Tunisia’s uprising sends warning to police states 17 Jan 2011 The toppling of the Tunisian regime shows that an open economy can't work in the long term unless it is democracybased, in spite of western complacency and support. This should give pause to both investors and dictators.
China yuan investment a nod in right direction 14 Jan 2011 A pilot scheme will allow Chinese investors to use their own currency to buy overseas, albeit with restrictions. That lays down the pipes to establish the renminbi as a global currency. But while the capital account remains closed, the yuan flow will be limited.
Deflation off U.S. agenda despite still-tame CPI 14 Jan 2011 Key inflation numbers remain benign, despite some underlying price pressures. Meanwhile, though consumers spent a bit less than expected in December, they re hardly putting off purchases. Overall, recent data suggest concerns about pernicious deflation can be put to rest.
India can’t afford to be soft on corruption 14 Jan 2011 The government's lacklustre response to a series of scandals isn't just woeful; it is symptomatic of a general lack of reformist zeal which could drag down India's mediumterm growth. The best hope is that an outcry will lead to a crackdown on sleaze, but don't count on it.
Asia’s hot money starts to get fussier 13 Jan 2011 As U.S. optimism grows, inflows to riskier markets like Indonesia, India and the Philippines seem to be wavering. That may relieve central bankers worried about rising currencies and asset bubbles. But investors can no longer consider Asian stocks and bonds as a oneway bet.
Trichet rightly shrugs off inflation risk 13 Jan 2011 The ECB will keep interest rates unchanged and is confident that inflation in the euro zone will get back to the two percent target by year end. Trichet is right. In the short term, minding the euro crisis is more important than obsessing about inflation.
EU bank levy idea is circular – and dangerous 12 Jan 2011 Brussels has floated the notion of a oneoff 50 bln euro tax on lenders to help pay for sovereign bailouts. But whacking banks so that governments can continue to prop them up makes little sense. Worse still, the scheme could reinforce the moral hazard the EU wants to end.
U.S.-China love-in shouldn’t deter rebalancing 12 Jan 2011 Goodwill has flourished ahead of President Hu's visit to Washington. The two powers need to work together on geopolitical issues like North Korea. But tough conversations on trade are still needed: the bilateral imbalance between the U.S. and China has actually grown.
Belgium invites crisis, but doesn’t quite get one 12 Jan 2011 Despite lacking a government for six months, the country is in better shape than the euro zone periphery. Sovereign debt spreads are at a euroera high, but still way below those of Spain. The economy is competitive. And the king is helping by focusing on the deficit.
Europe can find ways to make EFSF more efficient 12 Jan 2011 Euro zone leaders are debating ways to increase the region's 440 billion euro bailout fund's lending capacity and make it more flexible. Revamping the fund could help fight contagion in bond markets. But radical changes aren't on the immediate agenda.
Euro zone should switch to strike pre-emptively 11 Jan 2011 The Christmas pause was short lived. The euro zone's fiscal crisis hasn't gone away. Portugal is next. Belgium is a concern. All eyes are on Spain. Euro zone leaders should learn from crises past and act preemptively, even if that bruises political egos.
FTSE 100 at 6,000 is no cause for celebration 11 Jan 2011 The UK's main equity index is hovering around a threshold that's supposedly psychologically important. But such round numbers are arbitrary. After taking into account GDP growth, inflation, or dividendenhanced total returns, passing the 6,000 mark is nothing to write home about.
India is behind curve on inflation 10 Jan 2011 It’s not just that the latest food inflation figures have reached 18 pct; the current account deficit is also high. The authorities need to get a grip, even if it means sacrificing 9 pct growth. Structural reforms, not loose policy, are the only sure way to sustain rapid growth.
India is behind curve on inflation 10 Jan 2011 It s not just that the latest food inflation figures have reached 18 pct; the current account deficit is also high. The authorities need to get a grip, even if it means sacrificing 9 pct growth. Structural reforms, not loose policy, are the only sure way to sustain rapid growth.
U.S. must avoid overreaction to assassination try 10 Jan 2011 The global primacy of American bonds and currency stems mostly from the nation s economic might. But confidence in U.S. political stability also plays a role. The shooting of a congresswoman, though tragic, shouldn t alter those perceptions unless freedom of speech suffers.
China’s euro lifeline could pay for itself 10 Jan 2011 Buying bonds of troubled euro countries like Spain or Portugal isn't charity for China. A healthy Europe, with a stronger currency, would buy even more Chinese goods. And there may be political concessions to be wrung down the line.
Gimmicky prudence could be enough for California 10 Jan 2011 The governor s budget slashes spending by $12.5 bln, but the total is still more than the previous year s final version. Still, combined with the cutbacks since 2008 and assuming no doubledip recession, the additional parsimony if it flies may suffice to stave off crisis.
Spain must keep worrying about the provinces 10 Jan 2011 The Spanish government says the country's regions are on track to comply with their 2010 budget deficit reduction plans. But some big ones, like Catalonia, won't. And this year's goals will be hard to achieve without determined pressure from Madrid.
U.S. underclass growing faster than employment 7 Jan 2011 Nonfarm payrolls increased 103,000 in December, but the ranks of the longterm unemployed rose by 113,000. True, the U.S. economic recovery is finally accelerating. But the expanding layer of nearpermanently jobless people is bad news for longterm fiscal and social health.
EU must pressure Hungary into policy change 5 Jan 2011 Budapest is taxing foreign firms, suppressing the central bank s independence and clamping down on the media. It s a big embarrassment for Europe just as Hungary takes over the EU chairmanship. If Hungary doesn t change tack, it may discover that populism often leads to poverty.