How to minimise Greek moral hazard 15 Jul 2011 Europe is looking at slashing Athens' debts as a way of solving Greece's problems. That might look like rewarding the Greeks for their profligacy, encouraging other indebted nations to ask for the same favour. Here's how to reduce the chance of that happening.
Indignados don’t say much, but must be listened to 15 Jul 2011 Spain's young protest movement may be too vague to shape the debate in the coming general elections. But they are having some impact on specific issues, like electoral reform or mortgage defaults. The risk is that they oppose more important, structural changes.
Bluster hides U.S. debt deal progress 14 Jul 2011 Even as credit raters like Moody's blare alarm, debt talks superficially seem hopeless. But behind the theatrics, a deal to cut spending and boost government borrowing authority is emerging. It's more a bandage than a major fiscal fix, but it should preserve America's AAA rating.
Banking clarity could complicate euro debt deal 14 Jul 2011 Market turmoil has forced European leaders to seek a comprehensive solution for Greek debt woes. But a final agreement could require lengthy government approvals. EU bank stress tests results could rekindle jitters. Euro leaders must act fast.
Italian debt squeeze leaves little breathing room 14 Jul 2011 Rome can comfortably absorb the rise in borrowing costs seen in the latest bond auction so long as its growth and austerity plan stays on track. But a significant slippage on either part of the plan could land it in a debt spiral.
Japan takes unwilling role in Europe’s debt drama 14 Jul 2011 Investors fleeing the euro zone credit crisis are landing in Tokyo's bond market, adding to upward pressure from domestic investors. That's pushing up the yen, and making life hard for exporters. Intervention is risky. Japan's policymakers must be cursing their safehaven status.
Unseen sovereign debts show need to act now 13 Jul 2011 Hitherto unquantified UK liabilities mostly public pensions are greater than the entire national debt. Other countries are similarly burdened. Though these debts are of a different kind, states' budgetary reforms become ever more urgent.
Egypt pipeline chaos threatens neighbours 13 Jul 2011 A fourth attack on natural gas facilities raises questions over the sustainability of Egyptian energy exports, and Cairo's ambition to increase revenues by renegotiating deals. It may also prompt Israel to look elsewhere to ensure its own energy security.
Berlusconi really must go 13 Jul 2011 It's no longer about abuse of power and bunga bunga parties. His continuation as Italy's prime minister could drive the country into a financial death spiral. His own supporters are shaken and the public is afraid. But the opposition is behaving responsibly, so there's some hope.
China’s rising wages spell trouble ahead 13 Jul 2011 GDP growth has slowed in China, yet aftertax incomes rose by 14 percent in the first half. Chinese workers deserve a fair share of corporate profits, but fast wage increases add to inflation and growth worries. It might create a dreaded wage inflation spiral.
Australia’s CO2 plan has much to recommend it 13 Jul 2011 The planned carbon levy is saddled with political sops, and will cost money to implement. But the proposed hybrid of tax and capandtrade is an innovative way to put a price on environmental costs. Bigger polluters like China, India and the United States should watch closely.
Nervous Republicans may spur U.S. debt limit deal 13 Jul 2011 A plan from the GOP Senate leader could unjam Washington's budget stalemate. Democrats haven't nixed it, and business will push for it. Dogmatic Tea Partiers will be a tougher sell. But with time short to raise the debt ceiling, even they may realize they need to give a little.
Fed gives markets more to worry about 12 Jul 2011 Minutes from the latest FOMC meeting reveal a growing schism over whether to ease monetary policy to cope with unemployment or to start tightening sooner to attack inflation. Already spooked investors can now fret over the possible incompatibility of the Fed's dual mandate.
IMF deputy job could be mixed blessing for China 12 Jul 2011 The promotion of Zhu Min to deputy managing director would lock in a top IMF position for China. But a fourth deputy position dilutes the job's value. And this could lead the U.S. and Europe to delay further reforms to increase emerging countries' influence in the fund.
Market weaknesses will be profound, and test lows 12 Jul 2011 Deeper fears for the euro zone are exacerbating worries about global growth. Further falls in the euro seem certain. Stocks across the world look likely to retest their March lows, with financials especially vulnerable.
Greek debt buyback mustn’t be a bank bailout 12 Jul 2011 As the euro zone debate about Greece drags on, the idea of bond buybacks by the European bailout fund is back on the table. The central aim must be to seriously relieve Greek's sovereign debt burden. It should not be just another bank subsidy.
Italy can save itself to save euro zone 12 Jul 2011 The growing Italian crisis leaves the euro zone out of options. The country is both too big to fail and too big to bail. But it can deal with its own crisis if its government keeps firmly focused on its debt problem and the structural reforms that remain vital to boost growth.
Abu Dhabi debt confusion needs clearing up 11 Jul 2011 The emirate doesn't formally guarantee the debt of governmentowned entities like TDIC or Aldar. Whether it does or not is worth billions to investors and to its own economy. Either the lessons from Dubai World have been ignored, or Abu Dhabi wants to make a point at a cost.
Obama’s budget push comes half-year too late 11 Jul 2011 The president was elected partly on the strength of his stated Team of Rivals approach to governing. Yet he ignored a harsh but fair budget plan thrashed out by his own bipartisan debt panel last year. The mad scramble now means chances for a meaningful deal have been lost.
China inflation and U.S. jobs make nasty cocktail 11 Jul 2011 With inflation still soaring, China must slow its economy further to rein in broad price pressures and that will pull on the world's growth. Meanwhile, the U.S. is struggling to add jobs, and the euro zone is hardly helping. This bodes ill for the fragile global recovery.