Greek deal makes best of a bad job 21 Feb 2012 It would have been better to have bitten the bullet earlier and Athens is still unlikely to pull through without further economic and political shocks. But the debt restructuring cum bailout keeps the pressure on Greece and has probably defused a wider blow-up.
China’s Ten Kingdoms era has lesson for euro zone 21 Feb 2012 The 10th century division of China into squabbling regimes brought unbalanced trade and rival currency debasements. But then came the unifying Song dynasty, with monetary stability and economic growth. Fragmentation can be more unstable than unity – a lesson for Europe today.
Iraq offers investors ultra-high risk-reward bet 20 Feb 2012 When war ends, investment opportunity begins. There has been enough peace in Iraq for the Baghdad bourse to rise 32 pct over two years, outperforming bigger Middle East rivals. The risks are huge, but reconstruction, demographics and oil make this frontier market tempting.
Rickonomics don’t add up but could win U.S. votes 17 Feb 2012 The GOP’s problem is that free-market capitalism seems to be a minority enthusiasm. Rick Santorum waters it down even further with his approach, emphasizing budget-busting manufacturing and family-oriented tax policies. While his math doesn’t work, it may still prove popular.
Five phases of China hard-landing denial 17 Feb 2012 China watchers have yet to face up to the country’s real estate problems. While politicians fret about too-expensive houses, economists still think 2012’s GDP will grow 8.3 percent. Faith in China’s ability to avert a property-led credit crisis rests on shaky assumptions.
Ethical economy: In praise of cooperative thinking 15 Feb 2012 Cooperative ownership has a bad reputation – too many utopian dreams, not enough business sense. But even in profit-seeking companies, a not-for-profit mentality is widespread in the modern economy. And the cooperative model is a natural structure in finance.
New hedge fund thriller mixes fact with fiction 14 Feb 2012 Robert Harris’s novel “The Fear Index” features a futuristic evil genius computer that may be closer to reality than fiction, writes Chrystia Freeland. The rise of intelligent machines in this portrayal of the hedge fund universe offers a glimpse at the possibility of a jobless economy.
U.S. budget can-kicking is running out of road 13 Feb 2012 Barack Obama’s $3.8 trln plan is more position paper than economic blueprint, as soaking the rich is a non-starter with Republicans. And when politicians promise deficit-reduction jam in future years, tomorrow rarely comes. But for both parties, the fiscal reality soon will.
Still a long slog ahead for U.S. jobs 8 Feb 2012 Employment growth in the United States has started picking up. But even at a rate of 250,000 a month, roughly January’s figure, full employment may not be reached until 2020. A new Breakingviews calculator shows how a faster or slower pace of job creation changes that picture.
The world threatens to return to normal 8 Feb 2012 A good U.S. jobs report is prompting a global rethink. Rate cuts in South Korea and Australia are now less likely. Stocks are rallying. Treasury yields are up from ultra-lows. The euro zone crisis remains grave, but the world may be improving. If it is, safe havens are in danger.
Ethical economy: The great race for jobs 8 Feb 2012 The U.S. unemployment rate is down, but the workforce is still much smaller than it was. Socio-economic forces which create employment are losing out to job destroying new technologies. The best solution is put more money into what Adam Smith called “frivolous professions”.
ECB’s graceful surrender may lend Greece more time 8 Feb 2012 The European Central Bank bought Greek bonds at a discount. It has now reportedly agreed not to demand repayment at face value. That makes sense. Without a deal, the next Greek bailout might fall through, and the ECB is anxious to help delay Europe’s day of reckoning in Athens.
Commodities and debt detach Canada from U.S. 7 Feb 2012 GDP and jobs growth are slowing north of the border while picking up in America. Prices of oil and other raw materials may now be recovering after a dip in the autumn. But Canadian households are still stretched by housing costs and debt, suggesting possible trouble ahead.
EU should cut Madrid some deficit slack 7 Feb 2012 Spain will struggle to shrink its budget deficit to 4.4 pct of GDP this year, but it shouldn’t try too hard. Forcing the pace could create a deeper recession. The government still needs a deficit target to control the unruly regions. But the EU should let it set a realistic one.
IMF takes too euro-centric view of China 7 Feb 2012 The Fund says a bad slowdown in the euro zone would cut China’s GDP growth in half. Not likely, since China relies much less on exports than in 2008. The IMF is also wrong about Beijing’s appetite for another big stimulus programme. China’s real risks are internal, not external.
EU needs contingency plan to handle Greek blow-up 6 Feb 2012 The latest game of brinkmanship being played in Athens will probably end in a fudge. But if it doesn’t, Greece’s banks will go bust and the rest of the euro zone will need a plan to prevent a panic in its own banking industry.
Rising U.S. employment masks lingering malaise 3 Feb 2012 January saw 257,000 new private-sector positions and the jobless rate fell again. That’s good for job-seekers and Obama fans. But labor force participation is well below 2007 levels and long-term unemployment is way too high, making traditional full employment hard to attain.
Rich countries need to escape institutional traps 3 Feb 2012 Greece could balance its trade and budget without becoming much poorer. Spain could cut unemployment and become richer in the process. The U.S. could rein in health care expense. All that is required is institutional reform. Sadly, it seems to take more than crisis to get that.
Japan’s bluster can’t sink the irrepressible yen 2 Feb 2012 Officials want the central bank to print yen to stop its climb to help exporters. They shouldn’t hold their breath. The Bank of Japan may oblige for long enough to cool the currency’s rise, but an ageing population and massive debts mean fighting for a weaker yen is a losing battle.
Ethical economy: The tough road to sensible taxes 1 Feb 2012 President Obama can’t keep his rhetoric straight on taxes. In single speech he endorsed both simplicity and complexity. He’s hardly alone. Confusion and distortion are well-established tax traditions. The first step to a better system is to give justice the highest priority.