US should pay for jobless benefits – and tax cuts 22 Nov 2010 The cost of extending jobless benefits should be offset with spending cuts. By the same logic, proponents of keeping tax cuts that would otherwise expire should suggest ways to pay for them. There are plenty of fiscal options. It s just a matter of political will on both sides.
Euro zone right to postpone day of debt reckoning 22 Nov 2010 Ireland has followed Greece in accepting a bailout, with Portugal maybe next in line. Peripheral economies may ultimately be overwhelmed by their debts. But defaulting now would risk triggering a panEuropean crisis for governments and banks. Delaying the pain makes sense.
Irish politics could complicate EU bailout 22 Nov 2010 The country s prime minister has pledged to call an election after its financial rescue is agreed. However, the government may still struggle to pass its impending budget. The desire for a political fresh start is understandable. But delaying the bailout would be very dangerous.
FBI takes a stab at soft hedge fund tissue 22 Nov 2010 Monday s raids of several funds offices seem to owe something to tracking the firms use of third party expert networks. These consultants risk unwittingly aiding the exchange of verboten information. So while the feds may yet come up empty, it s a reasonable place to poke.
Replacing Summers proving a challenge for Obama 19 Nov 2010 The White House knows the ideal replacement for Larry Summers would be a female CEO who could reach out to Republicans and business without irking liberals. Buzz about Evercore founder and banker Roger Altman joining shows landing that dream candidate may be mission impossible.
Muni market concerns look overblown 18 Nov 2010 Sharp declines in the U.S. municipal bond market the playground for taxsensitive wealthy investors were stomach churning. Yields soared this week and issuers pulled deals. The fire feeding the turmoil, however, doesn t look like it has much more fuel.
Fed misses a transparency trick with stress tests 18 Nov 2010 Putting the 19 most significant US financial firms on the treadmill again is a welcome move. But keeping the test s criteria and results private is a mistake. Full disclosure last time helped rebuild confidence and for banks it s a small price to pay for being too big to fail.
Greece budgets for even tougher austerity 18 Nov 2010 The Greek budget is for those with strong nerves. Having formally missed this year's targets, the government plans deep adjustment in 2011 amid a 3 percent further fall in GDP. Debt at 153 percent of GDP by the end of 2011 will keep the spectre of restructuring present.
Rattner case flaunts lawmen’s timing again 18 Nov 2010 The former car czar is being sued by New York's sheriff in a kickback scandal on the very day that GM has gone public. It evokes the SEC's pursuit of Goldman as financial reform hung in the balance. Watchdogs may not always have the strongest bite but give them credit for bark.
EU shouldn’t cut nose to spite face with Irish tax 18 Nov 2010 Forcing Ireland to increase its 12.5 pct corporation tax rate as a condition for a bailout wouldn't just hurt the emerald isle. It would hurt the rest of the EU. Germany and France may grumble but with the UK's support, Ireland is likely to keep its flagship tax policy intact.
Republicans grudgingly refuse pork with their tea 17 Nov 2010 The U.S. Senate GOP leader s backing for a ban on earmarked funding for pet local projects is a win for the Tea Party faction. But it s also good news for fiscal hawks of all political stripes. Earmarks may only cost some $17 bln a year, but they invite undisciplined spending.
A single-focus Fed could still backstop economy 17 Nov 2010 Republicans might one day succeed in stripping the central bank of its duty to promote employment, forcing it to focus exclusively on price stability. Democrats and the Fed would protest. But even a narrower mandate wouldn't prevent it from acting in a financial crisis.
Portugal needs growth, unity to avoid Irish fate 17 Nov 2010 Lisbon says it won't need a bail out but markets aren't listening for now. Portugal's debt load and funding costs are rising. It will need to raise 20 bln euros next year. Calming investors' fears will require a stronger economy and political concord. But time may be short.
Markets won’t force California’s budget hand 16 Nov 2010 When Ireland and Greece run big deficits, debt investors get angry. But when California says it will need more than $20 bln to balance its budget, bond buyers stay cool. They re not blind to the Golden State s problems, but they re understandably confident they ll get paid back.
Europe’s promises won’t make peripheral debt safer 16 Nov 2010 EU leaders have tried to calm markets by stating that a new default mechanism for sovereign bonds won't affect existing investors. But that won't make it any easier for Greece or Ireland to reduce their debt. And launching the new bailout regime in 2013 could make life harder.
Russia still too slow to clamp down on shady banks 16 Nov 2010 The Bank of Russia says the failed International Industrial Bank misused $800 million of central bank support. It alleges IIB may have engaged in criminal activities. But its slow response to the scandal raises serious questions about the quality of its supervision.
Europe back to bailout poker game 15 Nov 2010 The EU is pressing the Irish to take financial aid the country says it doesn't need. It looks like a reverse scenario from Germanled Europe's tough stand towards Greece. But now, as then, the question is whether Europe can convince the markets it can avoid a major meltdown.
Bernanke’s fun-house mirror reflects Paul Volcker 15 Nov 2010 Thirty years ago, Volcker implemented radical and unpopular policy to help the economy. Now, Bernanke is doing the same thing in reverse to feed inflation rather than fight it. But tall Paul was later reconceived as a hero. It s hard to see how bearded Ben will be vindicated.
Political uncertainty grows a bit more conclusive 15 Nov 2010 Companies that blame hiring and investment delays on Washington fog are often just masking antiObama sentiment. But this lameduck session of U.S. Congress won t ease business skittishness about taxes or deficits. The unsettled state of fiscal policy could undermine confidence.
Irish bailout will make markets happy, Germans sad 12 Nov 2010 Ireland is in talks about tapping a European facility that will not impose a haircut on borrowers. If agreed, a deal will boost Irish debt and ease fears of contagion. However, Portugal may still require a similar rescue. And the EU s core will pay the heavy price.