 2000 he has been a financial journalist, and is the author of "Great Conservatives, " a book on British political history. He has a first class Honours degree in Mathematics from Trinity College, Cambridge and a Harvard MBA.
The drop in the headline unemployment rate to 9.7 pct is not what it seems. Other data were revised to show an extra 1.2 mln people -- 8.4 mln in all -- have lost their jobs in this downturn. Seasonal tweaks may have been overdone, too. The recovery is still worse than jobless.
The EU wants financially strapped Greece to cut the pay of government employees. The same prescription could help in the deficit-ridden US. Civilian federal employees are paid double what private sector employees get. While controversial, it's a potential source of big savings.
Headline economic growth was an annualized 5.7 pct last quarter, but net of inventory rebuilds the gain was only 2.2 pct. Meanwhile, prices rose at a 2.7 pct rate. The payments balance and savings rate improved, but U.S. growth is sluggish -- and inflation looks to be edging up.
The U.S. central bank is withdrawing liquidity while keeping interest rates low -- the opposite of Bagehot's crisis advice to lend freely but at high rates. The Fed's tactics beat keeping the fire-hoses running, but could restrict credit to important sectors like small business.
The institution fears a withdrawal of stimulus will slow emerging market growth through 2011. Its conclusion may be righter than its rationale. Lower public sector deficits will help capital-poor countries. The projected slow recovery of world trade is a far bigger problem.
Pinera's presidential victory could signal a return to something like the full-blooded capitalism of the Pinochet years. If authoritarianism and corruption are avoided -- and growth is strong -- the Chilean example could help lure other countries away from socialist populism.
The U.S. central bank's profit increased 47 pct in 2009, as it held more assets and benefited from big spreads between short and long-term rates. Financially, the Fed is incentivized to sell assets before raising rates, to delay rate rises, and to keep Fannie and Freddie alive.
The new head of the Central Bank of Argentina says her institution should "look after the country's development". That means using the nation's foreign currency reserves to support President Fernandez's big spending. It might help for a while, but then the money runs out.
By then, bailouts and stimuluses will be all but over, recovery should be under way, and Obama's promised spending freezes should be in place. Yet even on his own figures, the deficit next year will still be an eye-watering $1.3 trn. Bigger spending cuts are needed -- and soon.
The production of research papers quintupled over the last decade. But in science, China is still something of a poor cousin to the U.S. and Europe. For its wealth, China isn't even more scientific than Brazil. With a science-friendly government, that is likely to change.
Bernanke is opposed by hard-money Republicans and anti-Wall Street Democrats. If the latter prevail, his replacement might be worse. But his role in the housing bubble and refusal to admit error make it wrong to keep him. Even in government, messing up should be penalized.
Those betting on a U.S. decline may have to postpone their economic Götterdammerung. Thanks to flexible labor markets, productivity rose 2.5 pct in 2009, compared to a Eurozone decline. European, not American, living standards look more vulnerable to emerging market competition.
U.S. inflation is convincingly positive, whether measured gross or net of food, energy and shelter. Strong industrial production and soaring commodity prices suggest price pressures will intensify, not decline. That risks pushing inflation high enough to rattle bond markets.
The country’s two-tier exchange rate will increase oil revenues in bolivar terms. But rising inflation, threats to local businesses passing on higher costs and the corruption resulting from a gamed system will worsen chaos. While Hugo Chávez remains, jungle law will prevail.