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.
ECB would survive a peripheral default 26 May 2011 Haircuts on Greek, Irish and Portuguese government borrowings sufficient to cut their debt/GDP ratios to 90 percent would only knock 20 percent off the central bank's capital. The real danger would come if governments were foolish enough to let peripheral banks also melt down.
Emerging markets evolving but still mispriced 26 May 2011 The draws of emerging and frontier economies include stellar growth potential, youthful populations and, sometimes, maturing domestic markets. Mexico still can t claim the stability of France, however. The similar pricing for their risk suggests an adjustment is on the cards.
Multinationals propping up U.S. economic growth 26 May 2011 While first quarter GDP growth was a sluggish 1.8 pct, much of it inventory buildup, private sector growth was 3.6 pct and GNP growth was 3.1 pct. With the government now reining in spending, corporations active overseas are providing the economic stimulus.
G8 can help transform Middle East economies 25 May 2011 The World Bank has pledged $6 bln of aid to Egypt and Tunisia. But the G8 summit this week could go further and come up with a larger plan to support the Arab spring, focusing on job creation rather than debt relief. It needs to be significant to help restore investor confidence.
Soft sterling is cushioned by euro weakness 25 May 2011 There's not much to like about the pound. Inflation is high while growth and interest rates are low. Jobs and wage data mean the wait for a UK rate rise may go on. Rates are rising in the euro zone, but the worsening euro crisis may make sterling a shelter.
London drift bares Gulf stock markets’ weak spots 24 May 2011 Prominent UAE and Qatari stocks are looking west to boost valuations or list the majority of their shares. That's a bad advert for local markets. But Gulf companies might better reap the full benefits of going abroad if they also embraced tighter governance and listing standards.
Only China can tackle its own dodgy accounting 24 May 2011 Serious reporting shenanigans have hammered several U.S.listed Chinese companies most recently Longtop. However, American investors and regulators have little redress across the Pacific. They should practice healthy skepticism until China opens and polices its own markets.
Greece blinks first to avoid euro zone showdown 24 May 2011 Athens says it will shrink its budget by a further 2.8 pct of GDP and jump start privatisations just as talks with the euro zone, the IMF and the ECB were veering towards confrontation. The troika is right to play hardball. But in the end it can't afford to let Greece sink.
Italy may not dodge the next crisis 23 May 2011 Rome has probably avoided the current euro crisis, despite S&P's decision to cut its outlook. But unless the country can reform its political and economic system and at present, that doesn't seem likely it could be brought to the brink the next time the global economy dives.
Saudi $4 bln lifeline to Egypt won’t come for free 23 May 2011 Riyadh has pledged soft loans and central bank deposits to help Egypt out of its economic doldrums. This dwarfs aid offered by the U.S. and will make the kingdom one of Egypt's largest creditors. Cairo cringes at IMF aid's conditionality but Saudi money will have a price too.
Markets face up to QE2 exit and euro zone impasse 23 May 2011 Weak Chinese data has bashed Asian equities, with a knockon for global stocks. As support from U.S. money printing and the dollar carry trade ends, equities will struggle to absorb blows from inflation, higher rates and an unresolved euro zone crisis that threatens a default.
What if the IMF chose its chief on economic merit? 20 May 2011 The race to succeed Dominique StraussKahn will involve personalities and politics. But if the state of a candidate's home economy were the sole criteria, none of the frontrunners would pass muster. Ranking the fund's 187 members suggests South Korea should supply the next boss.
Moral hazard is clue to solving euro crisis 20 May 2011 The idea that entities don't learn lessons unless they feel pain is valid in the euro zone but only if the blame is shared properly. The mess isn't just the responsibility of profligate Greeks, but also foolish banks and hypocritical Germans and French. Each needs to suffer.
Asia gets less bang for its investment buck 19 May 2011 Take China. It now gets a third less GDP per dollar it ploughs into fixed assets like roads and factories than 30 years ago. Other Asian nations tell the same tale. Creating sustainable growth will require better capital allocation, and politically painful restructuring.
ECB cries wolf with Greek debt collateral threat 19 May 2011 Juergen Stark, the ECB chief economist, says its statutes would make it impossible to lend to Greek banks by accepting government bonds as collateral if the country restructures its debt. That's an exaggeration. Restructuring could create problems, but there are ways round them.
Japan recession could lead to strong rebound 19 May 2011 The economy shrank 0.9 percent after March's earthquake hit consumption and the supply chain. That's worse than expected. But it looks like disruption rather than destruction. If the central bank is spurred on to necessary monetary easing, this could presage a powerful recovery.
ETFs gone wild: a guide for the perplexed 18 May 2011 Financial engineering is invading the previously simple world of exchangetraded funds. Regulators fear ETFs could pose systemic risks. But how do the funds work in practice, and why could they become a problem? Breakingviews provides a road map for the uninitiated.
Merkel tosses away ace card in Greek debt poker 17 May 2011 Euro zone leaders seem open to the idea of a voluntary reprofiling of Greek debt before 2013. For this to work, creditors need to believe that a more severe haircut awaits them if they don't agree. Yet Angela Merkel keeps insisting that this won't happen.
IMF should use crisis to toughen itself up 17 May 2011 Under Dominique StraussKahn, lending has multiplied tenfold, largely to basket cases like Greece. But recent IMF loans have failed to force change while damaging other lenders' standing. The fund would make the best of its crisis by replacing the soft DSK with a mean SOB.