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.
NAFTA veteran is trade-friendly choice to run WTO 6 May 2013 The two men vying to replace Pascal Lamy are both Latin American. But Roberto Azevedo has spent 15 years fighting Brazil’s protectionist corner, while Mexican Herminio Blanco negotiated NAFTA and has 13 years of private sector experience. He looks the likelier free-trader.
The private sector comes to U.S. economy’s rescue 3 May 2013 Enterprises added 176,000 jobs in April, and the private sector grew by 4 pct in the first quarter. Higher payroll taxes, tight state budgets and sequestration downsizing aren’t preventing employment gains. America’s form of austerity by stealth looks to be working.
Healthcare study reveals risks of blind spending 3 May 2013 The trillions of dollars America plans for insuring the poor may not improve health, new research shows. The study’s merits aside, its scrutiny of Medicaid costs and benefits offers a model for making policy. Most programs would profit from a thorough look before Congress leaps.
President’s pragmatism paying dividends for Peru 2 May 2013 Ollanta Humala’s social programs and support for indigenous peoples please his supporters, but he has also welcomed foreign investment and may be rolling back an expensive mining consultation law. The strategy has critics, but could keep Peru on an enviable growth trajectory.
Fed running risk of re-inflating bubbles 1 May 2013 The U.S. central bank is sticking with loose monetary policy and hefty asset purchases. But with stocks at record levels and home prices up 9.4 pct in a year, asset values are heading higher even if growth isn’t. The Fed needs to counter bubbles as well as economic sluggishness.
Corporate America lamely blames U.S. budget cuts 25 Apr 2013 This earnings season, forced deficit reduction is filling a role previously held by the weather, China and other spurious scapegoats. Delta and IBM are among the culprits, but Washington-inflicted damage is trivial. Even so, lawmakers could all but end any financial disruption.
House finance chief puts politics over governing 23 Apr 2013 Jeb Hensarling, head of the U.S. House finance committee, has shunned the new consumer bureau’s chief. He complains Obama appointed Richard Cordray without congressional consent. The lawmaker would better serve finance, and democracy, by making his case with tough questions.
IMF needs more creative ideas on growth 22 Apr 2013 The world’s richest nations are on track to grow just 1.2 pct this year, half the pre-crisis rate. The policy experiments - austerity, stimulus and easy money - aren’t yet paying off. The IMF seems stuck too. More innovative research and advice would make the fund more valuable.
Prioritizing U.S. debt could stamp out market risk 19 Apr 2013 Drama over the cap on Uncle Sam’s borrowing power rattled investors back in 2011. A new proposal would force Treasury to pay bondholders before contractors and seniors. If the debt limit can’t just be scrapped, at least markets could be spared some of Washington’s dysfunction.
Brazil boxes itself into corner on growth 18 Apr 2013 The central bank just raised interest rates to fight inflation. GDP expansion, meanwhile, is already stalling. High public spending and rapid private credit growth, the fuels for Brazil’s boom, are both reaching their limits. President Rousseff may be running out of options.
Whatever happened to the inflation "Weimarists"? 12 Apr 2013 When the U.S. Fed began its massive stimulus campaign, critics invoked Germanic history and wheelbarrows full of cash. Four years on, only the most stubborn hawks still fear hyperinflation. Consistently low price growth has made Ben Bernanke’s easing look safe, if his exit works.
Obama puts other people’s money where his mouth is 10 Apr 2013 The president doubles down on taxing the rich as the Buffett levy makes an official appearance. New revenue is the centerpiece of Obama’s deficit-cutting ambitions, with millionaires, buyout bosses and smokers targeted. That probably dooms his budget plan - and a big debt deal.
Excessive vacancies are a travesty of Justice 9 Apr 2013 Several key posts remain open at Barack Obama’s law enforcement department as deadlines loom to file financial crisis-linked cases. The president is already under fire for not nailing Wall Street miscreants. It’s starting to look like he and the Justice Department are giving up.
Pensions need to share pain when cities go broke 28 Mar 2013 Stockton wants bondholders to pay for its financial woes while leaving retirement benefits intact. That’s unfair and undermines the law’s power to rein in runaway pension costs. A U.S. judge should deny the California city bankruptcy protection until it revises its position.
Venezuela’s new capital controls just won’t work 21 Mar 2013 Two-tier exchange rates are frequently used to limit imports. However, history shows that three-tier rates like Venezuela’s new system foster rent-seeking, corruption and huge economic costs, and then fall apart, as did Venezuela’s previous such attempt in the 1980s.
Fed’s supertanker looks destined to make big waves 20 Mar 2013 The U.S. central bank shows no signs of scaling back $85 bln of monthly bond buys and says much time would elapse between ending purchases and raising rates. Yet the Fed’s 2015 target of up to 4.5 pct is a far cry from six years near zero. The rapid turn could shock the system.
Cyprus crisis shows unwelcome return of randomness 19 Mar 2013 The specifics of straightening out the Mediterranean island’s banking system matter less than the way policymakers are making things up as they go along. They seem to backtrack and abandon principles. It’s all too reminiscent of the shifting responses during the 2008 crisis.
Latin America can’t afford parochial finance 15 Mar 2013 Ecuador wants to abandon a treaty for resolving U.S. investment disputes. Other nearby nations have ditched a similar multilateral pact. Such accords gird modern globalization. Rows involving Argentina and Chevron mean investors hardly need more reasons to avoid the region.
All together now, central banks do not go bust 1 Mar 2013 The Federal Reserve and other central banks with bloated balance sheets will book losses when interest rates rise. But the red ink can’t bleed them dry. Ben Bernanke and other policymakers need to hammer this point home to keep away economically unnecessary political trouble.