Roman Abramovich’s Irish assault could backfire 5 Oct 2010 The Russian billionaire has accused Ireland of deception over plans to force haircuts on guaranteed junior Irish bank debt. His intimidation of an impoverished Ireland will infuriate taxpayers. That may yet sway a future government to walk away completely from the weakest banks.
Tax fraud is Greece’s Achilles’ heel 5 Oct 2010 The government is ahead of IMF/EU targets for cutting its deficit, as its new budget shows. But revenue is seriously lagging, due to the country's massive tax fraud and evasion. Athens wants to sort this out but, as last week's tax amnesty shows, this won't be easy.
Latvia is example of how austerity can work 5 Oct 2010 After draconian cuts designed to head off devaluation of the lat, GDP fell 18 pct in 2009. Now Latvia s economy is turning up and the currency s parity with the euro seems assured. The government responsible even got reelected. Keynesian stimulus isn t the only answer to a bust.
In rush to make rules, CFTC should keep it real 4 Oct 2010 The U.S. watchdog has little time to churn out small print for derivatives trading. Wall Street is worried that the hurry and the agenda of CFTC boss Gary Gensler might bring heavyhanded results. It s partly predictable bleating, but overzealous rules could cause damage.
EU unlikely to fall for China’s Greek ploy 4 Oct 2010 We're such nice guys, we'll even buy Greek debt, says China's PM on his European tour. It looks like an attempt to curry favour with the euro zone as the U.S. piles on pressure to revalue the yuan. But the euro zone isn't likely to and certainly shouldn't swallow the bait.
Politics is Portugal’s biggest financial problem 4 Oct 2010 Bond investors are punishing Portugal more than its larger neighbor Spain. Both countries face similar challenges, and Spain's may in some ways be more acute. The difference is that Portuguese politicians haven't yet agreed on how to tackle it.
UK coalition must impose equality of misery 4 Oct 2010 Higherrate taxpayers will forfeit automatic state handouts for their children, probably from 2013. This is rough justice and creates new tax anomalies, but is sensible. The well off should bear more of the pain from the UK s spending cuts. Yet top earners continue to escape.
Obama could use another deal maker by his side 1 Oct 2010 The rest of his presidency is likely to require agreement with Republicans on tax and budget issues. His departing chief of staff, Rahm Emanuel, was once an investment banker and understood how to close a deal. Negotiating skills are still in high demand at the White House.
Modest TARP losses only tip of bailout iceberg 1 Oct 2010 The $700 bln fund may lose just $50 bln, an improvement on earlier estimates. But the U.S. committed trillions of dollars elsewhere to prop up the system. Much of that may be recovered, but Fannie and Freddie alone show TARP will only be a fraction of the whole cost.
Bank rescue takes Ireland to the brink 30 Sep 2010 Propping up its troubled lenders will lift the country's deficit to an astonishing 32 pct of GDP. Getting the cost out into the open is better than sweeping it under the carpet. But the underlying deficit is still 12 pct. Until that is addressed, Ireland will be vulnerable.
Spain will survive its latest downgrade 30 Sep 2010 Moody's was the last of the rating agencies to knock Spain's AAA rating. It did so by just one notch. This should encourage the government to stick to its guns on fiscal discipline, as it sends its austerity budget to parliament. But if growth stalls, it will have to do more.
Taxpayers come second to company in AIG plan 30 Sep 2010 The deal with the U.S. government makes the company s finances simpler and healthier. That s potentially good for shareholders, starting with the Treasury. But initially the plan mainly just rejigs the government s interests. It doesn t get taxpayers their cash back any sooner.
Bizarre tender could tar Medvedev’s reputation 30 Sep 2010 Russian oil majors Lukoil and TNKBP are crying foul after being barred from a landmark tender for two Siberian oilfields. Authorities say they lacked paperwork, but it looks like the tender is being rigged to benefit an oil company backed by President Dmitry Medvedev.
U.S. trade thaw may leave China out in cold 30 Sep 2010 Passage of a retaliatory China currency bill in the U.S. House helps brand this Congress one of the more protectionist in years. The next one might well embrace trade by passing several stalled pacts. But Beijing shouldn t expect that to translate into a friendlier Washington.
U.S. tax debate should bypass old German theory 30 Sep 2010 The expiry of Bushera tax cuts could hurt the anemic U.S. recovery. Hawks reckon that's an acceptable risk, saying America can't afford to extend them. But that assumes belief in Wagner's Law, which posits everhigher public spending a bit of dogma in need of debunking.
Prosecuting politicians for negligence is bad idea 29 Sep 2010 Retired leaders should be liable for corruption or war crimes. But Iceland's decision to charge its former premier with negligence during the banking crisis sets a poor precedent for any civilised state. It looks vindictive, and will deter future politicians from seeking office.
Protests unlikely to derail EU fiscal tightening 29 Sep 2010 Spain has gone on general strike for the first time in eight years. Unions across Europe want a demo in Brussels. But in spite of appearances, opponents don't seem to expect governments to retreat from austerity. Unemployment, and subdued political opposition, explain why.
Mayor’s ouster won’t solve Moscow’s problem 28 Sep 2010 The abrupt sacking of mayor Yuri Luzhkov could help improve the city's negative investment climate if his successor gets a free hand to tackle the Russian capital's rampant corruption. But the way he was ousted leaves little hope this will happen.
U.S. corporate tax debate needs directional shift 28 Sep 2010 The hotbutton campaign issue of jobs offshoring is driving a vote on taxing overseas income of U.S. multinationals. The bill looks set to fail but corporate taxes do merit attention. A territorial regime and rate cut would shift the debate from the political to the sensible.
EU should resist ECB’s fiscal policy power grab 28 Sep 2010 Trichet, the ECB president, wants euro zone governments to answer his questions on fiscal deficits, and suggests a committee of wise men should monitor budgets. This goes too far. Budgetary policy is a matter of government responsibility, not central bank meddling.