India in depth: A reformist election manifesto 21 Jan 2014 The 120 million first-time voters who will decide the outcome of this year’s polls won’t be swayed by slogans. They want real opportunities and an end to pervasive economic gloom. What kind of policies will deliver the goods? Here are eight ideas all parties should embrace.
Bond rally stretches luck of the Irish 20 Jan 2014 Ireland is less risky than the United States, say bond markets. That’s a stunning performance for a country barely out of bailout – and it looks like a throwback to the pre-crisis era when credit risk was ignored. It may not last. And it dents Ireland’s hopes for EU debt relief.
Money market starts to tell ECB to ease 20 Jan 2014 There have been some sudden odd jumps in rates in the euro zone short-term interbank market. A few scattered spikes won’t bother the central bank, but too much tension would boost borrowing costs in the real economy. To counter that, the ECB would be tempted to loosen policy.
Hugo Dixon: Renzi-Berlusconi pact gives Italy hope 20 Jan 2014 A constitutional reform deal between the leader of Italy’s largest party and the leader of the opposition addresses one of the country’s biggest problems: its ungovernability. Now Renzi needs to put his energy behind key economic reforms, especially jobs and public spending.
China starts new year with old “hot money” problem 20 Jan 2014 Growth of 7.7 percent beat the target in 2013, but is also an invitation to speculators. An appreciating currency, the proliferation of new investment types and low rates elsewhere mean China’s appeal is strong. The mystery is where the cash actually ends up.
Wealth Addicts Anonymous? It misses the point 20 Jan 2014 Ex-trader Sam Polk says that money-sucking finance types should meet up to get a grip on their bonus addiction. If such support groups are needed, meetings should start with a firm lecture on why greed is not good. But there’s a better way – common-sense pay regimes.
Quitting China is all about knowing how to go 20 Jan 2014 Foreign businesses used to be desperate to get into the People’s Republic. Google’s departure in 2010 was a shock. Now, as easy growth vanishes, leaving China is becoming less unusual. While some have kept a foot in the door, others are making a show of slamming it.
Davos briefing offers scary set of global risks 17 Jan 2014 The World Economic Forum’s annual risk report gives the global elite plenty to worry about at next week’s shindig. It highlights issues like inequality and global warming, but also low-probability, high-impact dangers like another financial bust. That’s still a big concern.
China trust default is least painful option 17 Jan 2014 A troubled product called “Credit Equals Gold” is days from defaulting. If it fails a few rich investors will lose money and some risky borrowers will face higher rates. Bailing it out would imply the authorities stand behind the shakiest investments. It’s not a difficult choice.
Flawed Thai rice subsidy rebounds on government 17 Jan 2014 The country’s anti-graft agency is examining losses caused by buying rice from farmers at inflated prices. If charges are brought against Yingluck Shinawatra, the embattled leader’s tenuous hold on power will weaken further. But scrapping the handout will erode her support base.
Gas deal means Brazil can also be seen from Alaska 16 Jan 2014 Sarah Palin’s gubernatorial successor has signed a deal for the state to take an equity stake in a $45 bln LNG project. The Last Frontier seems the last place likely to get entangled Latam-style with Exxon, BP and others. Oil production is falling, though, leaving fewer options.
Euro QE puzzle misses French and Italian pieces 16 Jan 2014 Mario Draghi’s dovish stance has raised hopes the European Central Bank could launch asset purchases. Europe’s fragmented money markets and weak lending mean the payoff could be significant. But it can only be done if France and Italy embrace reform.
Migration is an economic positive 16 Jan 2014 Immigrants to rich countries have little long-term effect on wages, unemployment or government finances. At worst, migration exposes defective economic structures. Overall it also helps poor sending lands, which gain habits and capital from destination countries.
Facts belie tale of selfish German export mania 16 Jan 2014 Germany is often chastised for living at the expense of others. Stunted domestic demand and a misguided export obsession are said to threaten global stability. The reality is different, as the latest GDP numbers confirm. Consumption is thriving, while trade held back growth.
Hong Kong can’t build away high house prices 16 Jan 2014 The government is freeing up land and loosening planning laws to boost supply and make housing more affordable. But new construction will struggle to keep up with demand. Until interest rates rise or capital flows from China ease, Hong Kong property prices will remain stretched.
Unemployment insurance wrong tool for tougher task 15 Jan 2014 Emergency relief made sense in the midst of the financial crisis. But a rising number of long-term jobless requires another approach. Training and incentives to relocate might better address structural workforce issues. They won’t come cheaply, but the investment could pay off.
Ambitions exceed delivery in Europe market reform 15 Jan 2014 The aims of the revamp of regional market trading rules are laudable: more transparency and greater investor protection. Some of the changes are good. Others, notably caps on off-exchange share trading, may prove heavy-handed. But it’s not too late to refine the implementation.
U.S. natural gas price finally reaches safety zone 15 Jan 2014 At near $4.50 per mln Btu, drillers can turn a profit on gas after several painful years. Cold weather has helped push up the price, but with demand rising it’s more than a blip. Meanwhile, production costs have come down. The likes of Exxon and Chesapeake can breathe easier.
Hollande finally gets it. Can he do it? 15 Jan 2014 The French president launched a pro-business plan to restore profits and create jobs while cutting public spending. Acknowledging that France needs more supply-side reforms is sound. Whether Hollande has the political strength to implement the new policies is another matter.
Another reason to be gloomy about emerging markets 15 Jan 2014 Workers in developing economies aren’t cranking up output as much as before. Fading productivity growth will put a brake on wages and consumption, and slow emerging markets’ quest to become less reliant on spenders in rich nations. Investors are right to be pessimistic.