Egypt should bite stock market bullet 15 Mar 2011 The country's stock exchange, closed since January, is likely to plunge when it finally reopens as investors sell to reflect Egypt's postrevolutionary economic reality. But stalling to protect overstretched brokerages or the currency could have much more serious consequences.
Saudi’s Bahrain intervention raises investor risk 15 Mar 2011 The presence of Saudi troops in the small kingdom can only inflame Bahrain's majority Shi'ite population. Even if protests are ultimately suppressed, the United States will be embarrassed, Iran may cause mischief and trouble could spread elsewhere.
U.S. advisory crowd of CEOs is redundant 14 Mar 2011 President Obama's new 26strong competitiveness council, headed by GE's Jeff Immelt, looks unwieldy. And his debt commission already gave him sensible ideas. The panel dresses businessfriendly windows, but what's needed is sound policy, not months waiting for predictable advice.
Chasing Amazon won’t help states much 14 Mar 2011 The Internet retailer doesn't collect sales tax in most states. Cashstrapped jurisdictions want to close the loophole. It's an easy way to find revenue without much hiss from voters and traditional retailers love the idea. But it won't go very far to closing budget gaps.
Japan catastrophe could make U.S. debt costlier 14 Mar 2011 Offloading some of its $1 trln of foreign reserves could raise cash to help rebuild after Friday's devastating earthquake. The Fed is due to end its Treasury bondbuying program in June. If Japan, the secondbiggest foreign holder, starts selling that's another support gone.
Tragic quake may add to inflation pressures 11 Mar 2011 The economic impact of the earthquake near Japan is not yet quantifiable. Other Pacific nations are at risk from a tsunami too. But as Japan loses some output and spends to rebuild, the quake is likely to raise demand for commodities and food, and drive Japan's debt still higher.
Were Luddites the victims of 2011-style finances? 11 Mar 2011 The British weavers who destroyed looms 200 years ago thought their unemployment was due to machinery. But there's a case to be made that inflation, money supply expansion, budget deficits and trade barriers were to blame. Maybe we haven't learned much in two centuries.
EU can use carrot to foster Arab democratisation 11 Mar 2011 Europe must seize the opportunity to help repair the damaged economies of restive Mediterranean countries and assist them in overhauling their political systems. From North Africa to Central Asia, it has a patchy record in supporting democracy. But it's worth trying again.
UK’s 50 pence tax is a political economy puzzle 10 Mar 2011 The top rate of income tax brought in by the last government is bad economics. But the politics aren't yet right to nix it. Even so, the coalition should use this month's budget to say the tax will be cut before the next election. That could work economically and politically.
U.S. public radio needs new funding model 10 Mar 2011 Impolitic remarks by an NPR executive and a political push by Republicans have jeopardized the broadcaster's federal money. The government should support the arts but, all things considered, it may be time for a new approach. A $3 bln endowment could set a path to independence.
Regulatory arbitrage could go far beyond Basel III 10 Mar 2011 It's fun to guess whether Swiss, UK or U.S. banks will end up with tougher capital and liquidity rules. But as financial reforms play out globally, for instance in derivatives, there's also the possibility that whole business lines will migrate raising new systemic risks.
UK pension reforms are painful, fair and in step 10 Mar 2011 Plans to tackle unaffordable public sector pensions have incensed unions. But while reform would cut benefits, it would create a fairer system and could even fund tax cuts for the less well off. Britain, and other European states embracing pension reform, must press on.
Politics to keep Fed board two shy of a full house 9 Mar 2011 Republicans failed to waylay Ben Bernanke from another term as Fed chair. But they may score a consolation prize by blocking a Nobel laureate from the board. Although the GOP argues Peter Diamond has the wrong résumé, the opposition is more about Senate politics and prerogative.
U.S. $16 bln debit fee clampdown needs a do-over 8 Mar 2011 Bankers' claims of dire consequences if they lose the revenue may be alarmist. But the Fed simplistically wants them to charge merchants only enough to break even. The scrum hurts small banks and risks wasting an opportunity to create a more efficient, secure system.
Libyan no-fly zone could create more oil havoc 8 Mar 2011 The consensus among traders is that foreign intervention could bring down crude prices by hastening Gaddafi's exit. But that ignores the possibility that protesters elsewhere, especially in the Gulf, might be emboldened.
WW2-style panel could stiffen U.S. budget spines 8 Mar 2011 The U.S. lawmaking process is biased toward increases in federal spending rather than cuts. One fix is to copy a 1941 committee whose sole purpose was to wield the ax. Other reforms could make it easier to pass budgets and avoid threats of government shutdowns and debt defaults.
China’s budget should calm investors in three ways 7 Mar 2011 Premier Wen Jiabao promised sustainability through low inflation and high income growth, and liquidity from fiscal expansion. Finally, security: record expenses on police and surveillance to contain unrest in case things don't work out. All three bode well for asset prices.
Higher rates double trouble for US muni investors 4 Mar 2011 Rising interest rates are bad for bond investors generally. But in the $3 trln municipal debt market, hysteria over possible defaults already has investors rattled. When rates almost inevitably rise and more paper losses accumulate, some may simply give up.
Growth, not inflation, is Asia’s bond market worry 3 Mar 2011 Rising food, fuel and property prices suggest Asia has a serious inflation problem. Markets tell a different story. Asian bond yields indicate investors are more concerned that the region's growth will slow and believe that the U.S. recovery offers more attractive opportunities.
U.S. spending deal won’t settle funding fight 3 Mar 2011 Democrats and Republicans have compromised to avoid an embarrassing temporary shutdown, and may cut a deal for the rest of the year. But even if this logically implies raising the statutory debt ceiling, it's not clear agreeing on that will be so easy.