Edward Hadas: How can a plane vanish in a small world? 19 Mar 2014 The information vacuum around flight MH370 is as unusual as it is disturbing. In the interconnected globalised economy, things usually work well. When they don’t, the causes are identified, and changes often follow to prevent recurrence. MH370 is, so far, the distressing exception.
Chinese gambling fever spreads beyond Macau 19 Mar 2014 Shares in Lippo jumped 36 percent after a consortium including the property group won approval to build a large-scale casino in Korea. The prospect of luring punters from Northern China explains the excitement. But just like in Macau, investors may be pushing their luck.
Bank of England goes for subtle shakeup 18 Mar 2014 The UK central bank has appointed an outsider to look after markets. Nemat Shafik’s challenge is to be close to traders, but not too cosy. Insider Spencer Dale will oversee financial stability. He’ll be most effective if he emulates his free-thinking predecessor Andy Haldane.
Mystery bond shift doesn’t dent faith in dollar 18 Mar 2014 An unexplained $105 billion shrinkage in the Fed’s store of Treasuries held for other central banks caused no market ripples. That’s testimony to investors’ belief in the dollar’s reserve status. Even more remarkable: the world’s most liquid bond market still holds big secrets.
Real risk to emerging markets lies in real rates 18 Mar 2014 The end of the global cheap money era has pushed real interest rates sharply higher in developing nations. That will prompt companies to respond by paring back investment. The loss of demand will be bad news for a world economy still struggling to shake off long-term stagnation.
India in depth: A grim global economy awaits Modi 18 Mar 2014 If the opposition politician wins next month’s election, he will have to reckon with a slowing China, weak global demand and investor pessimism over emerging markets. The trio might turn out to be a more formidable foe for Narendra Modi than the sputtering domestic economy.
Ukraine rescue needs American Tea Party signoff 17 Mar 2014 Talk about irony. Obama will be the cheerleader for a $15 bln fund bailout of the embattled state. Yet the Republican right is still blocking an IMF overhaul agreed in 2010 giving extra power to the likes of China and Brazil. To get them to help Ukraine, the GOP has to budge.
Smartest U.S. export to China could be Max Baucus 17 Mar 2014 The new ambassador to Beijing arrives just as Uncle Sam seems to have lost interest in his biggest trade partner. China know-how is scarce in the White House; key seats sit empty. But Baucus could be an asset by helping cement new trade pacts that leave both sides better off.
EU’s Crimea sanctions only good as opening gambit 17 Mar 2014 Vladimir Putin won’t care much about the travel bans and asset freezes imposed by the EU on 21 Russian individuals. But these sanctions only make sense as a first-step response to Moscow’s actions in Ukraine. It’s now up to EU leaders to get serious about retribution.
Hugo Dixon: Cameron lowers Brexit risk 17 Mar 2014 The UK premier’s wish list for EU reform is pretty moderate. Given that he will campaign to stay in the EU if he achieves his goals, the risks of Britain exiting Europe – already cut after the opposition virtually ruled out an In/Out referendum – have fallen further.
UK budget set to focus on all the wrong areas 17 Mar 2014 The coalition is set to extend housing subsidies and is likely to tinker with tax thresholds. But sorting the UK economy’s biggest issue – anaemic productivity – requires business investment. The government could do more, if it admitted there was more spare productive capacity.
Market adjustment is not over yet 17 Mar 2014 Gold’s rise to a six-month high indicates rising fear and coincides with a retreat to assets seen as safe, including the yen and bonds. Emerging market woes may now hit developed markets more keenly. But the Fed seems intent on tapering, which will eventually be bad for gold too.
Hugo Dixon: Europe should give Cyprus a hand 17 Mar 2014 One year after a shock plan to raid bank deposits, capital controls remain in place. The economy hasn’t shrunk as much as feared, but the recession is still deep. The euro zone should help – principally by enabling the lifting of capital controls and the creation of a bad bank.
Review: An unreliable guide to inequality 14 Mar 2014 Thomas Piketty’s chunky book on “Capital in the 21st Century” has been widely hailed. But his key equation is faulty, his sociology crude and his historical analysis doubtful. Still, there are good ideas, and the big policy suggestion – a progressive tax on capital – is sensible.
Rouble hard to defend against Putin’s attacks 14 Mar 2014 The takeover of Crimea has sent the currency down, along with Moscow stock markets. The president’s erratic moves are hurting an already slowing economy, even before Western sanctions isolate Moscow. Soon even the central bank will find it hard to defend the rouble against Putin.
Spain’s economic growth is robust – yet fragile 14 Mar 2014 After seven lean years, the Spanish economy is doing better than expected and looks set to beat current growth estimates. Yet fault lines remain, and show the need for both serious reforms and a sensible fiscal policy.
Puerto Rico bond hopes may be self-fulfilling 13 Mar 2014 Investors’ warm reception for this week’s $3.5 bln issue looks strange given the island’s junk rating and rocky finances, not to mention that existing bonds trade at a big discount. But the issue funds deficits long-term and keeps the market open, giving Puerto Rico a lifeline.
ECB needs cunning plan to join currency wars 13 Mar 2014 The euro is at two-and-a-half-year highs, a strength that could drive ultra-low inflation even lower. In principle, the European Central Bank is squeamish about blatantly targeting a weaker euro. But it need have no qualms about picking policy tools that maximise currency damage.
Central bank transparency is overrated 13 Mar 2014 The Bank of England destroys recordings of its rate-setting meetings. That’s a blow to future historians, and frustrates traders who mine information for profit. But in central banking, confidence is crucial. Too much candour about fears and hopes can be counterproductive.
Scots’ devolution makes more sense than secession 12 Mar 2014 The revelation of an 8.3 pct fiscal deficit in 2012/13 is a reminder of how ropey an independent Scotland’s finances would be. Ex-Prime Minister Gordon Brown reckons that instead of betting the loch, Scots would be better off clinching back more powers for Edinburgh. He’s right.