Rising U.S. prices mean Fed should move 15 Jun 2011 The latest headline inflation reading benefited from lower energy costs, but consumer prices have risen 3.6 pct in the past year. The U.S. central bank's preferred core measure hit a threeyear high in May. Just to keep real interest rates flat, the Fed needs to lift its target.
Germany’s Greek plan could have scary consequences 15 Jun 2011 Can the euro zone stomach Germany's plan for a Greek debt extension? Markets are already pricing a lot of pain into the country's bonds. But Spain and peripheral banks could still be powderkegs for wider contagion. Europe's defences need shoring up.
Greek riots make global market blues even bluer 15 Jun 2011 Images of police clubbing protesters in Athens rammed home the severity of the Greek crisis to investors globally. With a vacuum of good news in the U.S. or China, it's not surprising to see risk premiums rising. The odd dotcom IPO aside, there's little to bolster confidence.
Greek protests risk feeding anti-bailout feelings 15 Jun 2011 Protests against austerity are turning violent raising further questions about Prime Minister Papandreou's capacity to deliver on the euro zone/IMF bailout plan. Rising opposition will give fodder to those in lender countries who opposed a bailout in the first place.
Ireland chooses risky moment for bank bond raid 15 Jun 2011 The government is threatening to haircut senior creditors of its defunct lenders. The move directly challenges the ECB and will further rattle markets spooked by talk of a Greek restructuring. But Europe s fear of contagion may help Ireland secure better terms on its bailout.
China gives global investors hope of soft landing 14 Jun 2011 They shrugged off higherthanexpected inflation in May, focusing instead on stable production and investment figures. Worries that China had overtightened are receding. Since growth looks safe, the yuan may have more room to strengthen.
Dim hopes for Italian spring after Berlusconi rout 14 Jun 2011 The Italian prime minister knows how unpopular he is after bad defeats in four referendums. His fate is now in the hands of his political allies but he may not be able to limp on until the 2013 election. As he struggles, the chances for serious economic reforms are gone.
Headless Belgium ticks on in vulnerable state 13 Jun 2011 Unhappy anniversary. It is a year since Belgium has been ruled by a caretaker government. At least the economy is growing unlike in weaker euro members. But bank exposure to the periphery is high and any credit event there could whack up Belgium's deficit and bond yields.
Syria spillover threatens neighboring economies 13 Jun 2011 The stream of refugees across the country's borders is just one example of how a meltdown could strain the economies of Syria's neighbours. Turkey, Lebanon and Iraq are vulnerable. The extent of the fallout is hard to predict, but Syria's isolation heightens uncertainty.
Fed gets a taste of painful exit strategies 13 Jun 2011 Auctions of some $30 bln of toxic assets once owned by AIG haven't gone too well. Only half the latest crop sold, as a fatigued Wall Street fretted about depressed mortgage bond prices. The bigger worry, however, is what it says about the fate of the Fed's whopping balance sheet.
Lifting GDP growth key to U.S. debt, job fixes 13 Jun 2011 Tim Pawlenty and Larry Summers, otherwise unlikely bedfellows, seem to agree on that. Forget Pawlenty's fanciful 5 pct growth rate. Just historically average growth 3.3 pct or so would shrink deficits and boost employment. But getting even there requires the right policies.
Erdogan’s victory suggests Turkey may not need EU 13 Jun 2011 The AKP has scored a big victory, but it will need to compromise on constitutional change. This is the best possible result for Turkey. The success of its promarket, regionallyoriented policies could show it doesn't have to lock itself into a politically unresponsive union.
Mongolian wolf still too wild for IPO markets 13 Jun 2011 Hot coal prices may soon see the government float its prize mine one of the world's best. But the shares will also be a bet on an economy with soaring inflation, weak banks and a government unused to big windfalls. Mongolia has yet to prove its wolf economy can be tamed.
Irish finance minister faced mission impossible 10 Jun 2011 Brian Lenihan, who has died at 52, ran Ireland's economy from the onset of the crisis to its bailout. A hasty decision to guarantee the banks in 2008 proved fateful. But Lenihan inherited a badly run and bloated financial sector.
Hillary Clinton wouldn’t suit the World Bank 10 Jun 2011 The U.S. secretary of state may want the top job at the multilateral in 2012, though officially she doesn't. With her background and potential ambitions, that's probably a bad idea. Even if it's just an early trial balloon, it reveals the jockeying for the vacancy at the IMF.
Brazil at risk of wasting its boom 9 Jun 2011 It's the flipside of wasting a good crisis. While interest rates are rightly high to ward off inflation, they have brought an overvalued currency. Brazil should be running a big budget surplus and building reserves. But President Rousseff doesn't seem to be making it happen.
IMF snub points to an overheating Turkey in denial 9 Jun 2011 Ankara has told the IMF not to publish in full its latest report on the economy, saying it was written by inexperienced analysts. Turkey is an emerging market success story, but supercharged growth has risks. No doubt that was the IMF's conclusion. The government should listen.
Receding risk appetite reveals new Asian havens 9 Jun 2011 Indonesia and Japan are among those enjoying newfound investor confidence, thanks to shifts in financial health and wealth. Concerns about global growth favour traditional safehavens like Treasuries, Swiss francs and gold but have also signalled some unconventional harbours.
Stock market Sino-phobia could see capital dry up 9 Jun 2011 Deepening concern about accounting at forestry group SinoForest has triggered a rout in Chinese stocks listed abroad. Indiscriminate buying has given way to distrust. If there now comes bad news about China's economy, some Chinese companies could face a severe capital shortage.
U.S. mortgage market should be much smaller 8 Jun 2011 That matters as regulators and financiers rethink home lending. With a smaller role for the government, sources of funds could fall well short of today's $10.5 trln of outstanding mortgages. But a postcrisis market could be scarcely half as big and therefore easier to fund.