LibDems make laudable U-turn on cutting UK deficit 10 May 2010 The UK's third party has dropped its insistence that deficitcutting should wait until next year. This will make it easier for the Conservatives, who want to wield the axe this year, to run a responsible economic policy whether in coalition with the LibDems or on their own.
Voters are ignoring avoided costs of bailouts 10 May 2010 Elections have taught a U.S. senator and Angela Merkel's party in Germany the same lesson: Taxpayers loathe bailouts, whether of banks or nations. But opponents of such rescues need instruction, too in the costs of the panic and destruction that would otherwise have ensued.
U.S. economy kicks butt – relatively speaking 7 May 2010 Despite the uptick in the unemployment rate, healthy job creation underlines the economy's resurgence in a tough world. Along with productivity growth, that shows the benefit of the U.S. labor market's flexibility and its competitiveness even in the face of a weak euro.
Flash crash brings no answers, just questions 7 May 2010 U.S. equity markets are among the most scrutinized anywhere, yet a day after a stomachchurning bungee jump in prices there's still more fingerpointing than explanation. The episode raises crucial questions about superfast trading, exchanges and market structures in general.
Changing liability rules on BP would be unfair 7 May 2010 The oil major's critics in Washington want to increase more than 100fold a $75 mln cap on its legal liability beyond the cost of cleaning up its Gulf spill. The ceiling seems absurdly low. But BP is resigned to paying more and retroactively raising the cap would be overkill.
Tory/LibDem pact looks good for UK but is unlikely 7 May 2010 An inconclusive UK election leaves the thirdplaced LibDems wooed to form a government. A coalition with the Tories would have the majority and the authority to tackle the deficit now. But Labour, which sees slower cuts, is offering the LibDems what they want: electoral reform.
Gamblers beat pollsters as election oracles 6 May 2010 Time and again, punters have proved more reliable than the polls in forecasting election results. That should not come as a surprise. The smart money not only has something at stake. It can also take a view based on all available information polls included.
Trichet tries to shore up the euro zone’s levees 6 May 2010 The European Central Bank head says he will remain inflexible on inflation, doesn't want to talk about sovereign defaults in the euro zone, and seems to rule out buying government bonds. That's for today. But as always, he's keeping all his options open for the future.
Why the euro zone must reform — and why it won’t 6 May 2010 The Greek financial crisis has been worsened by long months of haggling between euro zone members, and their denial that the worst could happen. But the reforms needed to put in place a crisisprevention and resolution mechanism are unlikely to see the light of day.
Market bulls need clear UK election result 5 May 2010 The immediate impact of a UK general election on shares and sterling is usually modest, as opinion polls have become better at predicting the outcome. This time it's a three horse race, so there are some combinations which would spook the markets.
Ex-Bear boss still blowing same old smoke 5 May 2010 Jimmy Cayne repeated his shortselling conspiracy to the commission scrutinizing the crisis, saying he couldn't have saved the firm. Panel members resisted cheap shots about his outofoffice antics, but Cayne revealed his time off hasn't put him any more in touch with reality.
Supertax gives Rio excuse to ditch bad BHP deal 5 May 2010 The big joint venture with BHP Billiton was agreed when Rio was in worse shape and iron ore was cheaper. The deal makes less sense now and the longer the delay, the more that is. A controversial new Australian tax may give Rio a chance to renegotiate, or exit gracefully.
Reform needs care to avoid financial trichinosis 5 May 2010 The legislation has officially entered the U.S. Senate sausage factory, where lawmakers are trying to stuff the bill with myriad amendments. Most aim for porky local projects or piggishly prey on populist sentiment. Herein are three proposals that could sicken the system.
JPMorgan shows Congress can be an easy target too 4 May 2010 A senior economist at the bank slammed the unnerving ignorance of lawmakers at the Goldman hearings. The view reflects what many on Wall Street say privately, but JPMorgan disavowed it. That probably makes as much political sense as the grandstanding by the senators.
Aussie tax approach risks world resource shortages 3 May 2010 Australia's proposed 40 pct resource super profits tax risks doesn't just legitimize thirdworld profits grabs. By suppressing mining profits peaks, it could reduce goldrush exploration activity when prices are high. That, in turn, might exacerbate resource cycles.
Is Obama losing control of U.S. financial reform? 3 May 2010 Legislators seem to be scrambling to outregulate each other while the White House keeps mum. It defied its liberal base on nationalizing the banks last year and breaking them up. But as controversial amendments, such as those on derivatives, emerge, it may be time to pipe up.
Breaking up banks is no silver bullet 30 Apr 2010 Politicians on both sides of the Atlantic including two of the party leaders fighting the UK election want to separate socalled casino investment banks from utility lenders. But simple rules would create arbitrage opportunities and rigidities without curbing risktaking.
Wall Street’s separation anxiety is misplaced 30 Apr 2010 Big banks don't want to spin off their lucrative derivatives desks, even into subsidiaries. Yet the U.S. Senate plan has merits. It would rid the derivatives market of perceived taxpayer support and discourage risky speculation. But international cooperation is critical.
U.S. growth suggests a Bourbon economy 30 Apr 2010 Moderate Q1 GDP improvement looks less attractive when more closely examined. Half the growth was inventories, while the inadequate saving and payments deficits of 200307 are reappearing. Like the French royal family, the U.S. economy has learned nothing and forgotten nothing.
Greece gets ready for great austerity experiment 30 Apr 2010 A tough new aidforpain deal is expected by Monday. Both the Greek and EU governments have finally grasped the scale of the challenge. But the plan will face domestic resistance, and wage cuts will only make the debt burden heavier. The crisis has been calmed, but not resolved.