Moody’s growth fear reflects UK private debt woe 8 Jun 2011 Cut spending and kill growth. Or don't cut spending and see the deficit rise. That's Moody's Catch22 warning. But the real cause of low UK growth isn't government spending cuts but hugely greater private ones housing debts.
Berlin takes on the ECB over Greek restructuring 8 Jun 2011 Germany's finance minister says a debt deal must go beyond a soft Viennastyle rollover, and include a substantial contribution from bondholders. This puts him at odds with the European Central Bank. It also doesn't bode well for a swift agreement on Greece's second bailout.
Pawlenty hopes unlikely growth will fund tax cuts 7 Jun 2011 The U.S. Republican presidential contender's economic plan hinges on a decade of 5 pct annual GDP expansion. That's a very tall order, though the blueprint would boost growth. But it could get interesting if his assumptions for longterm pensions and healthcare are as ambitious.
Delivering Plan A should be UK’s priority 6 Jun 2011 The British government is being urged to change economic course. The latest attack envisages a green new deal and job creation. But it's imperative that the deficit is cut because that is the best way to keep interest rates low. It's hard. But it's the only way.
Greece mustn’t waste its second chance 6 Jun 2011 Athens will probably receive enough bailout cash to see it through to end2013. But if it veers off track again, as is all too possible, any third chance might come with such extreme conditions that a messy default and a humiliating exit from the euro wouldn't be far away.
European rift widens in leadership vacuum 6 Jun 2011 Whether on vegetables or the euro, on immigration or banks, Europeans seem more divided than ever. Populist parties are gaining ground across the continent. The EU was built on crisis. But this time it lacks leaders with the strong political will to make it progress.
Yemen uncertainty nudges up geopolitical risk 6 Jun 2011 Ali Abdullah Saleh is gone, but the crisis goes on in the al Qaeda hotbed situated next to a strategic oil chokepoint. Saudi Arabia has earned poor returns on the probable billions it has poured into Yemen over the years. Luckily, it can't afford to turn its back.
There’s value in shares despite new risk aversion 3 Jun 2011 Investors pushed yields on 10year U.S. Treasuries below 3 pct. But that makes bonds look expensive, while equities are still cheap enough to compensate for the attendant risks. Herein lies a buying opportunity for those with medium to longterm time horizons.
Greece’s weakest turkeys may vote for Christmas 2 Jun 2011 It should be possible to get nearly half Greece's creditors to roll over loans as part of a Vienna Initiative. That will help close the country's funding gap. But it's the most vulnerable creditors who will be susceptible to pressure, creating further problems down the line.
IMF should pass on Belarus 2 Jun 2011 The exSoviet republic faces a fullblown economic crisis and has asked the IMF for a loan of up to $8 bln. But ruling autocrat Alexander Lukashenko has shown little sign he's ready to carry out the deep reforms his country needs. The IMF should give Belarus the cold shoulder.
Japanese M&A adventurism poorly directed abroad 1 Jun 2011 It has become a mantra within Japan Inc that, with the domestic market shrinking, companies must make international acquisitions. But creating more competitive and profitable businesses through domestic consolidation would be better for the country not to mention shareholders.
China’s backdoor bank rescue sends mixed message 1 Jun 2011 Beijing's plan to shift $400 billion of local government borrowing should be good news for Chinese lenders. But if the bailout happens, it may show that the bad debt picture is even worse than investors feared. Moreover, it gives everybody an incentive to embark on another binge.
Ireland might need second bailout too 1 Jun 2011 There's a funding gap in the Irish rescue just as there is in Greece's. Fortunately, the hole probably doesn't appear until 2013, giving Dublin some hope of raising cash on the markets. But if it can't, it will be thrown back on its official lenders' mercy.
Cup loss wouldn’t be end of the world for Qatar 31 May 2011 Even if it happened, losing the right to host the soccer World Cup might do no more than dent the $77 bln of infrastructure spending promised by the Gulf nation in the run up to 2022. But it would be more than just embarrassing to be stripped of the chance to hold the event.
U.S. housing double-dip highlights black spots 31 May 2011 A new low for the S&P/CaseShiller index doesn't mean trouble everywhere DC area prices are rising. But in five of its 20 regions, prices are at or below 2000 levels, while two more have seen 50 pct falls. In those troubled areas, housing miseries will infect the real economy.
Investors have a simple antidote to IPO greed 31 May 2011 BlackRock has written to advisers complaining about aggressive pumping of new issues. The fund manager's concerns are legitimate, particularly when it comes to private equity exits. But the most effective response to overpriced offerings is to not buy the shares.
Policymakers must hold nerve as economy softens 31 May 2011 Global data is suddenly weaker, prompting fears of renewed economic downturn. The soft patch is for real. But some slowing is necessary to curb oil prices that are fuelling inflation and hurting consumers. To respond with more money printing would be a big, inflationary mistake.
China’s growth hinges on wild west 31 May 2011 Poorer western cities like Chongqing are catching up the richer, but slowergrowing east. This month's trade fair shows how cheap labour is attracting multinationals and investment. A relative lack of exports and of stateowned enterprises, once a hindrance, now looks a blessing.
Don’t take IMF words on Greece at face value 27 May 2011 Listen to what Athens, the euro zone and the IMF itself say about its lending practices and one might think Greece will go bust if it hasn't signed a comprehensive new reform plan within a month. Time is ticking and pressure mounting, but the deadline isn't quite that hard.
Russia’s capital outflow should worry investors 27 May 2011 Billions of dollars are fleeing Russia each month. There are several shortterm explanations, but it's also clear that Russians are increasingly loath to invest in their own country. That sends a disturbing signal that confidence in the economy's prospects is lacking.