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.
Italy can’t afford to waver on austerity 8 Jul 2011 Rome is sending mixed signals on its fiscal plans. Its finance minister has been weakened by a corruption probe into a close associate. With spreads on Italian debt at euroera highs, investors' patience may be running out. Italy should frontload its austerity programme.
U.S. jobs rout should give fiscal hawks pause 8 Jul 2011 The loss of 39,000 government positions in June aggravated tepid business hiring. In the past year, the shrinking public workforce has offset over a third of private job growth. Drastic budget cuts could mean more unemployed workers that companies don't look ready to absorb.
Trichet’s hard shell may hide softer heart 7 Jul 2011 The European Central Bank is raising rates and keeps playing hard ball on Greek debt. But it has dropped a collateral requirement for Portugal and hints that it will take care of dependent banks. It's unlikely it would ever allow a meltdown of the Greek financial system.
UK’s periphery resemblance will keep rates low 7 Jul 2011 UK and EU interest rate policies are oddly different. The Bank of England held at levels far lower than Europe's despite the fact that inflation in Britain is a lot higher. The reason is that the UK has things in common with the euro zone's periphery and lags Germany.
Emerging U.S. budget deal deserves close scrutiny 7 Jul 2011 Encouragingly the White House is upping the ante in talks to raise the debt limit, pushing for a pact that would include $4 trillion in budget savings. But investors need to curb their excitement until they've examined the proposed cuts to be sure they're free of actuarial fudge.
A year on, Dodd-Frank hides risky distractions 6 Jul 2011 It s de rigueur for U.S. politicians to squeeze unrelated pet issues into legislation. But when financial reform is already complex and the SEC overburdened, writing and complying with disclosure rules on, say, the use of African minerals is likely to be counterproductive.
Infighting won’t change Iran’s economic policy 6 Jul 2011 The sixyear rule of Mahmoud Ahmadinejad has damaged Iran's finances as the potential benefits of high oil prices have been wasted. But the mixed policies of the regime are unlikely to change even if the current power struggle ends with the ousting of the divisive president.
Portugal must heed Moody’s second-bailout warning 6 Jul 2011 The rating agency's downgrade may look harsh, as Lisbon is just beginning to implement a tough austerity plan in exchange for its first EU bailout. A junk rating may also hurt the country's finances. But it's a reminder that Portugal cannot afford to stray from its chosen path.
U.S. minimum wage is better politics than policy 6 Jul 2011 When a Republican presidential contender hinted at axing the popular hourly pay support, it looked like a rookie political stumble. But the underlying economics of the argument may stand up. The policy is a classic case of good intentions being overtaken by unintended results.
Mexican vote offers neither promise nor threat 5 Jul 2011 Supposedly reformist party PAN, loser in weekend elections, has managed the economy decently but not reformed much. Now it faces high unemployment, drug conflict and a revitalized opposition. A PRI victory won't bring much economic change; faster U.S. growth would do most good.
A balanced U.S. budget isn’t worth fighting about 5 Jul 2011 Congress will have to soon agree on increasing government borrowing authority. Bickering over a Republican idea to stick a balanced budget amendment into the Constitution is a distraction. The rule is unlikely ever to become law. And as a fiscal goal, it's needlessly austere.
Cutting expat fat is a necessary pain for the Gulf 4 Jul 2011 Foreign professionals are feeling the heat as the Arab spring brings urgency to UAE and Saudi efforts to raise employment among nationals. Creating a more sustainable workforce should eventually compensate for shortterm threats to productivity. But there's no painfree fix.
Don’t expect Venezuelan economic boom after Chavez 4 Jul 2011 If health woes force the president to resign, his party successors will pursue his policies. And even if the opposition wins in 2012, history suggests high oil prices will continue to bloat government spending and hinder freemarket policies and the growth of nonoil businesses.
S&P’s default threat could be good news for Greece 4 Jul 2011 The ratings agency says it will consider a French proposal for a Greek debt rollover as a default. The euro zone still has a few months to agree on a second bailout for Greece. But S&P's move should prompt it to embrace a more comprehensive solution.
French Greek plan is an almighty fudge 1 Jul 2011 It's not entirely clear who the Gallic banks are trying to hoodwink with their elaborate scheme for rolling over Greek debt: rating agencies, accountants or taxpayers. But Europe would be better off with a simpler, more upfront scheme that didn't involve smoke and mirrors.
France’s new finance chief has debt work cut out 30 Jun 2011 François Baroin made headlines last year when he warned that France was at risk of losing its AAA credit rating. As finance minister, he will have to make sure the upcoming presidential campaign doesn't become a moment for populist spending and costly electoral promises.
Lagarde’s IMF should prioritize toughness 29 Jun 2011 Too often, as in Greece, the fund has lent to countries that can't repay, only delaying and worsening the reckoning. The institution can have the pivotal role Lagarde wants while being less of a soft touch. That means saying no a lot and saying yes only on tough terms.
China’s inflationary mixed messages 29 Jun 2011 Is inflation under control? Even the premier, Wen Jiabao, seems unsure. The confusion reflects the existence of two kinds of inflation in China. Shortterm pressures probably aren t a problem. But it is hard to see how longterm forces can be tamed without a slowdown in growth.
A letter to the Greeks 29 Jun 2011 As the Greek parliament prepares to vote on austerity and the people mass in demonstrations and strikes, Hugo Dixon explains why it would be mad to vote No and proposes a better alternative.