Hadas: Greed is best indicator of financial crisis 26 Oct 2017 New research casts small-time property investors as the secret villains in the 2007 U.S. house price collapse. As usual, the love of leverage was the root of financial distress. Balance sheets are stronger today, but investors still haven’t learned the virtue of moderation.
Banks score hollow victory in class-action win 25 Oct 2017 The U.S. Senate killed a rule allowing groups of consumers to sue financial firms and card issuers. Forced arbitration clauses caused uproars in the Equifax hack and Wells Fargo fake-accounts mess. The shrinking political target on Wall Street’s back is set to grow again.
Republican tax-reform hopes have yet to hit reality 24 Oct 2017 A giddy GOP looks set to pass a budget resolution to pave the way for a tax overhaul that the House aims to approve by Thanksgiving. Members haven’t solved their deficit dilemma, though, and President Trump has shot down potential revenue raisers. The hard work is just beginning.
UniCredit gets head start on recovery path 24 Oct 2017 A data glitch forced Italy’s biggest bank by assets to publish third-quarter results two weeks ahead of schedule. Fortunately, the figures show lower costs and stronger capital. A fee-boosting partnership with asset manager Amundi helped offset the drag from low interest rates.
Italy’s north teaches Catalonia a self-rule lesson 23 Oct 2017 Areas which bring in 30 pct of Italian GDP demanded more autonomy in a referendum. Lombardy and Veneto want to keep more tax revenue. But unlike the Spanish region they stopped short of demanding independence. Orderly voting and a clear outcome will force Rome to negotiate.
Abe wins mandate to give Japan a raise 23 Oct 2017 Shinzo Abe’s big election win gives him room to push harder on reforms to boost wages and competitiveness. But skeptics have seen this before. The prime minister must act quickly and avoid getting sidetracked. After nearly five years of delay, investors are losing faith.
Review: The myth of Federal Reserve independence 20 Oct 2017 America’s central bank is notionally free from the executive and legislative branches. A new book by Sarah Binder and Mark Spindel argues the Fed’s actions are constrained by politics. The trouble is that politicians don’t exercise their "money power" responsibly.
Tech misjudges how far its D.C. star has fallen 20 Oct 2017 Firms like Facebook used to have it easy in Washington. Now they face intense scrutiny over the use of Russia-backed online ads in the last election. Yet they are sending lawyers to congressional hearings instead of executives. Their tone deafness could come back to haunt them.
Change at the top is Bank of Italy’s best option 20 Oct 2017 Governor Ignazio Visco’s uneven track record during the country’s banking crisis undermines the case for renewing his term. Sniping from politicians challenges the central bank’s independence and could hobble his replacement. But even if Visco stays he risks being a lame duck.
Kiwis test new formula in central bank petri dish 20 Oct 2017 New Zealand was the first nation to give independent rate-setters an inflation target. Now a new government wants to add employment as an objective. The less painful the switch, the more likely others will adopt goals that better suit today’s economic and political realities.
PBOC’s Zhou seeks lasting sway with debt warning 19 Oct 2017 The central bank governor is suddenly ramping up calls for reform and warning of a possible “Minsky moment.” With the 19th Party Congress in full swing, the soon-to-depart 69-year-old no doubt hopes to burnish his legacy, and ensure a like-minded successor fills his shoes.
Taylor-led Fed would be dangerous in manifold ways 19 Oct 2017 In addition to the Stanford economist's dogmatic bent for a programmatic monetary policy, John Taylor backs bigger regulatory changes than others in the running to be the next U.S. central bank chief. His laissez-faire ideas about policing Wall Street are loaded with risk.
New U.S. approach can better rein in drone dangers 19 Oct 2017 The FAA will share oversight of the vehicles with state authorities under a promising test project. Conflicting federal and local rules have caused confusion, with courts adding to the uncertainty. Combining forces can help regulators contain risks in increasingly crowded skies.
Hadas: Time to slay the free market-myth monster 19 Oct 2017 The oft-told story of vibrant private companies as economic heroes isn’t right, and the common tale of the incompetent state is equally wrong. A new group at University College London can help create a more accurate – and more complex – narrative. The economy is a shared project.
U.S. tax outlook opens M&A pricing divide 18 Oct 2017 Republicans want to cut the corporate rate to 20 pct, but the timing is as uncertain as the outcome. Theoretically, profit – and thereby valuations – could get a 23 pct boost from lower taxes. Sellers want that priced in, but buyers won’t. All-stock deals could be one answer.
Global watchdogs may curb U.S. deregulatory push 18 Oct 2017 The U.S. Treasury will decide whether to recommend scrapping the post-crisis bank resolution regime, as some Republicans urge. But foreign regulators threaten to impose new limits on American firms if it's ditched. That reduces the chances of a major rollback of financial rules.
Viewsroom: President Xi Jinping’s moment 17 Oct 2017 The Chinese Communist Party’s 19th National Congress kicks off this week. Delegates at the week-long confab will select new leaders, including for key financial and economic posts. But the spotlight will be on Xi and whether he can consolidate his power and extend his reign.
Vivendi can live with Italy’s “golden power” move 17 Oct 2017 Premier Paolo Gentiloni wants Telecom Italia to install state-backed directors and a special appointee to handle security matters. It’s a headache for top shareholder Vivendi. But government sentinels are preferable to being forced to spin off assets or accept state investment.
Cox: Next Fed chair will need unusually thick skin 16 Oct 2017 The debate over who will lead the central bank is narrowly about hawks and doves. Policy matters, but the broader economic benefits of the Fed’s relative independence may count for more. Whoever gets the job will have to resist Trump's bullying – and stop doing Congress's job.
Venezuela votes make default tightrope trickier 16 Oct 2017 Regional elections brought President Nicolas Maduro's candidates surprising success, defying polls and economic meltdown. If opposition complaints of fraud are believed in Washington and Brussels, more sanctions may follow. That will make creditors even harder to keep at bay.