Ukraine’s election could kick-start reforms 18 Jan 2010 The first round of the presidential poll eliminated the unpopular incumbent. Next comes a runoff between old rivals Yanukovich and Tymoshenko. Whoever wins, relations with bossy neighbour Russia are likely to improve. The two candidates might even manage to agree on policy.
Chile may swing Latins away from socialism 18 Jan 2010 Pinera's presidential victory could signal a return to something like the fullblooded capitalism of the Pinochet years. If authoritarianism and corruption are avoided and growth is strong the Chilean example could help lure other countries away from socialist populism.
US bank tax surprisingly isn’t dead on arrival 14 Jan 2010 Congress, particularly the Senate, has been a graveyard for tough financial reform. And banks are hoping the new liability levy will suffer a similar fate. But they shouldn't count on it. A clever design and a determined White House push mean Wall Street may have to pay up.
Obama’s crisis responsibility fee is full of holes 14 Jan 2010 In theory, repaying bailout losses from a tax on banks' wholesale funding is clever and defensible. But the socalled Goldman Sachs Tax fails to catch some of the institutions most responsible for taxpayers' losses. And it throws up other inequities, too. Here are some of them.
Liability levy looks increasingly like Wall St tax 14 Jan 2010 The Obama administration's apparent decision to exempt deposits from the new tax will hit the likes of Goldman much harder than commercial banks. This isn't just politically astute. It also makes economic sense to make hot money a more expensive source of funding.
EU can live with Russia-Belarus oil row 14 Jan 2010 Moscow and Minsk are fighting over the price of Russian oil that Belarus reexports westward about 10% of the EU's oil consumption. A cutoff would cause problems, but pipeline politics don't work as well for oil as for gas. Consumers of Russian oil have more alternatives.
US health reform may cost investors 13 Jan 2010 Labor unions are balking at Obama s move to tax their health benefits to pay for reform. So Democrats are considering taxing investment income. That s a bad idea. Not only might it raise the cost of reform and worsen the deficit, it could politically doom the whole plan.
Weak Greece struggles with strong euro 13 Jan 2010 Dubious figures have been a Greek problem since it entered the euro zone. Now the zone's leaders are angry, and a double digit fiscal deficit, high indebtedness and poor competitiveness suggest Greece may struggle to stay in. Without political will to change, Greece could fail.
Can crisis inquiry live up to 1930s trailblazer? 13 Jan 2010 Then, Pecora turned a tame US investigation of the 1929 Crash into an exposé that spawned tough banking laws. Despite flashes of incisiveness, the commission s debut hearing with Wall Street bosses lacked that kind of promise. It s early days but the panel needs to sharpen up.
China’s tweaks won’t cure financial excess 13 Jan 2010 A surprise hike to bank reserve requirements is a step in the right direction, but the extra capital required won't keep banks from lending too much or deter foreign speculators. Meanwhile, new plans to introduce margin trading on stocks could increase asset price inflation.
Ditching China could be good for Google 13 Jan 2010 The search giant cites a vendetta against free speech as the reason it may pull out of China. But commercial factors probably play a role too. Google now has a chance to regain ethical credentials it compromised at China's behest, and earn valuable political goodwill elsewhere.
Trade shows why U.S. can grow, and UK can’t 12 Jan 2010 The falling dollar helped cut the U.S trade deficit in half, but growth has returned and the trade shortfall is once again increasing. Weak currencytherapy hasn't worked in the UK, where exports have hardly budged. The UK economy remains unbalanced and unready for strong growth.
Fed has incentive to keep yield curve steep 12 Jan 2010 The U.S. central bank's profit increased 47 pct in 2009, as it held more assets and benefited from big spreads between short and longterm rates. Financially, the Fed is incentivized to sell assets before raising rates, to delay rate rises, and to keep Fannie and Freddie alive.
Venezuelan economic policy reverts to jungle 11 Jan 2010 The country s twotier exchange rate will increase oil revenues in bolivar terms. But rising inflation, threats to local businesses passing on higher costs and the corruption resulting from a gamed system will worsen chaos. While Hugo Chávez remains, jungle law will prevail.
China faces curse of a too-rapid recovery 11 Jan 2010 Booming December exports undercut China's main argument for keeping its currency cheap and increase the chances of a backlash from trade partners. The U.S., which has its own longterm job problem, could see China's rapid recovery as a justification for more protectionism.
Greece case puts new EU Commission to test 11 Jan 2010 The EU must lean on Greece to avoid a euro zone nightmare scenario. But Europe's leaders aren't in a position to lecture on fiscal discipline, and the European Central Bank can't legally do much. This leaves the new EU commission, which faces its first major credibility test.
UK’s third party tries some grown-up economics 11 Jan 2010 Britain's minority Lib Dem party is downgrading some expensive spending pledges to aspirations, shrinking the policy gap with the Conservatives. If this year's general election is inconclusive, the Lib Dems' price for joining a Labour coalition would be deeper spending cuts.
Geithner needn’t pack his bags — yet 11 Jan 2010 Political appointees tend to lose their support the same way a person goes broke slowly, then all at once. The latest AIGrelated emails are corrosive for the embattled U.S. Treasury secretary, but not decisive. Still, he has bled enough that this year could well be his last.
France’s wrong-headed Google tax will backfire 8 Jan 2010 Nicolas Sarkozy wants to tax Google on its French business, while an official report suggests the tax could help subsidize content industries. If enacted, the proposals will mostly hamper the growth of Internet advertising, and hurt its supposed beneficiaries.
UK electoral arithmetic has its fiscal risks 8 Jan 2010 Though the failed putsch against Gordon Brown will help the opposition Tories, they don't have a clear lead. That raises the possibility of a hung parliament, with the LibDems holding the balance of power. In some scenarios that would be good for fiscal discipline; in others bad.