BoE adds to doubts over UK 9 Jul 2009 The Bank has put back any pronouncement on quantitative easing until August. By adding to the UK s uncertainties, that is probably a mistake. The likelihood is that a weak economy will prompt the BoE to continue its moneyprinting policy. And that will bring heightened risks.
Geithner drives harder bargain on Tarp warrants 9 Jul 2009 The US Treasury sold warrants attached to bailout loans too cheaply to the first bank to buy them back. Since then, it has got its act together, getting much closer to realistic estimates of market value. Good thing too, with the biggest banks warrants still outstanding.
Indonesia hustles towards joining the Brics 9 Jul 2009 President Yudhoyono deserves his apparent reelection. He has done a sound economic job in a tough place. Indonesia's size and Islamic majority make it an intriguing potential addition to the quartet of Brazil, Russia, India and China. But corruption could be the sticking point.
Keeping hedge funds and private equity in check 8 Jul 2009 The EU wants to include hedge funds and private equity investments in its new system of financial regulation. The leading figures in those businesses aren t keen on the idea. Breakingviews.com writers debate this thorny issue.
UK plumps for regulatory fudge 8 Jul 2009 The old tripartite system for managing crises involving the Treasury, the BoE and the FSA is merely being retuned. And the government has deferred the question of how to prevent future bubbles. Unless momentum is maintained, it could end up wasting a good crisis.
G8 summits have outlived their purpose 8 Jul 2009 The meeting of the rich world s leaders in Italy should be the last. G8 summits have rarely produced anything of substance. With China and India missing, the group is now too small to do much. The G8 no longer serves a serious purpose. It should disband.
China gambles trade relations with Rio spy row 8 Jul 2009 The arrest of Rio Tinto staff for alleged espionage risks being seen as retaliation for the miner's tough stance on ironore prices. Perceptions of heavyhanded, paranoid behaviour may reinforce economic sinophobia. China risks being viewed externally as another Russia.
Politics gets in way of UK bank regulatory reform 7 Jul 2009 A proper debate about the relative merits of returning bank oversight to the Bank of England or leaving it with the FSA is essential. But with a general election looming, the two options are too closely linked to the two main parties. That s a recipe for moralesapping inaction.
Riots may be deadly price of China’s growth 7 Jul 2009 Conflagrations that killed 156 people in Xinjiang had little to do with economic woes. Yet China s economic policy has everything to do with civil stability. Sadly, Beijing may not realise that the purblind pursuit of rapid growth makes unrest more likely.
Second US stimulus may depress more than stimulate 7 Jul 2009 An Obama advisor warns of another big fiscal infusion. And the vice president says the US misjudged the downturn s severity. But stimulus must be financed somehow. Rising interest rates suggest the US is already taxing investor patience. Bigger deficits will send them packing.
G8 can weep together, or fight together 6 Jul 2009 The rich country leaders who will gather in Italy this week all face the same hardships financial meltdown, crippled economies, risky bailout plans and widening deficits. They could simply commiserate. Better to listen to the rest of the world and fight off protectionism.
India’s budget stores up trouble 6 Jul 2009 It's hardly alone in spending to stave off decline while promising discipline later. But the budget misses reform opportunities and will strain India s reserves and credit. With a 1980s retread finance minister, there's a risk of a return to statist policies and low growth.
Italy’s wage rises don’t belong in the eurozone 2 Jul 2009 The folks in Rome don t seem to know about the recession. The wages of Italian government workers are up 7%. That s worse than a joke. For Italy to stay in the rigid eurozone, it has to learn selfcontrol. That means wage cuts when necessary. Now is the right time to start.
UK’s off-balance-sheet liabilities crash home 2 Jul 2009 The government has renationalised a failing rail franchise, sold in a flawed auction, while delaying the partprivatisation of the useless postal service. Both moves reflect current economic reality and past bad policy. The pressure on public finances is only going to intensify.
Evercore shouldn’t get greedy with GM 1 Jul 2009 The boutique is asking for a $15m success fee for its advice to the bankrupt carmaker. That s on top of some $24m GM already paid. But the bankruptcy overseer has reasonable objections. The government did most of the legwork typically left to an advisor.
US consumer watchdog will have stretchable leash 1 Jul 2009 Obama s proposed Consumer Finance Protection Agency won t have the broad, unchecked power that bankers feared. But it could still make their lives difficult, especially if the president appoints antiWall Street militants to the board. That s a significant risk.
California’s promises might trade at a discount 1 Jul 2009 The Golden State is short on cash so it plans to issue IOUs instead. The last time it did so, most banks accepted the scrip at face value. This time, in light of the state budget woes and economic crisis, banks may demand a discount hurting anyone paid with these promises.
Argentine anti-market policies’ good run may end 30 Jun 2009 President Fernández' moderate defeat in midterm elections may force policy compromise. So may reality with wheat planting down 30%, her government s strategy of heavily taxing farmers and exporters may finally hit the economic buffers. Still, Argentina has had a great run.
AIG shares rise 20-fold, but directors matter more 30 Jun 2009 The giant US governmentsupported insurer will again have stock trading in the $20s but only because of a reverse stock split. More importantly, a fresh slate of directors brings a range of potentially useful skills. With luck, they can help recoup taxpayers sunken treasure.
Tumbling UK needs to save – not spend 30 Jun 2009 Despite a government borrowing binge, the UK suffered the biggest GDP fall for half a century. Still, consumers managed to save less than in the last quarter. The UK can t begin a real recovery until consumers and the government return their finances from Neverland to reality.