Tough to get good policies in Argentina 27 Mar 2008 Argentine farmers are right to protest higher export tariffs. However, as with most commodity and energy exporters, Argentine economic performance depends primarily on world markets. That makes it difficult for the electorate to figure out which economic policies make sense.
US federal spending, not consumers, stoking trade woes 26 Mar 2008 Incipient recession is widening the US budget deficit. It should exceed $500bn for the year to September 2008, compared to a declining traderelated current account deficit of $739bn in 2007. Soon, fiscal profligacy will more than account for US trade woes.
The Fed should regulate Wall Street – all of it 26 Mar 2008 Hank Paulson seems to agree. The Fed is funding investment banks it doesn t, strictly, regulate. The Bear Stearns drama shows it s impossible to disentangle them from true banks. The Fed has real levers to deploy, too. It s wellplaced to lead a more coherent regulatory effort.
Sarko’s UK visit will be pleasant, but useless 26 Mar 2008 The French president, eager to boost his muchbattered image, will tell the Brits whatever is required to make his visit a PR success. But his conception of politics as the art of corporate meddling will find fewer takers in the UK than it does in Italy or Spain.
Will the Fed’s $75bn lubrication work? 25 Mar 2008 Traders are betting it will unblock the seizedup market for treasury repurchase agreements. But banks scrambling for liquidity before quarterend could easily mop that up. If they expect more losses, their defensive capitalhoarding could bring back market turmoil.
Russian pressure threatens neighbours’ market zeal 25 Mar 2008 Medvedev's sabrerattling about Nato echoes Putin's policies for the near abroad. Political pressure, and the example of Russia's oilfuelled economic success, may undermine neighbours' commitment to free markets. Russian contempt for property rights could prove contagious.
KMT win is no economic bonanza for Taiwan 24 Mar 2008 Taiwan s Taiex stock index rose 4% on March 24, on hopes that Ma Yingjeou s election win for the Kuomintang would bring closer ties with China. However China already represents 39% of Taiwan s exports and it is difficult to see how the DPP s economic record can be much improved.
Japan can get along without a central bank chief 19 Mar 2008 In most countries, that would precipitate a big crisis. But Japan's opposition is right not to want a central bank boss too closely tied to the Ministry of Finance. Interest rates need to be raised, and the next governor needs to be powerful enough to do so.
Markets too eager to celebrate over mortgage giants’ plan 18 Mar 2008 That s the only way to read the positive reaction to regulator Ofheo s relaxing Fannie and Freddie s capital constraints. Ofheo seems to be hoping that promises from the agencies not to gear up will encourage investors to pony up more capital. That seems a tad optimistic.
US economic pig now Fed and watered 18 Mar 2008 Bernanke is slopping nearly $450bn of new liquidity into the market's trough and is watering it with a 0.75% rate cut. But the US economic pig needs a diet and exercise, not more truffles. Until real interest rates are positive, the economy will remain in poor shape.
Fed draws a line in the sand 17 Mar 2008 Bear Stearns descent towards insolvency forced the US central bank to take drastic action: $30bn of support for JPMorgan s rescue of the Wall Street firm and discount window access for brokers to prop up the securitisation market. The Fed has rarely been this handson.
US should be congratulated on swift Bear bailout 17 Mar 2008 The contrast with the UK's months of dithering over Northern Rock is extreme. The Fed has had to oil a privatesector solution with $30bn of public money. But it has avoided nationalisation. What's more, the virtual wipeout of Bear's shareholders limits moral hazard.
What happens in Tibet may not stay in Tibet 17 Mar 2008 For the first time ever, the monks of Lhasa have political leverage from China s hosting of the Olympics. A successful revolt might embolden others particularly those hardhit by China s worryingly rampant inflation to rise up, too. There s a risk of general civil unrest.
The Fed’s alphabet soup 17 Mar 2008 The US central bank has expanded its financing menu for banks and brokers. Dwight Cass explains how the TAF, TSLF and PDCF programmes work.
Could the Fed run out of money? 14 Mar 2008 Its bailout of Bear Stearns is the third time it has relaxed the rules for pumping liquidity into the market in a week. If any more institutions need cash, the Fed's $700bn of conventional firepower might be depleted. It might then have to find yet more unconventional tools.
Losses of 40% will make SWFs wary of bank rescues 14 Mar 2008 Sovereign funds have put $50bn of equity into struggling Western banks. The shares are down by over a third. High dividends will cut their losses, but the debacle should be enough to deter SWFs from being so helpful the next time the begging bowl goes round.
Freddie and Fannie should raise more capital 13 Mar 2008 If they have called the housing market right, they may not need more. But that s a big if. And with capital tight, they can't easily help the US mortgage market their public mission. Raising new equity would dilute shareholders. But if it's spent wisely, they could benefit.
Did the Fed torpedo Carlyle Capital? 13 Mar 2008 Some on Wall Street argue the Fed s new $200bn Term Securities Lending Facility caused Carlyle s lenders to demand more collateral, so they could trade it for government bonds. That s farfetched. But a similar drama could unfold for other types of mortgage funds.
Paulson misses multiple tricks on financial reform 13 Mar 2008 The US Treasury Secretary's plans to avoid a repeat of the current crisis are only soso. They apparently don't fully grasp the nettle on monetary policy, incentive structures, risk management, financial complexity, bank capital or ratings agencies. Marks out of 10? About 4.
Make budget simplicity the helmsman’s course 11 Mar 2008 Alistair Darling must present a budget for an economy so far largely untouched by the credit crunch, but which could soon be hit hard. The UK chancellor's best course is to acknowledge the pending damage to growth and revenue, and trim accordingly.