Volcker muddies debate about his own rule 13 Feb 2012 The former Fed chairman’s eleventh-hour comments serve as a decent primer for why banning prop trading is a good idea. But he doesn’t address any of the practical concerns big banks have raised. And Volcker’s argument about the downside of liquidity seems a dangerous red herring.
U.S. budget can-kicking is running out of road 13 Feb 2012 Barack Obama’s $3.8 trln plan is more position paper than economic blueprint, as soaking the rich is a non-starter with Republicans. And when politicians promise deficit-reduction jam in future years, tomorrow rarely comes. But for both parties, the fiscal reality soon will.
Letter to the Editor: IMF and Romania 10 Feb 2012 The International Monetary Fund takes issue with a Breakingviews article on its lending to Romania, arguing the fund helped the country return to growth and remains transparent and flexible in response to changing circumstances.
Renters need to flex muscle in U.S. housing debate 8 Feb 2012 Though America’s mortgage system subsidizes homebuyers, its dysfunction has cost all taxpayers dearly. Few groups are pushing for change. But the nation’s 39 mln renters - often an afterthought in the discussion - ought to be up in arms. They might find unlikely allies, too.
New US trustbuster may rejig deals, not kill them 7 Feb 2012 Though no soft touch, as antitrust chief William Baer could prove a better listener than his predecessors. That means ideas to make deals like AT&T’s defunct bid for T-Mobile USA palatable may at least get heard. The big question is whether his appointment gets past the politics.
U.S. tinkers around edges of housing market 6 Feb 2012 The White House wants to breathe life into a depressed U.S. housing market. Its latest flurry of initiatives is as dizzying as the whirlwind of programs launched three years ago. The trouble is, housing policy isn’t easy - and President Barack Obama’s plans won’t make much difference.
Rising U.S. employment masks lingering malaise 3 Feb 2012 January saw 257,000 new private-sector positions and the jobless rate fell again. That’s good for job-seekers and Obama fans. But labor force participation is well below 2007 levels and long-term unemployment is way too high, making traditional full employment hard to attain.
Become a U.S. regulator and see the world 3 Feb 2012 America’s financial watchdogs may get to monitor any deals done with any U.S. clients by any bank globally, if the Volcker Rule has its way. To do their duty, regulators will need more staff. Is this how a help-wanted ad might run? And, below, the warts-and-all first draft?
Freddie outrage needs to end in reform 1 Feb 2012 The U.S. mortgage giant is back in the crosshairs, this time for purported bets against homeowners. The latest tempest, however, is a distraction. Freddie Mac and Fannie Mae need fundamental remodeling. Critics would do well to focus on that rather than political point-scoring.
Swiss banking rocked to its core by tax row 30 Jan 2012 U.S. authorities aren’t content to chase only giants like UBS. The country’s oldest bank, Wegelin, fell victim to the crackdown and broke itself up. Though the Swiss have tried to preserve a semblance of their financial system, the anti-haven snowball looks set to keep rolling.
Obama offers more anti-fraud bark with little bite 25 Jan 2012 In his State of the Union speech, the president called for a new financial-crimes unit and harsher penalties. But a similar task force already exists, and punishment is plenty tough. What’s needed is resources for complex cases against Wall Street, not more laws and bureaucracy.
IMF is wrong place to look for early warning 24 Jan 2012 German and British leaders, among others, have told the multinational to do a better job spotting looming economic trouble. But as the IMF’s tardy forecast of a euro zone recession shows, the fund’s diplomatic role makes it ill-suited to being ahead of the curve forecasting doom.
Alluring subprime debt can still poison investors 19 Jan 2012 Credit Suisse, Goldman Sachs and other banks reckon there’s life yet in the mortgage market’s toxic waste. Double-digit yields, after all, are hard to ignore. But subprime sludge still has the ability to slip buyers up. Investors should tread carefully.
Next World Bank chief is easy to find 19 Jan 2012 He already has the job. Though a news report says the White House is considering Larry Summers and others to run the agency, there’s no reason to replace Robert Zoellick when his term ends in June. He has shown a flair for fundraising, diplomatic skill and economic prescience.
Turnaround earns Colombia safe haven status 19 Jan 2012 Its murder rate last year, though still high, was the lowest since 1984. For investors, Colombia enjoyed strong expansion and record foreign investment. With order returning, wages low and resources abundant, the country has near bullet-proof potential for rapid growth.
Killing Keystone pipeline is bold gamble for Obama 18 Jan 2012 The president spurned Republicans by giving a thumbs-down to the giant U.S.-Canada project. It might score him environmental points with progressive voters. But Obama is sacrificing jobs and a cushion against another oil shock. The recovery is too fragile for such politicking.
IMF’s $500 bln funding request looks ambitious 18 Jan 2012 The Washington lender had no trouble in trebling its funding from anxious member nations after the 2008 crisis. But pulling in another half trillion dollars now may not be so easy. Extra funding from the U.S. will be a tough political sell and the likes of China remain cautious.
At least Obama knows which agencies he’s cutting 13 Jan 2012 The president is making good on promises to shrink the bureaucracy by merging six federal agencies and cutting up to 2,000 jobs. Though politically clever, it’s a bitty fix. Repairing America’s fiscal imbalances will require deeper cuts and more creative measures than this.
Antitrust watchdog rivalry may spell M&A trouble 12 Jan 2012 The U.S. Justice Department surpassed the Federal Trade Commission in antitrust enforcement last year. But signs that the FTC will block pharmacy provider Omnicare’s bid for PharMerica suggest a new hard line. Competing cops on the beat could gum up Wall Street’s deal machine.
Fed profit shows it’s in the market but not of it 11 Jan 2012 The U.S. central bank is handing the Treasury $77 bln of its 2011 profit, a hair under the 2010 record. That’s three-quarters of what all the nation’s commercial banks collectively make in a year. It’s a reminder that the Fed plays big these days - but by different rules.