India’s Common Man Party is investors’ frenemy 3 Jan 2014 After taking power in the state of Delhi, the new anti-corruption party is set to play spoiler in the 2014 general election. That makes seasoned politicians nervous, and investors wary. But voters’ willingness to put a premium on good governance is cause for optimism.
This summer’s blockbuster film could be Chinese 3 Jan 2014 Stonking box office returns at home mean China’s cinema operators are branching into film studios. Add in acquisitions of overseas theatre chains, and a Chinese-produced blockbuster on U.S. screens is coming soon – if China’s government can lay off the propaganda.
The chilling echoes of 1914, a century on 3 Jan 2014 A rerun of descent into global war is really rather unlikely. But some of the danger of 100 years ago is present today. Late 19th century increases in tariffs helped to create competing blocs. A similar multi-polar economic world is now emerging.
Past predictions should ensure one future result 2 Jan 2014 Alas, not all Breakingviews prognostications for 2013 panned out. Some were spot-on, others missed the mark. But the guiding philosophy for this annual attempt at agenda-setting financial foresight is to spark lively discussions. In that sense, the 2014 edition can deliver again.
Recovery will only increase inequality 2 Jan 2014 Growth is reviving thanks to massive fiscal and monetary stimulus. The benefits flow directly to property owners, but trickle down slowly to the unemployed. The losses for less well-off are permanent, and there has been little effort to reverse the wealth grab by the ultra-rich.
Small tech best placed to take on Big Brother 2 Jan 2014 The lesson from 2013: there are grievous flaws in security systems once thought virtually impenetrable. Companies and their data need better protection. With many big players compromised, small tech groups may step up and make a lucrative stand against surveillance.
Who packs the biggest power to surprise in 2014? 31 Dec 2013 Difficult jobs abound in the global economy, but so do low expectations. Getting it right could mint the legacies of downtrodden politicos like Dilma Rousseff and John Boehner. Equally, a few CEOs may defy the odds, such as the bosses at Deutsche or Microsoft. Herewith our list.
Markets face a year as tough as 1994 31 Dec 2013 The year ahead is likely to be a difficult one for global investors. Though the yields have risen, safe-haven bonds are overpriced. So are equities, which ran up this year in anticipation that 2014 would bring better economic data. Emerging markets are also likely to struggle.
Local audit highlights China’s debt dilemma 31 Dec 2013 Provinces and towns owed almost $3 trillion at the end of June, according to a long-awaited report. The state will now have to decide which borrowers to bail out, and which to cut loose. The broader conundrum is how vital increased lending is to China’s continued economic growth.
Scotland will reject independence 31 Dec 2013 The north British state will decide in September whether to secede from the United Kingdom. A thriving, home-ruled Scotland sounds great, but the economics look ropey. Moreover, secessionists have already surrendered monetary tools that could have made independence compelling.
Tokyo can shrug off censure for slumping yen 31 Dec 2013 South Korea and China are again complaining about Japan’s weak currency. But it’s hard to blame Tokyo. The Bank of Japan’s monetary policy has been unchanged since April. And while Japanese trade is almost balanced, Korea’s current account surplus remains embarrassingly large.
China index: Slowdown looks home-grown 31 Dec 2013 China’s economy decelerated further in November, according to Breakingviews’ alternative index. Lower truck sales, steel output and rail freight volumes suggest sluggish demand. House prices and pollution were up, but their contribution is a sign that growth is far from healthy.
Time for Larry and Sergey to invest in journalism? 30 Dec 2013 Amazon billionaire Jeff Bezos is buying the Washington Post and eBay founder Pierre Omidyar is funding a new reporting venture. But take a look at the numbers, and few have made their money at the expense of the fourth estate quite as obviously as the Google guys.
Dollar to give other currencies beating many want 30 Dec 2013 Currency market volatility will be pronounced in 2014. As the U.S. Fed cuts its asset purchases, the dollar looks set to climb from its current debased depths. The yen and the euro are keen to be beaten, emerging markets aren’t. The pound’s rise will rival the dollar’s.
Brinksmanship to worsen with U.S. midterm election 27 Dec 2013 Congressional contests will make extremism more appealing to lawmakers than compromise. That means more gridlock, in which President Obama’s healthcare reform gets more attention than economic policy. Worse, the GOP minority’s only real leverage is the threat of default.
Europe will court shutdown with new parliament 27 Dec 2013 Eurosceptics and fringe parties will make big gains in next year’s European Parliament elections. A U.S.-style deadlock is unlikely, but mainstream parties will have to compromise more, and passing laws will be harder. It will look more like the old-style Italian model.
Two cheers for Israel’s tri-state water deal 27 Dec 2013 Tel Aviv will share more with Jordan and Palestine. Such regional agreements are crucial where water is scarce. Properly irrigated farmland could boost Palestine’s economy by a fifth. Israel, though, is only giving up a token amount and remains in control. At least it’s a start.
China’s banks are coming – this time for real 27 Dec 2013 Overseas assets are growing as lenders chase the country’s corporate diaspora. Takeovers are a likely next step. Japan’s “follow-the-client” banking strategy in the 1980s ended badly, but red tape and lack of foreign funding should make China’s rise slower and more sustainable.
U.S. employers will bring more jobs back home 26 Dec 2013 The nation’s energy costs and wage growth are lower than in many other countries. Productivity’s higher, too. Not only does it make outsourcing to the likes of China less appealing. It may also herald a renaissance for American manufacturing.
American universities need lesson in capitalism 26 Dec 2013 Spiraling degree costs are an economic drag, with $1.2 trln of student debt and parents’ savings hit. Yet graduate income is falling. President Obama is pushing for better value for money. A few colleges are already showing how education can pay off for students and country.