Lax money to blame for Russia’s inflation surge 26 Jan 2011 Russia's chronic inflation problem currently 8.8 pct and rising shows no signs of abating. Temporary factors such as drought haven't helped, but the underlying causes are fiscal and monetary policies. A stronger rouble and a tighter budget are needed to kick the habit.
Euro rise is unlikely to hit growth – for now 26 Jan 2011 The euro is up more than 2 percent this year against the dollar on better news about the debt crisis. But it's still way off its historical peak, and it hasn't risen as strongly against other currencies. The impact on the euro zone's growth, so far, is likely to be limited.
U.S. president moves debt reduction to backburner 26 Jan 2011 Obama's Sputnik moment may not leave as lasting a mark as axis of evil or the era of big government is over. More important was what the president didn't say, notably about his own debt panel's budgetcutting plans. Apparently the era of big government deficits is not over.
UK’s shock contraction hurts government and pound 25 Jan 2011 Snow and ice were factors but the 0.5 pct contraction in the size of the UK economy brings on the serious risk of a double dip recession. The government will come under fire. The Bank of England's inflation stance is vindicated. The pound will weaken further.
Taiwan shows hot money flows aren’t all bad 25 Jan 2011 Hot money is flowing out of Asia's emerging markets, yet into Taiwan. Rising tech exports, an appreciating currency and low inflation all serve as a lure. The inflows are a vote of confidence in Taiwan's policy and prospects. Policymakers can afford to let them roll.
Bond sale success shows EFSF can be more generous 25 Jan 2011 The first bond issue of the euro zone's 440 billion euro bailout fund was a hit. It is borrowing at below 3 percent, while lending to Ireland at 6 percent. That looks like a racket. Lowering the rate would both give Ireland a breather, and display political unity.
Global economy not as healthy as it looks 25 Jan 2011 The IMF predicts 4.4 percent growth for 2011. But inflation has reared its ugly head in many parts of the world, suggesting economies are growing faster than can be sustained without structural changes. Spurring on reform should be the main focus of the annual Davos shindig.
India needs solution to $1.5 trillion puzzle 24 Jan 2011 That’s what it will need to invest in infrastructure over the next decade if it is to reach 10 percent GDP growth. The government and banks won’t be able to carry that load on their own. Financial liberalisation could help fill the gap.
Sarkozy’s G20 plans fail to impress 24 Jan 2011 Though it is France's turn in the G20 chair, it's hard to see that President Sarkozy's calls for more commodity markets regulation, a reformed world monetary system and a financial transactions tax will gain much traction. His focus on food prices may not be unhelpful, however.
Japan should heed new government doom-monger 21 Jan 2011 It's good that new economics minister Kaoru Yosano talks tough on Japan's heavy debts. The healthy 5 percent GDP growth of 2010 can't be counted on in future. Now Yosano must succeed where his prime minister failed, and persuade Japan to stomach spending cuts and tax increases.
Counterpoint: China can learn from U.S. moms too 21 Jan 2011 China's fabled tiger moms may have lessons for U.S. politicians, as James Pethokoukis argued here. But their U.S. sisters have plenty to teach China about shopping. Consumption's share of GDP growth is at a sevenyear low. All work and no play makes China an unbalanced economy.
Emerging markets stalked by inflation and rates 21 Jan 2011 Consumer prices are rising across emerging economies and interest rates are following. Borrowing costs are rising in Asia, Brazil's overnight rate is over 11 percent and Russia should move. For highpriced emerging market equities, the tightening of liquidity is a threat.
Euro crisis further shrinks Barroso’s credibility 20 Jan 2011 The European Commission president has been mostly invisible during the euro debt crisis. Now he's irked France and Germany with veiled criticism of the euro zone bailout fund. Paris and Berlin are right to ignore him. But their original mistake was to champion him for the job.
China’s Hu dodges inflation trade-off 20 Jan 2011 President Hu Jintao says inflation won't force yuan appreciation. But maybe it should. Prices are rising at 4.6 percent, and the economy is growing at an abovetrend 12 percent. The undervalued yuan is drawing money into China, undermining efforts to tighten.
Peripheral debt is still rife with downside risks 19 Jan 2011 A couple of decent bond auctions has eased pressure on the euro zone. But investors should be wary. Though a few tempting investment openings exist, many Greek, Irish and Portuguese bonds still aren't cheap enough to compensate for the risk of default.
Europe needn’t crush markets to fight crisis 19 Jan 2011 Europe must revamp its 440 billion euro bailout mechanism. But turning it into a bondbuying fund, as some suggested, would be a mistake. It could distort markets and encourage profligate governments. The euro zone should rather look at ways to make lending terms more flexible.
BoE must resist a double dip rate hike 18 Jan 2011 UK inflation at 3.7 percent is far worse than expected. The pressure on the Bank of England is huge. But raising interest rates now will threaten a new recession, a bigger fiscal deficit and stilllonger unemployment queues. The BoE must be strong.
Governance beats acronyms for investors 18 Jan 2011 The BRIC bloc touted by Goldman s Jim O Neill in 2001 was partly selffulfilling, diverting billions of investment from elsewhere. His latest growth group, including Turkey and Mexico, could do the same. But smaller betterrun places may provide higher longterm returns.
EU stress tests inch towards credibility 18 Jan 2011 New bank tests will cover liquidity and sovereign debt risks. That tackles two big flaws of last year's effort. But capital adequacy both quality and quantity must also be higher. And unless governments can recapitalise banks that fail, the tests will flop again.
Book review: Is the West doomed? 17 Jan 2011 A controversial book by Dambisa Moyo, How the West was Lost, suggests that it is virtually bound to be eclipsed by China. It raises the idea of protectionism and default as a way of fighting back. Hugo Dixon is more sanguine about the prospects and doesn't like all the remedies.