Fannie-Freddie containment is crucial 11 Jul 2008 If US policy wonks handle the crisis poorly, the mortgage giants woes could spread throughout the economy with dire consequences for banks, consumers and the government itself. Decisive action is called for, but the pain should be spread gradually.
Paulson must be gritting his teeth 10 Jul 2008 The US Treasury secretary and exGoldman boss implied in March that the regulation of Fannie Mae and Freddie Mac, the US mortgage giants, needed an overhaul. Now, with investors alarmed, he has little choice but to repeat their regulator s sanguine remarks. It can t be easy.
Leaders punt global warming into distant future 9 Jul 2008 High energy prices have made voters more aware of the costs of mitigating global warming. But even George Bush now admits something must be done. The G8 has found a way to defuse the political risk of cracking down it adopted emissions targets that won't take effect until 2050.
Fed needs new teeth to avoid another Bear debacle 8 Jul 2008 Ben Bernanke sounds willing to extend the Fed s emergency lending to brokers into 2009. That may be expedient, but the moral hazard risk begs a quid pro quo in the form of tougher regulation. Bernanke is making the right noises, but Congress needs to act fast.
Investing in US mortgage giants is a lottery 7 Jul 2008 Fannie Mae and Freddie Mac shares fell sharply on Monday. The future for the US mortgage groups is clear as mud. Even ignoring loan losses, the impact of their use as government policy tools and their supposed taxpayer backing is murky. Shareholders are right to be wary.
Visa move shows Russia still needs BP 3 Jul 2008 Some of TNKBP's British employees have been granted visas, just as BP withdraws some of its staff from Russia. This shows that the dispute over TNKBP isn t a goodvsevil one. The Russian government doesn t want to kick BP out. But Russian shareholders want control of the JV.
Turkey at political and economic cusp 2 Jul 2008 Turkey is politically at a cusp, with the legal system and the army both trying to remove the elected moderate Islamist government. It s also at an economic cusp, needing declining energy and commodity prices to avoid payments and inflation crises. It needs luck on both fronts.
UK Treasury nobbled by the banks – again 1 Jul 2008 The UK Treasury has bowed to pressure from banks by not making the new, overgenerous deposit protection scheme prefunded. That s a copout. Combined with plans for a halfbaked Special Resolution Regime, it s another blow to free market banking.
India needs old-fashioned remedies for inflation 30 Jun 2008 India s inflation is partly imported but not all. Money supply has grown too rapidly, the budget deficit is excessive and real interest rates are negative. The traditional remedies that are needed will be unpopular, but the government can always blame Bernanke at the Fed.
Basel II-lite fails to reflect crunch’s lessons 26 Jun 2008 US bank watchdogs have issued a lesscomplex version of the capital accord for smaller banks to use. Its authors didn t sleep through the credit crunch entirely: they ve acknowledged that nomoneydown mortgages can be risky. But it retains its big brother s main faults.
Ireland’s recession a small post-miracle payback 25 Jun 2008 The Irish economy may contract this year. House prices are falling and government finances are in difficulty. That s tough, but will only erase a sliver of a generation s enormous improvement. Ireland s new challenge is to compete with other rich countries as a peer.
The Fed’s call: flippers, financiers, or ‘flation? 24 Jun 2008 Bernanke et al aren t likely to dent fragile economic growth with a rate hike on Wednesday. But hints of what the Fed might do next will matter, especially the balance between propping up the economy, along with financial markets, and fighting commodityfueled inflation.
Shorting rules bungle has besmirched City 20 Jun 2008 The FSA is right to force the disclosure of short positions during rights issues. But the UK financial regulator made a hash of the rulesetting. It makes London look like an amateur market. The next step should be a proper consultation, and an end to rulemaking on a whim.
Exclusive: Will Joe Sixpack pummel Inbev’s Anheuser bid? 18 Jun 2008 Political temperatures are rising over the BrazilianBelgian brewer s taste for Bud. Inbev has hired heavyweight Washington lobbyists, including former Senate majority leader Trent Lott, in anticipation of a fight. But a battle much beyond St Louis could damage US markets.
Korea’s currency intervention would flop in the US 17 Jun 2008 The South Korean government's intervention to protect the won may strengthen the currency and hold down inflation. Both budget and payments are in surplus, while inflation is almost entirely imported. But a similar move wouldn't work for the US.
Europe shouldn’t copy US watchdogs’ ratings blunder 16 Jun 2008 Market overseer Charlie McCreevy wants to crack down on the raters. Some of his ideas look smart. But piling on new regulations his US counterparts strategy just boosts the rating firms implicit government endorsement. That shields them from healthy competition.
Growing double-digit inflation club hard to quit 16 Jun 2008 The number of countries suffering doubledigit inflation has grown sixfold in the past year. Typically, joining the club leads to price controls. But they fail, and only politically toxic interest rate hikes can lead to an exit. Realising that takes time and courage.
US steps closer to stagflation 13 Jun 2008 Inflation is here. Without some dubious seasonal adjustments, the threemonth annualized rate would be 8.3%. Even the reported 4.2% is too high from comfort. As for stagnation, May s real retail sales barely rose despite tax rebates. Investors haven t yet really caught on.
Irish No vote exposes EU weakness 13 Jun 2008 Ireland s rejection of the Lisbon treaty is not a disaster for the EU, which can function under its existing arrangements. But it s further confirmation that given a choice between hanging together and hanging separately, some Europeans prefer the latter. That s worrying.
Spanish fuel strike a harbinger for Europe 11 Jun 2008 Truck drivers are blocking roads in protest at high oil prices and fresh food could run out in days amid growing panic. The government doesn t have much room for manoeuvre. But the outcome will have ramifications in other countries where fuel prices are a hot political issue.