Fed leaves punchbowl but signals last call nears 24 Jun 2009 The US central bank left its target rate unchanged. But it signalled that the economy may be nearing a bottom. Its comments hint that it may change its bias toward tightening sooner rather than later. If it wants to avoid a damaging runup in commodities, it can t wait too long.
Sick man of Europe: it’s Berlusconi v Italy 23 Jun 2009 It is not just the Italian prime minister s reputation that is withering in the Roman sun. Italy s economy is too. Reform is needed to break a vicious circle of low growth, falling exports and crippling debt. But with Berlusconi otherwise engaged, big change isn t likely.
Sarkozy’s deficit neglect will hamper French growth 23 Jun 2009 The French president used a landmark speech to assert that he won t implement austerity policies . It shows little concern for France s rocketing budget deficits. This will not help the French economy. Moreover, his bizarre idea of a national bond will only lift debt even more.
California needs its own Felix Rohatyn 22 Jun 2009 The longtime Lazard rainmaker rescued New York City from bankruptcy in 1975. California s political landscape is much rockier than New York s was. But a financial wizard like Farallon s Tom Steyer could still help bridge the gap.
Fed needs end game for emergency loans 22 Jun 2009 It s still too early to pull the plug on all of its myriad financial rescue programmes. And some are winding down of their own accord. But the financial sector won t reach a healthy equilibrium until the US government withdraws its massive subsidies, Dwight Cass argues.
EU opts for lenient banking regulation 19 Jun 2009 Europe s leaders have reached a tentative compromise on plans for panEuropean regulation of the banking system. UK concerns on fiscal sovereignty have been addressed. Still, new transnational regulatory bodies will be created albeit lacking some teeth.
Spain needs further dose of realism 19 Jun 2009 The government is now more realistic in its economic forecasts a welcome sign. It has also paid lip service to budget austerity. But Madrid continues to spend with abandon. It must come up with a more concrete strategy to bring the budget back in line.
RBS lets Goodwin off hook but history won’t 18 Jun 2009 The bank s disgraced former boss is returning some of his controversial retirement pot. It looks to be a decision of tact, partly prompted by the threat of legal action. Goodwin can now retreat into exile. But the move comes too late to do much for his tattered reputation.
US plan hastens loss of central bank independence 18 Jun 2009 If Congress approves Obama's reforms, the Fed will get macroprudential powers. That makes its agenda more complicated and political. But the scheme only ratifies reality. The crisis had already killed off the notion that monetary authorities could work in ivory towers.
Latest US bankruptcy trend could be slippery slope 18 Jun 2009 Chrysler s restructuring included a swift asset sale under section 363 of the bankruptcy code. Now others, like Eddie Bauer, are trying the same shortcut process. But wider use of section 363 would sidestep creditors rights. Lauren Silva Laughlin explains the dangers.
Obama plan sensible but patchy 17 Jun 2009 Details of his overhaul of US financial regulation suggest a genuine effort to plug the worst holes. But much of it is a patchwork of tape, filler and dabs of paint. It will look better and could work better. But the best chance in decades of a full rebuild has gone begging.
Nuclear power solves problems – if money’s cheap 17 Jun 2009 Atomic energy is the best US hope for reducing carbon emissions by 2030. But new plants call for heavy capital investment. To encourage that, the Energy Department s $18.5bn in funding guarantees make sense. Global warming worriers should also hope real interest rates stay low.
Tax-deductibility of debt rightly in cross-hairs 17 Jun 2009 Giving companies and households an incentive to leverage themselves to the gills, as many tax systems do, helped exaggerate the bubble and bust. The IMF is now taking a pot shot at the practice. Unwinding these subsidies could be a convenient way for governments to raise cash.
BIC nations could have a future 16 Jun 2009 Russia is hosting a Bric conference. The guests Brazil, India and China have much to learn from each other. A combination of Chinese manufacturing, Indian democracy and Brazilian resources and monetary policy would be a worldbeater. Tough to see where Russia fits in, though.
A field guide to US financial watchdogs 15 Jun 2009 President Obama is set to announce regulatory reforms on Wednesday. While some are potentially meaningful, they may not do much to streamline a system the administration says is riddled with gaps, weaknesses and jurisdictional overlaps. Robert Cyran describes the key players.
Citigroup’s chief executive deserves more time 15 Jun 2009 Though he didn't create Citi's messes, Vikram Pandit is on shaky ground with US regulators, like the FDIC. While he's dithered a bit and botched the Wachovia deal in more ways than one removing Pandit would be unwise. BofA's Ken Lewis, now that's another matter.
Germany signals way to avert debt crises 15 Jun 2009 The German government plans to swear off almost all fresh borrowing, but not until 2016. It s the right approach, but not fast or drastic enough. Freeborrowing Western governments risk debt crises. They must aim to run fiscal surpluses as soon as possible.
IMF on wrong track with Latvia/Sweden band-aid 12 Jun 2009 The fund is trying to rescue the Latvian economy without a devaluation of the absurdly overvalued lat. There s no doubt devaluation would be painful for Latvia and for Sweden, whose banks are badly exposed. But Latvia simply isn t viable without one. Better get on with it.
Personal view: Flat taxes were always a pipedream 12 Jun 2009 A financial crisis is forcing Latvia to abandon flat taxes. But it s no great loss. Edward Hadas argues that flat taxes are neither flat in practice nor particularly fair in theory.
Personal view: Flat taxes are still a good idea 12 Jun 2009 Latvia has retreated from a flat tax out of necessity. But the overall idea is still good. Simplicity promotes efficiency, economic growth and fairness, says Ian Campbell.