BoE’s inflationary bias should raise concern 15 Dec 2009 UK inflation has come in above estimates again. Despite the deepest recession in half a century, consumer prices have barely fallen. The Bank of England may be pleased to have avoided deflation. But its persistent inflationary bias, evident for five years, is storing up trouble.
IMF should call Ukraine’s bluff 15 Dec 2009 The government is dramatizing its plight to persuade the IMF to lend again. But Ukraine's problems are as much political as financial. The IMF shouldn't disburse more money until Ukraine comes up with a coherent plan. That won't happen until after January's presidential election.
Protectionism won’t help China’s champions 14 Dec 2009 Steel tariffs and buy China technology policies aren't just revenge against the U.S. China once traded market access for foreign knowhow and capital. Now promoting domestic champions looks a bigger priority. It could backfire, as China is not yet ready to strike out on its own.
US financial reform still faces steep climb 14 Dec 2009 The bill that came out of the House on Friday with a slim majority is far more ambitious than what the Senate could pass on a tight vote. Those, like President Obama, who might like to see fat cat bankers suffer more will be disappointed by the diluted final result.
Copenhagen creates tension instead of harmony 11 Dec 2009 The global threat of climate change was supposed to shock nations into a common effort. The opposite seems to be happening. China wants rich nations to fund a cleanup. Other poor countries want China to help. And U.S. threats to tax carbonheavy imports could spark trade war.
What’s the cost of bank bailouts? 11 Dec 2009 In the UK, official estimates go from 8 billion to 846 billion pounds. It all depends on how official support is measured. It's hard to put a number on financial rescue programmes which simultaneously protect, benefit and endanger taxpayers. They are both expensive and priceless.
Warrant auctions imply Goldman misjudged market 11 Dec 2009 The vaunted Wall Street firm paid the U.S. Treasury s $1.1 bln asking price for its TARP warrants in July. Recent auctions of JPMorgan and Capital One warrants suggest the market price was much lower. Goldman had reasons not to balk, but still looks to have overpaid.
Spain should take head out of the sand 11 Dec 2009 A rating agency's warning about a possible downgrade has fallen on deaf ears. It seems the Spanish government isn't prepared to take tough action to control its ballooning deficit. It isn't too late to act. Here is a fivepoint plan.
Spreading the burden could ease City bonus hit 10 Dec 2009 One of the mysteries of the UK's 50 percent bonus tax is why it is raising so little. Estimated proceeds of 550 million pounds suggest top bankers may suffer a 30 percent hit. But by spreading the burden across the global workforce, banks may limit the impact.
UK shows how to destroy world-class industry 10 Dec 2009 Pensions were once a national specialty for the UK. Two rule changes within a single tax year add up to a massive blow. Such shortterm fiddling destroys confidence in longterm savings. The Chancellor's latest moves betray the government's intellectual bankruptcy on the subject.
UK bonus tax: One-off or two-off? 10 Dec 2009 The UK government has made a mistake in suggesting its bankers' bonus tax might be extended. One way of mitigating the damage would be to make clear that any repeat would cover total compensation, not just bonuses. Otherwise, banks will just jack up base salaries even more.
Bonus tax shows France and UK moving closer 10 Dec 2009 France will levy the same oneoff bonus tax as the UK. A jointly penned newspaper column by Nicolas Sarkozy and Gordon Brown shows narrowing differences on financial regulation. If the banking industry doesn't change its mores, more pain may be on the way.
Britain’s bonus tax may snare unintended victims 10 Dec 2009 Britain's draft law of the supertax on bankers' bonuses has been drawn very wide. This will deter clever bankers from exploiting loopholes. But asset managers, hedge funds and even foreign bank chiefs could also be hit. The Treasury should act fast to clear up the confusion.
Taiwan can’t hold off Chinese investors forever 9 Dec 2009 The island's premier says he won't let mainlanders take control of its banks in the near future. Such opposition to Chinese investment is becoming hard to sustain. Taiwan's recovery depends on China acting as export buyer of last resort. It may have to become more welcoming.
Mexico’s $1 bln oil hedge is costly insurance 9 Dec 2009 The country has bought protection against the oil price falling below $57. Hedging worked spectacularly well for Mexico when oil prices plummeted earlier this year. But this latest move looks particularly expensive. No wonder so few oil producers do the same thing.
Britain’s bankers had it coming 9 Dec 2009 The UK's planned oneoff tax on bonuses may well damage the City. But this year's profits are clearly a windfall, earned on the back of a massive bailout. The industry's failure to restrain pay is so socially insensitive that it has only itself to blame for the assault.
Nakheel’s accounts looks optimistic 9 Dec 2009 The Dubai developer reckons its assets fell just 5 percent in the first half. But property prices dropped about 25 percent. What's more, all this was six months ago and the accounts are unaudited. But even on its own reading, Nakheel had virtually run out of cash by June.
Commission to temper US deficit is a good idea 9 Dec 2009 The healthcare debate shows Washington has little stomach to close the longterm budget gap. Congressional selfcontrol would be best but seems unlikely. A bipartisan commission that would give Congress recommendations for budget cuts and revenue options is the next best thing.
Russia should waive its carbon credits 9 Dec 2009 Industrial decline has given Russia one asset, a vast supply of tradable carbon offsets. But a sudden sale would flood an already fragile market. An offer to write off some of the credits would help make Copenhagen a success. Russia would gain politically and economically.
New Japan stimulus is early, and risky, backtrack 8 Dec 2009 Yukio Hatoyama s DPJ, elected only in August on a stimuluscutting ticket, has approved a big new spending package. The cost of the measures will add to public debt already at 219 pct of GDP potentially crowding out the private sector as well as the DPJ s election promises.