Review: A crisis-like evaluation of "Stress Test" 12 May 2014 To judge the merits of Tim Geithner’s reflections, six Breakingviews columnists digested different pieces in a short amount of time. Like the regulators who often lacked broader context, the assessments vary. Yet there’s also consensus it’s a useful tome for the financial library.
Fed’s glasnost era dies, age 9: an obituary 8 May 2014 The U.S. central bank’s campaign to provide transparent policy guidance has lost its battle with market misinterpretation. Chair Janet Yellen, who helped nurture the effort, and other officials revealed the sad news this week. Its demise leaves investors worldwide bereft.
The Fed really does care about little banks too 1 May 2014 It’s easy to think no one would miss these thousands of small community institutions if they disappeared. But America’s top bank police chief, Janet Yellen, assured them she cares. Tailored regulation and still tougher rules for the bigger behemoths prove her point.
Fed and gridlock to thank for U.S. deficit decline 22 Apr 2014 Since five years ago, the expected ratio of government debt to GDP in 2019 has fallen from 81.7 pct to 72.5 pct. That’s a handy reduction. The Fed’s low interest rates have made a difference. But politicians can’t take much credit, having mainly just thwarted each other’s plans.
Fed offers too little, too late on too big to fail 26 Mar 2014 The watchdog’s researchers reckon big banks benefit from a cheaper cost of funds than smaller rivals thanks to an implicit government backstop. That’s often true, especially during crises. But the Fed ignores more recent data. The behemoths’ advantage is actually shrinking.
U.S. financial reform is still on to-do list 25 Mar 2014 The Dodd-Frank law brought broad new rules for Wall Street. Lawmakers are now focused on mortgage finance. That’s a valid priority, but if it weren’t for Washington’s logjam they could tackle far more, including money markets, mechanisms for bank failure and virtual currencies.
Further policy reversal is Argentina’s best option 24 Jan 2014 Cristina Fernandez has eased FX curbs. That’s a step toward tackling the peso plunge. But on official statistics, there shouldn’t be a currency problem. Argentina needs more reform, spending cuts and an independent central bank – plus better data. That means a whole new mindset.
Rousseff’s postcard from Davos may not reach home 24 Jan 2014 In her World Economic Forum debut, Brazil’s president preached to the capitalist choir. Promises of fiscal virtue, price stability and privatization should delight investors. An upcoming election, though, probably means it’ll take more emerging market turmoil to be less populist.
Brinksmanship to worsen with U.S. midterm election 27 Dec 2013 Congressional contests will make extremism more appealing to lawmakers than compromise. That means more gridlock, in which President Obama’s healthcare reform gets more attention than economic policy. Worse, the GOP minority’s only real leverage is the threat of default.
Hugo Dixon: Europe’s post-crisis challenge 16 Dec 2013 The hot phase of the euro crisis may be over. But the zone will limp on for years with low growth and high unemployment unless further action is taken on three fronts: bank balance sheets must be cleaned up, monetary policy loosened and more free-market reforms adopted.
U.S. budget mini-bargain beats no bargain at all 11 Dec 2013 A deal reached between the House and Senate replaces $63 bln in planned cuts and slices another $23 bln from deficits – but it fails to deal with long-term issues. It’s as close as this dysfunctional Congress gets to compromise, just in time for a midterm election year.
Osborne lets UK recovery ease austerity’s pain 5 Dec 2013 Stern responsibility remains the British Chancellor’s watchword. With jobs increasing and GDP rising faster than expected, it’s easy to resist calls to abandon his austere course. Small shifts, like tax cuts for young workers and a new attack on tax dodges, are useful ornaments.
Yellen channels her inner Bernanke before Congress 14 Nov 2013 In her first Senate confirmation hearing as nominee to lead the Federal Reserve, Janet Yellen was calm and composed. On policy questions, she argued the Fed’s actions were prudent without dropping any hints on the future. Markets may feel like Ben Bernanke never left.
Say goodbye to American housing finance reform 7 Nov 2013 Bailed-out mortgage backers Fannie and Freddie had an astounding $39 bln quarter. That sort of performance won’t last forever, and it doesn’t erase the companies’ past misdeeds. But as Congress mulls fixing the housing system, it might have trouble slaughtering two cash cows.
Lael Brainard isn’t the only Fed no-brainer 6 Nov 2013 The departing Treasury official acquitted herself nobly helping the world understand Washington’s profligate and quixotic ways. She’s a confirmable choice on the central bank’s board of governors. Filling other Fed vacancies quickly is President Obama’s other obvious task.
France won’t meet its deficit target. No problem 5 Nov 2013 The European Commission’s latest forecasts show that France will not be able to shrink its budget deficit to the mandated 3 percent of GDP by 2015. But that isn’t bad news. Like the rest of the euro zone, the country will gain by breaking free from the austerity straitjacket.
De-Americanized world economy is a long way off 18 Oct 2013 China this week railed at Uncle Sam’s influence. Political brinkmanship over U.S. borrowing rattled markets, and the global impact of Fed policy is another worry. American hegemony won’t fade quickly, but officials elsewhere can join Washington lawmakers in speeding the process.
Accommodating Fed puts bond vigilantes out of work 18 Oct 2013 Those who took America to the brink of default may well do it again in early 2014. Investors expect the Fed to mitigate economic damage inflicted by the showdown and are buying Treasuries. As long as the central bank keeps obliging, bond markets won’t discipline politicians.
U.S. debt default disaster isn’t up for debate 14 Oct 2013 It would bring global trouble “in a way you couldn’t possibly understand,” says Jamie Dimon. Debt ceiling holdouts in D.C. suggest otherwise. But they’re wrong. Financial markets are a confidence game, and there’s solid recent evidence of what happens when confidence collapses.
Spain’s tax system is an unnecessary mess 11 Oct 2013 The country collects less tax as a share of GDP than the EU average, despite having higher headline rates. Improving the tax system is a key reform which is sitting on the government’s desk. Without a big change, Spain will keep struggling to get its finances under control.