Hugo Dixon: 2011, a year of Gandhian struggle 19 Dec 2011 Nonviolent conflict has enjoyed a banner year: the Arab Spring, the Occupy movements, the anti-corruption campaign in India and stirrings of protest in Russia. But for the technique to fulfil its potential, clarity of purpose, unity and nonviolent discipline are required.
SEC’s GSE charges underline need for revamp 16 Dec 2011 The U.S. watchdog has charged six ex-executives of Fannie Mae and Freddie Mac, the biggest bailout recipients, over subprime loans. It’s about time. Wherever the charges go, they’re symptomatic of the twisted consequences of the U.S. mortgage lending model. Its reform is overdue.
Payroll tax cut creates another mess in Washington 15 Dec 2011 In a bizarre irony, Republicans now want to pass a trillion dollar spending bill and raise taxes, while the Democrats fight to extend this year’s payroll tax cut and threaten a government shutdown. Whatever the outcome of the latest bickering, the victim is the same: the economy.
Bernanke birthday brings holiday from new stimulus 13 Dec 2011 With U.S. unemployment down and growth up, the Fed’s latest statement zeroed in on global problems - and didn’t introduce a QE3 program. Under such conditions, and with money supply strong, the chairman’s gift of low rates to markets may expire by the time he turns 59.
FDIC’s WaMu settlement is more fizzle than fight 13 Dec 2011 The U.S. watchdog has extracted only $75 mln from three former executives, mostly paid by insurance. For skeptics, it’s another inadequate rap for alleged financial rogues. But raising penalties and booting deals won’t help. Making suits and punishment more predictable might.
U.S. energy bill beneficiary redefines going green 13 Dec 2011 Oil billionaire T. Boone Pickens and U.S. Representative Nancy Pelosi are oddly aligned. A fuel subsidy proposal, if passed, would make them both richer because of their stakes in a “green” firm that would benefit. Congressional trading rules need an overhaul now more than ever.
Supersized IMF not just for little guy bailouts 9 Dec 2011 Europe’s promise to lend another $270 bln takes the fund’s pot over $1 trln. The move also raises the chance of fat contributions from the BRICs, who have insisted on more euro zone self-help. The muscled-up fund may soon have the scale to help rescue big nations like Spain.
Headless financial watchdogs needn’t be toothless 8 Dec 2011 Senate Republicans blocked another Obama nominee to lead a key agency, the Consumer Financial Protection Bureau. Politics is making it tough to solidify leadership at a handful of top regulators. But as the FDIC is proving, acting directors can still get things done.
Cuomo’s new millionaire tax walks knife-edge 8 Dec 2011 On its own, the New York governor’s temporary 2 pct surtax on incomes above $2 mln is well judged. But with New York City’s extra levies, the top tax rate in the metropolis is higher than in other states. Add federal tax hikes, and New York could suffer economically.
IMF won’t find it easy to tap Brazil’s cash 1 Dec 2011 The fund’s chief Christine Lagarde is hoping to borrow money, a gratifying role reversal for a country which needed a record IMF loan in 2002. But getting hold of some of its $350 bln of reserves will be hard. Like the IMF itself, Brazil is attaching conditions to its help.
Governments are now world’s financial engineers 30 Nov 2011 The crisis exposed the trouble with complex leverage games in the private sector. But Western authorities, undoubtedly abetted by bankers, have embraced high finance for everything from housing to Europe’s rescue fund. Such finagling, however, is harder in tough markets.
P&G may need to pop a plan B for Pringles 29 Nov 2011 Diamond Foods, agreed buyer of the consumer giant’s chips brand, keeps losing sparkle. Buried news about its internal audit investigation, rising payments to walnut-growing directors and other inconsistencies don’t seem to augur well for the probe - or P&G’s deal.
Bounced Citi CDO payout tests SEC’s credibility 28 Nov 2011 Judge Jed Rakoff isn’t convinced Citi’s $285 mln deal with the U.S. regulator serves the public interest. The watchdog can only blame itself. With few exceptions, lax enforcement has earned it a toothless reputation. Going to trial gives the SEC a chance to prove it has bite.
China could gain from helping Europe via IMF 28 Nov 2011 Rescuing the euro zone is a tough sell for a still-poor nation. But like Saudi 35 years ago, China could parlay some of its $3.2 trln of reserves into greater international clout through the IMF. It would be saving a big export market and a reserve diversifier into the bargain.
Wall Street might just miss Barney Frank 28 Nov 2011 On the face of it, the co-author of the Dodd-Frank reforms has been more a scourge than a supporter of the finance industry. But at least the congressman, who won’t stand again next year, has a grasp of the issues. Bankers could face more uncertainty and less understanding.
Gingrich candidacy evokes elements of Nixon’s run 28 Nov 2011 The former House speaker brings wits and experience along with his spotty ethical and political track record - like fellow Republican Richard Nixon in 1968. Tricky Dick later went against the party grain opening ties with China. Gingrich could do the same on taxes and healthcare.
U.S. lawmakers squandering gift from markets 21 Nov 2011 Global investors have given Congress lots of rope to rein in long-term deficits before they enter crisis mode. The committee charged with the task failed to make any progress. So far, markets are enabling such inaction. Washington, and the world, won’t always be so lucky.
EU-like tricks loom as U.S. budget deadline nears 18 Nov 2011 The “super committee” has till Monday to reach consensus. That looks hard, so the temptation to fiddle a way to $1.2 trln of cuts is intense. Doing so would ape how states fudged euro entry rules. Markets and the public will probably be far less tolerant this time.
U.S. housing policy veers toward madness 18 Nov 2011 Congress has given bipartisan approval for putting the wobbly FHA back on the hook for mortgages as big as $729,750. It’s yet another sign that lack of leadership results in batty decisions. Those borrowing such large sums don’t need federal aid. And Uncle Sam needs a break.
Coal industry blowing smoke with jobs claims 16 Nov 2011 A U.S. TV ad depicts Americans losing their jobs because of new pollution rules. The analysis is questionable even in isolation. But any loss for coal is a gain for other fuels like gas. And an estimated $200 bln in health savings from cleaner air counts for something, too.