Fed transition could look positively Reaganesque 10 Jul 2013 The timing of Fed chief Bernanke’s fate may be just as important to markets as the name of his replacement. Alan Greenspan gave investors a heads-up before the White House tapped Bernanke. Markets would be better served by a seamless 1987-style handoff.
Wall Street’s former sheriff saddling up again 8 Jul 2013 Eliot Spitzer is the model for local crusaders against financial powers that be. But the ex-NY governor’s scorched-earth style may not play in the city comptroller’s office, which he now seeks. While Spitzer may have big plans, he must re-establish trust and credibility first.
Hugo Dixon: How the euro zone can muddle through 8 Jul 2013 Three years on, debate still rages over what is to blame for the crisis and what to do about it. Looser monetary and fiscal policy are a small part of the answer, as is greater integration. Most important is to press ahead with reform, on a national and supranational level.
U.S. Basel embrace puts foreign watchdogs on spot 2 Jul 2013 The Fed is giving a thumbs-up to the Swiss-sanctioned global bank capital rules. The FDIC and OCC should follow suit soon. That quiets overseas critics skeptical that America would play ball. It should also coax Europe and Asia to show a similar team mentality on other issues.
Student loan rate hike is a D.C. dysfunction bonus 1 Jul 2013 Congressional inaction means Uncle Sam-backed college borrowing costs double to 6.8 pct. That should curb the rapid rise of such debt, now at nearly $1 trln. It might even slow education inflation. It’s a rare case of useful policy that doesn’t require waiting for the Fed.
Finance 101 would get U.S. pensions back on track 27 Jun 2013 Illinois, Connecticut and New Jersey are among the states that neglected the most powerful force in retirement saving: compound returns. Their pension burdens are much heavier because they short-changed the funds, a Moody’s study finds. It’s time to revisit the basics.
Market bloodletting may be more 2003 than 1994 26 Jun 2013 Bankers are smart to ask if the recent jump in rates could cause a replay of bond pain two decades ago. A better comparison may be 2003. Markets threw a hissy fit when the Fed signaled easy money would end. It didn’t last long. More importantly, nothing big blew up.
Wall Street finds itself in a 1994 state of mind 26 Jun 2013 Back then a jump in rates inflicted mega damage. Goldman Sachs partners even had to recapitalize their firm. Bank bosses are confident today, saying they’re no longer holding inventory and ceded prop trading to hedge funds. If true, maybe they have regulators to thank.
Bernanke should be international man of mystery 20 Jun 2013 The Fed chairman has embraced a far more communicative approach than his predecessors. The benefits, however, aren’t obvious. Based on the latest reaction in the markets, investors are parsing his comments as much as they did Alan Greenspan’s. Maybe fewer words would say more.
End of QE could create a healthy stimulus 20 Jun 2013 Ben Bernanke has upset investors with talk of lifting off the monetary gas. But the Fed chairman’s bond-buying accelerator has stoked markets for commodities and other assets more than GDP growth. Less acceleration could deflate energy prices and provide a broad economic boost.
Bernanke’s legacy at Fed won’t be his to forge 19 Jun 2013 Obama says the chairman has done enough. If so, his successor will face the task of rolling back years of ultra-easy policies. Jittery markets make that tricky even for a known Fed boss. After Wednesday, Bernanke may have only five FOMC meetings left to help set a new direction.
Detroit bankruptcy won’t solve its people problem 18 Jun 2013 Motown took a step closer to bankruptcy last week when the state-appointed fix-it man called on bondholders and public workers to accept steep cuts. Trouble is Detroit needs more than debt relief. It needs to build up its tax base if it’s to become functional as well as solvent.
Smallest U.S. state faces big financial quandary 12 Jun 2013 Rhode Island is on the hook for $113 mln of debt incurred by a failed videogame venture it backed. The Ocean State has a moral obligation to pay up, but not a legal one. Short-term, it would be savvier to walk away. The more pragmatic, long-term decision is to honor the promise.
Obama taps policy guru to elevate his academics 10 Jun 2013 The U.S. president has picked a trusted and loyal adviser, Jason Furman, to head the White House team of economic wonks. As Furman steps out of the shadows, he’ll need to balance a natural desire to boost the council’s profile without watering down its valuable research focus.
Mortgages could upset Fed’s best laid plans 10 Jun 2013 The U.S. central bank would like a graceful exit from quantitative easing. Investors in the $8.2 trln mortgage market will make that hard. Their hedges exaggerate movements in the Treasuries market, as seen in May’s yield spike. The pattern could be dangerously self-reinforcing.
U.S. recovery leaning heavily on McJobs 7 Jun 2013 Lower-paid and temporary work accounted for most of May’s 175,000 employment increase and 40 pct of new jobs in the past year. Meanwhile, part-time work remains high and may rise as Obamacare kicks in. The jump in jobs might look good, but for many it’s not a path to prosperity.
Making sense of the ECB’s negative rates dilemma 3 Jun 2013 European Central Bank officials talk the idea of negative rates up and down. This radical monetary policy might pull the fragmented euro zone back together. It could also backfire. The Breakingviews guide to negative rates explains why policymakers are being coy.
Fed generates the wealth, but where’s the effect? 31 May 2013 Americans’ private worth grew twice as fast as the U.S. economy last year, due largely to the rise in stocks and other financial assets. They can thank Ben Bernanke for that. Consumers aren’t, however, rushing to spend their gains. It’s another reason to question Fed policy.
California surplus is a hidden gem for U.S. economy 28 May 2013 The one-time basket case expects a $1.1 billion surplus next year. Other states are climbing out of deep fiscal holes, too. It’s still unclear what each local government will do with its newfound riches. But their recovery means they won’t be such a drag on the U.S. economy.
Global inflation slide stirs the bogeyman 24 May 2013 In theory, inflation should have picked up when central banks cranked up the printing presses. Instead, it’s slowing down. In the U.S., it’s nearly 1 percentage point below target. Policymakers now have to start worrying about their worst enemy – deflation.