Lower inflation could bring sterling down 25 Mar 2014 The British inflation rate is now comfortably below the Bank of England’s target, and the disinflationary trend is likely to continue for now. That will push back expectations for a UK interest rate rise, while a U.S. increase looks closer. The pound could slide.
Berlin’s housing boom has lessons for London 25 Mar 2014 The German central bank says Berlin’s property prices have risen 25 pct above fair value. But this mini-bubble is unlikely to expand to London proportions. Lending standards make speculation expensive, building is increasing sharply and the Bundesbank is on the case.
Rich world exports its way to trouble 25 Mar 2014 OECD countries are free-riding on world demand. Net exports by these 34 economies have been unusually high for two years. The strategy is both selfish and self-defeating. It has created an illusion of growth in rich nations, which an emerging market slump could now destroy.
Piketty cult is a danger for his cause 24 Mar 2014 A gloomy new book on capitalism ends with a call for higher taxes on the rich. Sympathy for Thomas Piketty’s reasonable conclusion is feeding outsized praise for a half-baked economic analysis. Ultimately his confused arguments may weaken the case for pay restraint.
Elusive U.S. manufacturing boom is just delayed 24 Mar 2014 Job growth in the sector of just 5 pct since 2010 hardly counts as a renaissance, even though U.S. firms pay only half as much for energy as European and Asian rivals. But the advantage looks set to continue for years. That leaves time for industrial activity and jobs to return.
Hugo Dixon: How EU can wean itself off Russian gas 24 Mar 2014 The Ukraine crisis has highlighted the EU’s dependency on Russian gas, although Moscow is even more dependent on exports. EU leaders want to intensify plans to diversify supplies. There will be a cost – either in cash or in the environmental impact. But it’s one worth bearing.
Deepening Thai crisis will worsen economy’s dive 24 Mar 2014 A court has voided the Feb. 2 poll that Prime Minister Yingluck Shinawatra most likely won. Soon, an anti-graft agency may demand her impeachment. The purge will worsen the power vacuum, and raise the risk of violence. Hopes of an economic revival later this year are fading.
Can regulating prostitution like a business work? 21 Mar 2014 A study sought by the Justice Department analyzed the $50 bln trade through the prism of eight U.S. cities. What emerges is an industry populated by mostly willing buyers and sellers, albeit with disgraceful management. While immoral, sex-for-hire might be less damaging if legal.
Review: A world of reasons for the dollar to crash 21 Mar 2014 In “The Death of Money” James Rickards sees a multitude of ways for the world monetary system to collapse. The greenback has dangerous adversaries in China and al Qaeda. But he lets the Fed and budget deficits off lightly. And some of his solutions would cause yet more havoc.
Obama’s new sanctions aim to expose crony Putinism 21 Mar 2014 The punitive steps against Russia are ostensibly just an escalated response to the Crimea annexation. But they allege a link between the Kremlin boss and Swiss oil trader Gunvor. Washington seems determined to reveal how Putin and his comrades amassed fortunes at public expense.
Google co-founder’s will may go Elon Musk’s way 20 Mar 2014 Larry Page is considering leaving his money to the Tesla and SpaceX boss. Musk doesn’t need the cash, of course, but his companies pursue green power, space colonization and other projects that Page cares about. It’s a reminder that doing well can be one path to doing good.
Ukraine defence more crucial than Crimean sanction 20 Mar 2014 Western leaders are still debating their response after Russia moved to annex the Black Sea territory. Their focus should instead be on preventing Vladimir Putin destabilising Ukraine. That requires tougher sanctions than previously discussed, and preparedness for economic war.
Market spared shame in gilt-rigging fiasco 20 Mar 2014 An ex-Credit Suisse trader has been fined by UK regulators for manipulating gilts during QE auctions. The Bank of England adds soft target to its role of passive watchdog earned in the Libor scandal. The market, which blew the whistle, gets rare kudos for self-enforcement.
Yellen and Carney miss chance for hard reset 20 Mar 2014 Central bankers say they’re paying more attention to the financial cycle but old economic fixations persist. The ECB hasn’t started to regulate banks and Janet Yellen’s Fed sounds as oblivious as Ben Bernanke’s. There’s progress at the Bank of England, but much more to be done.
Fed’s D.C. neighbors also need its jobs dashboard 20 Mar 2014 The U.S. central bank ditched its 6.5 pct target for headline unemployment, but Janet Yellen stressed broader indicators like U-6, which adds discouraged and part-time workers. Monetary stimulus may help at the margin, but lawmakers can use the data to guide structural changes.
Confused Fed adds to emerging market muddle 20 Mar 2014 U.S. policymakers have sent a garbled message about their intention to raise interest rates. Increased uncertainty makes global bond and currency markets more volatile. That raises the risks for developing countries already battling with slower growth and sagging investor morale.
Valuing Tencent’s chat app remains an act of faith 20 Mar 2014 The Chinese web giant has finally shed some light on its popular messaging platform. Revenue figures show WeChat is morphing from an app into a business. But sparse details on costs and regulatory risks make future earnings anyone’s guess. Valuations are based largely on hope.
Indian government seeks to cash in on Modi rally 20 Mar 2014 The state hopes to partially offload stakes in 10 listed companies through an exchange-traded fund. If the offer succeeds, it will boost privatization proceeds. It would also allow the current government to benefit from market hopes that rival Narendra Modi will win the election.
Fed’s only useful guidance is for more stimulus 19 Mar 2014 The U.S. central bank has dropped its 6.5 pct jobless trigger for raising interest rates – a risk to its credibility. Moreover, the change in future outlook seems dictated by a bias toward long-term easy money. Janet Yellen’s Fed won’t be putting on the brakes any time soon.
UK’s political budget transfers from young to old 19 Mar 2014 The chancellor has given retirees freedom over their pension pots, among other perks for saving. He hopes to unleash spending, help growth and attract votes. But the growth bet is risky, and the budget did far less to help the young or address the UK’s housing shortage.