Nikkei is the latest Japanese company to look for growth outside the shrinking domestic market. Its Financial Times purchase may work out, but the approach is flawed. Few companies can profitably escape their demographic destiny. It may be better to accept steady decline.
There are so many ways things could go wrong in Greece that it’s easy to miss how things could also go right. The good scenario involves the ECB buying up Greek bonds, the lifting of capital controls and a deal on debt relief – all by year-end.
Outside Japan, the $1.3 bln purchase of the salmon-hued newspaper is hard to fathom. The finances may never stack up. From a Japanese perspective, the calculus is different. In a shrinking market, without a product that travels internationally, deals like this are existential.
Ben Bernanke thinks the single currency is failing. He is not alone. But the former Fed boss is too short term and too financial. The euro zone has tough structural economic problems. The currency is different. Its future is political, and bright.
A sudden drop in Chinese demand could send that country’s output flooding onto world markets, turning India’s struggling steelmakers into zombies. Banks in the smaller economy need to give excess domestic capacity a quick burial by refusing to throw good money after bad.
The ECB president has done almost everything he can to keep Greece in the euro without breaking the central bank’s rules. Although Draghi has been attacked by Athens for asphyxiating the country and hardliners for showing excessive leniency, he has got the balance about right.
It’s not Yellen’s, Draghi’s or Kuroda’s. Russian central bank chief Elvira Nabiullina faces a unique bouquet of challenges. On top of a weak oil price and ruble, nettlesome inflation and Western sanctions, there’s Vladimir Putin. Under the circumstances, she deserves a medal.
Not noticing how loans were distorting the Greek economy led to a crisis. In China, the financial system’s ability to create illusory wealth is causing bother. The authorities are lost everywhere. They would do better if they treated finance as an unruly servant of the economy.
Now that Alexis Tsipras’ Syriza party is splitting, he can form a credible and stable new government. That could put relations with Greece’s creditors onto a constructive footing and turn the economy around. If Tsipras squanders the chance, the country will be doomed to failure.
Instead of lending money to Athens so it can recapitalise its stricken banks, the creditors should pump money directly into the lenders themselves. This will help sever the doom loop between the Greek state and its banks. It will also make Greece’s debt more sustainable.