Economic odds stacked against Catalonia breakaway 6 Oct 2017 On paper, independence looks viable for a wealthy region with GDP roughly the same as Finland’s. In reality, divorcing Spain would trigger harmful disputes over tax and debt. A Catalan central bank would lack the reserves to maintain confidence outside the euro zone.
Portuguese banks face long exit from bad-debt woes 6 Oct 2017 The three biggest banks plan to jointly manage their bad debts rather than selling them off. They have little choice. With common equity Tier one capital ratios averaging 11 percent and earnings depressed, lenders can ill-afford further hits to capital.
White House economist drinks Trump’s Kool-Aid 5 Oct 2017 Tax cuts will pay for themselves through economic growth, says Council of Economic Advisers chief Kevin Hassett. He also backed the U.S. president’s protectionist policies, despite being a “full-blown free trader.” That’s one aide fewer willing to dispute voodoo economics.
More for China than London in Russian hydro IPO 5 Oct 2017 Oleg Deripaska’s En+, which controls aluminium outfit Rusal, aims to raise $1.5 bln in an LSE and Moscow listing. It touts a green model, but public investors will have little say. The cornerstone backer, a partner of the PRC group that just bought into Rosneft, may do better.
Italian high finance picks up tab for bank sins 5 Oct 2017 Sickly mid-sized lender Banca Carige wants bondholders to take a loss as part of a 1 bln euro recapitalisation. Yet it will spare retail investors, leaving more pain for banks and insurers. The country’s flawed banking model is to blame. The good news is taxpayers won’t suffer.
Trump gets Puerto Rico priorities in a muddle 4 Oct 2017 The president’s vow to wipe out the U.S. commonwealth’s debt sent its bonds plunging. The devastation wrought by Hurricane Maria may necessitate another restructuring. But it doesn’t address the island’s problems. Its citizens need money, supplies and services, not distraction.
Hadas: Road to calm finance is unsafe at any speed 4 Oct 2017 A decade after the last financial crisis began, central banks are finally moving to normalise interest rates and money supply. With governments weak and banks and businesses hooked on easy credit, risks are high. There’s a better way to run this system, but few seem interested.
Europe faces bigger tax foe than Amazon and Apple 4 Oct 2017 The bloc’s antitrust chief ordered Luxembourg to collect 250 mln euros from the e-commerce giant. She is also pursuing Ireland over a 13 bln euro Apple case. The EU is winning the loophole battle. But a bigger war to level the global tax playing field may meet U.S. intransigence.
Wells Fargo boss makes case for his own dismissal 3 Oct 2017 At a Senate hearing Tim Sloan conceded poor oversight during the fake-accounts scandal, struggled to defend arbitration policies and was unconvincing about changing the bank’s culture. His performance should prompt incoming Chair Betsy Duke to find a leader who can turn the page.
Jerome Powell makes for a Goldilocks Fed choice 3 Oct 2017 The central bank governor is less hawkish than other candidates on President Trump's shortlist, including Kevin Warsh. Powell also aligns with the White House on regulatory reform. And his confirmation would be easier. Those factors could make him a Fed chair who is just right.
Central bankers’ superpowers are looking spent 2 Oct 2017 Between taming inflation, fighting the financial crisis and averting a breakup of the euro, monetary policymakers acquired an aura of omnipotence. Their responsibilities are growing and their mandates have turned into a fetish. A painful collision with reality is overdue.
Las Vegas tragedy strikes a U.S. inured to outrage 2 Oct 2017 Casino stocks fell and gunmakers’ jumped after the worst shooting in U.S. history left at least 50 dead. Horrific as it is, the incident is unlikely to impact gun laws, markets, political debate or voters’ minds. A deeply divided country will find it hard to mount a response.
Catalonia crisis is painful distraction for Spain 2 Oct 2017 Despite violent police intervention, the region’s vote to leave Spain is unlikely to trigger a breakup of the country. Yet the political unrest has damaged an already weak government and could strain public finances. Spain’s recovering economy needs a bigger political discount.
Political fiddles skirt UK housing market problem 2 Oct 2017 The Conservative government is putting up more cash to help homebuyers, while the Labour Party proposes rent controls. Both policies risk hurting those they are supposed to help. Lasting reform means pushing down house prices; no politicians seem ready to pay the political price.
Telecom Italia CEO’s job: fix governance discount 29 Sep 2017 The telco named Amos Genish its new boss. The Israeli’s to-do list includes mending relations with the Italian government and clarifying those with shareholder Vivendi – as well as fighting fresh competition. Unless he addresses these problems, TI’s lowly valuation will endure.
Cox: Where are the taxpayers’ private jets? 28 Sep 2017 Corporations long ago learned that hangars full of airplanes present an easy target for activists. Even mighty GE is grounding its fleet. So it's puzzling to see Trump's civil servants flying in such high style. It makes firing HHS director Tom Price his easiest call to date.
Brazilian oil auction gives Temer some validation 28 Sep 2017 The president is doing his country's economy good even as his popularity craters over graft charges. A less nationalist energy policy paved the way for a record haul in a drilling-rights auction and bodes well for more. It may leave Mexico and its oil deals battling for bids.
White House pins tax cuts on fanciful economics 28 Sep 2017 Presidential adviser Gary Cohn says its costly plan will pay for itself because of the expansion it'll spark. Skepticism is warranted. GDP growth topped 4 pct for a bit following Reagan and Clinton reforms, but the correlation isn’t as strong as the GOP would like to believe.
Viewsroom: Trump tax overhaul will be a long slog 28 Sep 2017 The U.S. president and Republicans want to reduce the corporate tax rate to 20 pct from 35 pct. After a blistering defeat over Obamacare, the prospects of significant reform are slim. Meanwhile, Equifax’s CEO slinks out of the building. Plus: Puerto Rico’s prayer for relief.
Italy gets narrow lead in race for EU naval giant 28 Sep 2017 Shipbuilder Fincantieri has won conditional control over French rival STX, which Paris nationalised suddenly in July. The pact defuses a cross-border diplomatic row. But the real battle will be fought over the ownership of a European naval champion that is now in the making.