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.
Bernanke throws up his hands on inflation 10 Jun 2008 In a speech on Monday, the Fed chairman hinted that interest rates would rise. But the academic part of the talk was more alarming. Bernanke admitted ignorance on how commodity prices, wages and expectations affect the inflation rate. And he didn t mention money supply once.
China is running out of anti-inflationary weapons 10 Jun 2008 China raised bank reserve requirements five times this year its latest move caused a stock market rout. But it hasn't touched interest rates. It fears higher real rates will attract hot money. Global liquidity tightening is the only solution to its inflation woes.
BoE City panel threatens independence 6 Jun 2008 Establishing a panel of eminent City folk to advise the Governor on financial stability is one of the Treasury s sillier ideas. When it comes to splashing taxpayers cash, the City s advice won t be hard to fathom. This is no way to solve the BoE s credibility deficit.
Turkey’s secularists choose terrible time to fight 6 Jun 2008 Prodded by oldguard secularists, Turkey's top court has vetoed a headscarf law. The battle over the Turkish soul risks paralysing a country in financial trouble. The central bank can t meet its newly doubled 7.5% inflation target. Muchneeded foreign investors could be spooked.
Welcome to Russia’s real world, Mr Hayward 6 Jun 2008 Faced with a possible eviction from its Russian joint venture with TNK, the BP boss has finally noticed something is wrong and wants Russia to abide by the ruleoflaw. After cozying up to the Kremlin for years, it s a bit late to cry. Other investors in Russia, take note.
Brazil’s monetary policy beats America’s 5 Jun 2008 Real interest rates of around 7% have produced a sound Brazilian economy. Savings are double the US, the payments deficit is lower, growth is much faster and inflation is comparable. Brazil s post2002 experience offers monetary policy lessons to Ben Bernanke.
Watchdogs should crack down on stealth takeovers 4 Jun 2008 UK regulators and US courts may force investors to disclose more about nonvoting economic stakes that they amass using derivatives. It s a good idea. When it is unclear who holds power over companies, shareholders suffer.
Why aren’t more private equity firms buying banks? 2 Jun 2008 TPG is the only buyout shop to take a sizeable stake in a big US lender. That s odd, with cashrich buyout firms looking for leveraged investments. Regulations on control of banks are one barrier. Buyout firms might try to change the rules or find ways to work within them.
US primary finale presents Hobson’s choice 2 Jun 2008 Assuming Obama wins the needed delegates in Tuesday s final state primaries, voters will be in a position to compare the candidates economic policies. But they won t find much difference higher taxes and more financial regulation are likely whoever wins in November.
Inflation deals first blows to bond markets 28 May 2008 Yields are rising despite slipping growth prospects. The combination reflects the new reality that global inflation could be here to stay. But the market has not yet abandoned its optimism. At 3.9%, the yield on 10year US treasuries is no higher than the inflation rate.
Could Mishkin’s departure herald harder money? 28 May 2008 Fed governor Mishkin s departure alters the Fed balance of power he was a noted soft money man and supporter of Ben Bernanke. The Fed has also raised its inflation forecast. Could these be the first signals of a policy reversal and a rate rise?
Eurozone finding unity in economic slowdown 27 May 2008 True, Germany grew five times faster than Spain in the first quarter, but German consumers were cowed. Eurozone divergence is set to give way to a shared slowdown. The strong euro and high oil and food price inflation are weighing on exports and disposable income.
The UK’s fiscal ship goes under (rocky) water 21 May 2008 UK government debt, including Northern Rock, has soared to 43% of GDP, breaching the 40% limit long ago set by Gordon Brown. The government will claim the damage is temporary but, even excluding the Rock, public finances look certain to sink.
Even the faithful should now sell Fannie and Freddie 21 May 2008 The mortgage giants spun profits before the crunch. Now US lawmakers want their shareholders to bear a lot of the burden of cleaning up the mortgage mess. If GSEs are predominantly tools of public policy, shareholders should sell maybe to the government itself.
US housing bailout risks making matters worse 20 May 2008 The Senate s $300bn political figleaf courts disaster. Slashing principal on underwater mortgages and refinancing homeowners into cheaper loans may sound good. But it could push house prices down rather than supporting them. And it provides perverse incentives.
US farm bill: 1930s socialism without the justification 20 May 2008 The farm bill expands US agriculture subsidies, born in an impoverished world where markets seemed to have failed. The new bill will subsidise the wealthy, provide cash supports even at high prices, damage world trade talks and boost inefficient domestic sugar and cotton cartels.
UK rate cuts recede and recession draws near 14 May 2008 Mervyn King, Governor of the Bank of England, unveiled a dire report on UK economic prospects on Wednesday. The bank has become much more pessimistic on inflation so the interest rate relief needed to promote economic growth is unlikely to come. Recession looks on the cards.
Questionable inflation data endangers markets 14 May 2008 Reported US CPI has remained under control in March and April thanks to huge and unprecedented downwards seasonal adjustments. Whatever the theoretical justification for these, they raise questions about the credibility of the figures and risk creating a false market.
Shareholders shouldn’t trust Freddie Mac 14 May 2008 The mortgage giant says its accounting snafus are behind it. But its credibility is shot. Freddie is raising $5.5bn after saying in March that it didn t need more capital. And its watchdogs are loosening its leash just as the mortgage mess deepens. Investors should worry.