What Europe needs now: a new Padoa-Schioppa 11 Jan 2012 The Italian economist died before his much-loved euro’s existence was threatened. As one of the fathers of the single currency, he understood the risks, but also the cures: more central banking pragmatism, more idealism about Europe, and deeper thinking about sovereignty.
Hungary’s choice: disaster or surrender 10 Jan 2012 Budapest needs financial aid from the IMF and EU after its populist policies scared away investors. A swift deal would calm fears of contagion to Austria and central Europe. But international lenders can only agree if the government repeals its most outrageous reforms.
Riposte: Financial repression is bad news 10 Jan 2012 Edward Hadas thinks it’s fine for reckless governments to force investors to buy their debt at low or negative real yields. But the practice distorts the price mechanism and zaps the economy. Just look at 1970s Britain. There’s no excuse for stealing from virtuous savers.
Women are still winning the U.S. jobs game 9 Jan 2012 They’ve nabbed only a fraction of the 1.4 mln roles added since mid-2009, new data show. But the post-crisis “Mancession” hurt XYers more. Men getting jobs back isn’t the same as women losing ground. They’re ahead, and should stay that way if education-related trends persist.
Shale oil set to take edge off crude price 9 Jan 2012 Gas from shale has flooded the U.S. market, providing 20 pct of supply and squashing prices. Rock-derived oil, by contrast, may add only about 4.5 pct to global supply by 2020. But that would still cover the expected rise in Chinese demand and help keep a lid on crude inflation.
Financial repression is here and may be helpful 9 Jan 2012 Governments want to reduce their debt burdens but avoid default and minimise austerity. Financial repression – laws and policies which push investors into low-yielding government debt – is an attractive alternative. Some repression now could help produce sustained prosperity.
U.S. recovery now not jobless, only homeless 6 Jan 2012 Despite the 200,000 new jobs last month and another drop in unemployment, job creation is still slower than in recent recoveries and looks a bit like the early 1960s. That’s partly because the weak housing market means few new construction jobs. Still, Obama can breathe easier.
Spain is still struggling with its deficit maths 5 Jan 2012 The new conservative government is scrambling to cut the deficit from more than 8 pct of GDP last year to 4.4 pct in 2012. The adjustment will be more difficult if the economy worsens. Madrid is taking the right steps, but there is no room for complacency.
2012: another year of living euro-dangerously 5 Jan 2012 Europe will keep the world on edge in 2012. More will be needed to shore up Italy and keep the single currency more or less intact. But the U.S. should keep recovering. And China and emerging markets may cut rates and help their consumers – and global rebalancing.
Korean spending spree sets right tone 4 Jan 2012 Seoul plans to blow most of its budget in the first half and is likely to end the year in deficit. It might seem an election-year stunt. But promoting domestic jobs instead of using a weak currency to boost exports is a path the rest of Asia should follow.
China’s growth may dip below 8 percent in 2012 3 Jan 2012 Three things could push the country’s GDP growth to a ten-year low: falling house prices, a slump in property investment, and slowing exports. All will take their toll on consumer confidence. Last time, Beijing stimulated the economy; it can ill afford a second round.
Mortgage reform might actually help U.S. economy 30 Dec 2011 Lawmakers have punted the problem of Fannie Mae and Freddie Mac, probably until 2013 at least. But reforms could take a decade to implement and a start is long overdue. Maybe politicians shouldn’t be so leery - greater certainty about the future might boost housing and growth.
Beijing will face fresh yuan dilemma 30 Dec 2011 The yuan’s six-year rise is likely to end, if not reverse, in 2012. The trade surplus is shrinking, inflation has eroded the currency’s real value and foreign investors are selling. But the U.S. still wants a revaluation. That would only increase the chance of a hard landing.
Bini Smaghi’s ambiguity advice is welcome 23 Dec 2011 The departing ECB board member says there should be no theological hang-up about quantitative easing, but insists that the institution should stick to “constructive ambiguity”. This is a welcome reminder that absolute transparency isn’t a must for a central bank.
Surviving animal finance: bear with the bull 23 Dec 2011 Just as a picture is better than a thousand words, an apt zoological metaphor conveys financial insight more effectively than the most comprehensive spreadsheet. But conjure the wrong creature out of the hat and confusion will multiply more quickly than a wrack of rabbits.
Spain must turn brain drain into gain 23 Dec 2011 Anecdotal evidence suggests that rising numbers of university graduates are fleeing Spain and its sky-high unemployment. A prolonged exodus is a risk, although there could be a silver lining to a temporary outflow of graduates abroad.
Ethical Economy: Escaping the Christmas cash nexus 21 Dec 2011 Is the Christmas frenzy the exaltation of the worst aspects of the modern consumerist economy and is Santa Claus only a retailers’ tool for pushing sales? No, there’s more. The gargantuan seasonal giveaway is an attempt to transform the cruel market into something more generous.
UK cuts pensions and workers – without a fight 21 Dec 2011 The government has compromised on public-sector pension reforms. But its deal with the unions will still reduce costs. Meanwhile, public-sector employment is back at 2003 levels. The government deserves plaudits for making the state more affordable without nasty confrontation.
Putin is on a collision course with change 21 Dec 2011 Russia’s mass protests against election-rigging reflect a strong yearning for change. This won’t stop Vladimir Putin winning the presidential election. But his methods of government are losing their power. And those hoping that he can move with the times will be disappointed.
Indonesia risks falling out of fashion in 2012 21 Dec 2011 It passed a long-awaited law to clear infrastructure bottlenecks and won an upgrade from Fitch. Yet these were already priced in. As global investors retreat from risky markets, Indonesia’s risks for investors are on the downside - even though its economy should remain strong.