Geithner juices up subsidy for bad bank plan 23 Mar 2009 The besieged US Treasury secretary has finally delivered a plan and it appears more feasible than anything that s come before. There are still potential problems, including the government s generous provision of cheap debt. But at least it sounds like a plan, not a pipedream.
Fully baked Geithner plan produces relief rally 23 Mar 2009 US stocks surged nearly 7% after the Treasury boss unveiled a plan to get toxic assets off bank balance sheets. It wasn t so much that he surprised the market with innovation. But he seems to have overcome earlier concerns about his battlereadiness, at least for now.
Bailouts will hobble US economy, even if they work 23 Mar 2009 The latest bad bank plan sounds plausible. But with a huge budget deficit, massive lending support and mortgage rescues in the pipeline, lots of government money is flowing to economic losers. Throw in excessive federal borrowing, and the headwinds to a recovery are rising.
Myners shouldn’t carry can for Goodwin bonus 23 Mar 2009 Calls are mounting for the UK Treasury minister to quit because he let the former RBS boss get a £700,000 pension. But remember how that weekend last October Myners was also negotiating a £37bn rescue scheme for three big banks. Critics should get a sense of proportion.
Dead zone for foreign investment expands 20 Mar 2009 Venezuela s nationalisation of the Grupo Santander unit is symptomatic. When a wellrun bank from a friendly social democrat country can t keep its assets, foreign investment has become impossible. Country by country, the Latin American dead zone is rolling back globalisation.
AIG backlash could endanger global economy 20 Mar 2009 Outrage over the $165m bonuses has turned financiers into devils and further undermined Geithner s credibility. That will make it harder for Obama to ask Congress for more funding to bail out banks. But until US banks are shored up, the whole global economy will feel wobbly.
Bonus pitchfork mob makes for lousy tax policy 19 Mar 2009 Outraged US legislators are planning punitive taxes on bonuses not just at AIG but at all recipients of government funds. The hotheaded and unfairly retroactive changes could hurt investor confidence, undermine Obama s credibility and damage the still valuable US finance sector.
Germany pays for past and future virtues 18 Mar 2009 During the boom years, Germans practised restraint but exported to overspenders. Weak exports mean the recession looks worse in Germany than in the US. Stimulus? Yes, but not too much. Future inflation is a worry. So is the cost of expensive bailouts for reckless neighbours.
Liddy needs to open up to taxpayers 18 Mar 2009 AIG s CEO is under fire for paying out retention bonuses. The public outrage means future bailout funds could be at risk. Taxpayers already own 80% of AIG. But Liddy still sounds like a typical cautious company boss. However tough it may be, he must answer to his new owners.
Fed stimulus accelerator is inflationary 18 Mar 2009 The Fed is increasing its balance sheet by another $1 trillion, including $300bn of Treasury bonds. Yet the pace of US economic decline seems to be slowing, while deflation is nowhere visible. Fed policy is now highrisk, and resurgent inflation may strike sooner than expected.
Taxing AIG bonuses would waste time and effort 17 Mar 2009 The payouts rightly raise popular and political ire. But one idea for redress loading tax on recipients risks the same damaging fallout as breaking the contracts: uncertainty. Besides, they're a historical distraction. US lawmakers have more than enough to do for the future.
US backtrack on mark-to-market is badly timed 16 Mar 2009 FASB s imminent easing of rules for reporting financial asset values looks like a rush job under bankled political pressure. It will also confuse investors the group supposed to benefit from accounting standards at an already volatile moment. It s bad policy at a bad time.
Citi’s new board picks hit the right note 16 Mar 2009 The ailing bank sorely needs some experienced and respected market heavyweights as directors. Pimco s former head honcho, a retired Fed president and two savvy bank bosses could do the trick assuming they and Citi chief Vikram Pandit can work together effectively.
Obama’s AIG populism undermines his authority 16 Mar 2009 The US president said Tim Geithner should pursue every legal avenue to block bonuses to AIG executives but it seems like Geithner already has. The bonuses stink. But raising doubts over contract commitments and contradicting his officials is unwise. Obama needs to be smarter.
AIG’s disclosure should just be the beginning 16 Mar 2009 The US insurer finally revealed that nearly twothirds of its $180bn bailout cash has already gone, mostly to US and foreign banks. AIG should disclose more, but it s a start. At least annoyed policymakers now have data to inform their critique of the AIG bailout and others.
AIG bonuses stink – but taxpayers must hold noses 15 Mar 2009 Paying $165m in guarantees to employees involved in making AIG a ward of the US government is disgraceful. But the commitments appear binding. Still, the government can name and shame to mitigate the pain, modify behaviour and avoid a firestorm that does more damage than good.
Swiss devaluation need not spark trade war 13 Mar 2009 Switzerland has sold francs to weaken its currency. The precedent sounds frightening. In a growthhungry world, are competitive devaluations back? They needn t be. The Swiss problem is unique safe haven status has made the franc too strong. Imitation is not recommended.
One-size stimulus for all doesn’t make sense 12 Mar 2009 The US idea that every G20 country government should pump 2% of GDP into the economy is impractical and wrong. Sure, some EU members could do more to fight the recession. But Europeans are right to point out that their generous welfare states are powerful antislump weapons.
Obama himself must draw line under bank crisis 11 Mar 2009 As long as Washington dithers on getting the banking system working, other economic initiatives are likely to be futile. The precise terms of the rescue are important, but what really matters is being able to declare credibly that the crisis is over. Obama must take the lead.
Obama wants to make IMF belle of the G20 ball 11 Mar 2009 After being snubbed by US policymakers for years, it now finds itself key to Obama s international economic recovery plans. The US wants to stuff its coffers and even wants it to name and shame countries that it deems too stingy with stimulus. It s a big reversal of fortune.