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.
U.S. budget cuts more blip than bomb 28 Feb 2013 For all the rhetoric, the impending $100 bln of federal spending reductions, however imperfectly chosen, won’t do much real damage to the growing economy. Uncle Sam’s outlays will still rise this year, and any impact will be short-lived and easily absorbed by the private sector.
Stronger economy is Bernanke’s Godot 26 Feb 2013 The Fed chairman is keen on reducing deficits, but not while the U.S. recovery is fragile. Trouble is, there’s no sign of growth gathering much more steam. Waiting for a robust recovery before making meaningful spending cuts is looking more and more like a fool’s errand.
U.S. taxes on rich and poor not created equal 26 Feb 2013 Federal government levies on the wealthy hurt the economy. But sales gloom at Wal-Mart relative to Macy’s and Saks shows that letting payroll taxes rise again has socked it to poorer consumers. That’s worse for economic growth because the less well-off actually spend their wages.
U.S. deficit dynamic duo remain uncontested champs 20 Feb 2013 The plan spearheaded by Alan Simpson and Erskine Bowles became part of the vernacular, though was rejected by policymakers. A revised $2.4 trln compromise, like the original, contains plenty of items not to love. Yet balanced ways to restrain the national debt remain elusive.
Fed’s extraordinary policy risks becoming ordinary 12 Feb 2013 Since World War Two, U.S. recessions have come on average every five years. That makes it likely that the United States will be stuck with ultra-low rates when the economy next turns down. This permanent monetary overdrive is bad for savers and the unbalanced global economy.
Captain Austerity gets his toe tagged 6 Feb 2013 Time of death: Feb. 6, 2013. The new Republican strategy shies away from fiscal tightening after controversial initiatives to slash deficits flopped. President Obama is seeking ways to scale back sharp cuts in defense and other spending. U.S. austerity is gone - and far too soon.
Uncle Sam should pay heed to troubled niece 31 Jan 2013 A fiscal debacle in Illinois has resulted in harsh consequences. The Land of Lincoln was forced to withdraw a $500 mln bond issue after investors got spooked about the state’s credit. It’s a reminder why America can’t get too complacent about its cheap debt or long-term problems.
Carney should remember central banks’ limits 28 Jan 2013 Mark Carney, the incoming governor of the Bank of England, thinks the monetary authorities can do more to help the economy. His suggestion of targeting nominal GDP instead of inflation rates may be fashionable, but that policy is more likely to stoke inflation than growth.
Washington shows how two wrongs can wind up right 28 Jan 2013 In a bid to limit the power of a new financial regulator, U.S. lawmakers blocked the president’s nominee to lead it. Obama’s back-channel appointment of Richard Cordray could be rendered illegal by a Friday court ruling. But Congress should be ready to approve him now anyway.
Washington downgrades debt threat to DEFCON 3 23 Jan 2013 The House has passed a GOP motion to raise the nation’s borrowing limit for four months. That implies Republicans will use fear of a government shutdown to try to cut the deficit. It’s akin to putting a gun to a kneecap rather than a head. It’s less messy and might just work.
California budget shows merit of forced discipline 14 Jan 2013 Governor Jerry Brown faced a deficit crisis in 2011. Now, his 2013-14 budget achieves a modest surplus. Spending cuts and higher taxes were required by the state’s balanced budget law and encouraged by bond downgrades. Washington should learn from the former and fear the latter.
Breaking debt cap is best of bad options for Obama 11 Jan 2013 He must meet U.S. obligations, and he can’t cut spending without Congress’s say-so. But some lawmakers want to stop him borrowing more. Trillion-dollar coins aside, breaching the debt ceiling is legally the president’s safest bet. That could force his critics into hard choices.
Obama pick for Treasury more tweaker than reformer 9 Jan 2013 Jack Lew knows budgets and helped balance America’s books under Clinton. But he may be too liberal for today’s Republicans, and his boss wants to cut entitlements with a scalpel, not a cleaver. That makes it unlikely Lew will preside over a long-term answer to U.S. deficits.
Tim Geithner wore more than firefighter’s hat well 8 Jan 2013 While part of the establishment that allowed the financial system to self-immolate, the departing Treasury secretary helped douse the flames effectively. While that should be his main legacy, Geithner also managed the role’s diverse duties in the toughest economic times.
Chuck Hagel is good choice for U.S. deficit hawks 8 Jan 2013 Obama’s pick for defense secretary mixes dovish foreign policy views - at least for a Republican - with budget-cutting fervor. The combination could actually slash Pentagon spending. Reducing it to the proportion of GDP seen in the late 1990s would save Uncle Sam $250 bln a year.
U.S. Congress will listen only to markets 2 Jan 2013 A last-minute, pint-size fiscal deal sets the stage for another cliffhanger in a few months. Worse, chances for deficit reduction are probably weaker now. In theory, everyone should want a broader plan but voters are too narrowly focused. Investors get the final word.
Review: Every monetary system needs a Paul Volcker 14 Dec 2012 William Silber’s biography praises the man whose determination and integrity overcame U.S. inflation with monetary policies the opposite of today’s, against opposition from politicians and economists. Yet once his work was done, policy slid back and his abilities were wasted.
Difference between "and" and "or" could undo Fed 12 Dec 2012 As well as saying it will buy more bonds, the U.S. central bank replaced its estimated duration for low interest rates with thresholds for the unemployment rate and inflation. If reality makes the two measures diverge, the new approach could prove rocky for markets.