Edward Hadas: Wealth buys less lifestyle, more power 2 Apr 2014 President Obama calls inequality the defining issue of our time. The general public isn’t persuaded. That could be because the gap in lifestyles has hardly widened. The real problem is the relative power of the elite. That is dangerous – it threatens to undermine democracy.
Big German public pay hike is good news for Europe 2 Apr 2014 More than 2 mln civil servants in Germany will see their pay rise 5.7 pct over the next two years. That means real income growth, and it will be a benchmark for the private sector. But much hinges on what consumers will do with the extra money in a country where savings are high.
ECB could fight currency war – by buying Treasuries 2 Apr 2014 The euro is at uncomfortable levels partly because quantitative easing is pulling down other currencies. A radical idea is that the ECB could respond by adopting QE and buying U.S. Treasuries. Direct FX intervention would break the rules but might lead to discussion and disarmament.
Banking goliaths can indeed be tamed 1 Apr 2014 No country has ended the problem of maybe needing to rescue a hulking financial institution. A new IMF report, though, shows the United States has done a better job than most with stronger rules and less concentration. A $600 bln subsidies figure also gives lawmakers a target.
Deflationary world can still stoke asset inflation 1 Apr 2014 The U.S. economy is a test case for the baffling coexistence of inflated asset prices and disinflation in consumer prices. Poor capital utilization and wonky income distribution – a sharp drop in workers’ share, a jump in financiers’ take – help resolve the mystery.
New French PM’s main challenge: his own party 1 Apr 2014 Manuel Valls will take over the French government after the ruling Socialist Party’s debacle in municipal elections. The interior minister’s free-market leanings suit President Hollande’s new supply-side views. But to conquer, Valls must fight off more traditional Socialists.
CITIC’s $41 bln deal can avoid a stock market test 1 Apr 2014 The Chinese conglomerate is injecting itself into its Hong Kong-traded subsidiary. To maintain a minimum free float, CITIC Pacific will need to raise cash or partly pay in convertible shares. Though the latter option is easiest, it also undermines the point of a public listing.
Huawei handset success requires foreign push 1 Apr 2014 Consumer devices like smartphones accounted for only a quarter of sales last year, but generated half the Chinese group’s revenue growth. As Huawei’s traditional telecom equipment business runs into headwinds outside China, success in handsets can help pick up the slack.
Ukraine needs gas efficiency more than imports 31 Mar 2014 Congress is debating speeding up U.S. gas exports to curb Russia’s sway over its former satellite. A cheaper solution lies closer to home. Ukraine is the world’s second most wasteful energy user. Merely matching Romania’s efficiency would slash Ukraine’s gas bill by two-thirds.
ECB has to cope with global disinflation illness 31 Mar 2014 The malaise of meagre price increases and high sovereign debt is almost global, but the euro zone is suffering particularly badly. The ECB is constrained, too, because it has so many national masters. Still, a bold QE campaign might be able to keep deflation away.
UK authorities show worrying market ignorance 31 Mar 2014 Insurance stocks fluctuated wildly after the government and the regulator each broke price-sensitive news in a clumsy fashion. The failure to anticipate market mayhem betrays poor instincts. It argues for tighter rules around dissemination of news by those that supervise.
Official attention will make or break bitcoin 31 Mar 2014 Scrutiny from tax authorities and regulators may deter off-the-grid types who like the digital money for its anonymity. Yet interest from investors and even creators of derivatives could start drawing bitcoin into the mainstream. Either way, its days in the shadows are over.
Companies risk changing euro view at wrong time 31 Mar 2014 A rising single currency has confounded and hurt European exporters. An increasing number are becoming euro bulls, but their conversion could be ill-timed. While the currency’s rally may not be over, the ECB seems too unhappy with euro strength for it to last past autumn.
Global house price surge calls for QE door to shut 31 Mar 2014 It’s too soon to call it a global bubble, but house prices are rising in most countries outside southern Europe. U.S. quantitative easing is a big factor, because capital inflows generated credit growth in emerging economies. Tighter monetary policy, now, is the simplest cure.
Hugo Dixon: Don’t bet on EU treaty change 31 Mar 2014 Wolfgang Schaeuble and George Osborne, the German and UK finance ministers, want European treaties redrafted to shore up the euro zone and keep Britain in the EU. But just because they want this, doesn’t mean it will happen – not least because treaty change isn’t needed.
Triple defence will shield Japan from tax burden 31 Mar 2014 The bump in the country’s sales tax on April 1 is threatening growth. But fiscal policy that pumps extra revenue back into the economy and a revival in investor optimism over deregulation can prevent a deflationary funk. If those tactics fail, there is always the Bank of Japan.
China developers could pull economy into a hole 31 Mar 2014 The recent default of a Ningbo group highlights the risks of a property bust. As sales slow, homebuilders are scrabbling for cash, pushing out completion dates and luring buyers with gold ingots. Real estate still holds the key to China’s growth. A bailout may be unavoidable.
U.S. LNG exports set for boost from Ukraine 28 Mar 2014 Though liquefying America’s plentiful gas for export makes business and economic sense, approvals are enmeshed in politics. U.S. gas wouldn’t reach Europe for years, but the energy implications of Kiev’s standoff with Moscow provide cover for lawmakers to give projects the nod.
Data realism conveniently saves Argentina $3.5 bln 28 Mar 2014 Last year’s growth was 3 pct officially, against expectations of a suspiciously high 5 pct. That allowed Argentina to avoid a payout on GDP-linked bonds. But the move toward more a credible economic policy has broader, lasting benefits too, like helping YPF borrow money abroad.
Review: Moneyball flaws can be found in finance 28 Mar 2014 “The Sabermetric Revolution” debunks some of the numerical analysis craze sweeping baseball. Two Smith College professors expose how many of the stats rely on poor measurement, dodgy theory and small data sets. Even good metrics quickly get arbitraged. Just like on Wall Street.