Banks’ taper rehearsal gives emerging markets hope 9 Dec 2013 Global banks’ loans to developing countries fell by just 2 percent in the second quarter. Exclude Brazil, Russia, India and Mexico and credit actually rose. Lenders’ early calm response suggests the withdrawal of the Federal Reserve’s cash glut may be less painful than feared.
Thai poll gives jittery investors a short-term fix 9 Dec 2013 Calling an election helps Prime Minister Yingluck Shinawatra break the political deadlock. But it won’t solve Thailand’s deep divisions. Investors who turned optimistic after the country found a modicum of stability in 2011 should remember its fading long-term prospects.
U.S. economic malaise may at last be wearing off 6 Dec 2013 America added 203,000 jobs last month and the unemployment rate dropped to 7 pct, adding to strong data like the third-quarter GDP growth rate of 3.6 pct. Reduced labor participation and sluggish wages are headwinds to a full-on recovery. But even a little normality is a relief.
Benefits of being "G-SIFI" seem to outweigh costs 6 Dec 2013 Since regulators published a list of systemic institutions in 2011, the banks concerned have boosted capital and tamped down their balance sheets. But smaller lenders, particularly in Europe, have done the same. The “too big to fail” club turns out not to be too harsh after all.
Cheap money wrong cure for West’s long-term stasis 6 Dec 2013 Larry Summers seems to think years of negative real interest rates can end “secular stagnation”. That’s too optimistic. If the torpor is demographic and technological, it’s probably incurable. In that case, more money-printing will only bring new financial messes.
U.S. trading overseer goes a little rogue 5 Dec 2013 Wall Street firms are suing the CFTC for bypassing standard practice when it issued tough guidance last month on overseas buying and selling of derivatives. U.S. dealers may suffer as a result. Absent the usual analyses and consultation, it’s hard for the agency to make its case.
Osborne lets UK recovery ease austerity’s pain 5 Dec 2013 Stern responsibility remains the British Chancellor’s watchword. With jobs increasing and GDP rising faster than expected, it’s easy to resist calls to abandon his austere course. Small shifts, like tax cuts for young workers and a new attack on tax dodges, are useful ornaments.
Healthy U.S. GDP growth more mirage than reality 5 Dec 2013 Revising the Q3 estimate up to 3.6 pct sounds promising, but much of the gain came from inventory buildup. That suggests a return to sluggish expansion this quarter. Fueling sustainable growth requires more jobs and less Washington interference for the wealth effect to spread.
China anti-bitcoin ruling will shake believers 5 Dec 2013 Beijing won’t allow currency competition. The central bank has barred financial institutions from trading the pseudo-money, while reining in anonymous users. Bitcoin can still be traded, but the authorities are wary. The virtual asset has just lost a lot of its speculative appeal.
Japan’s yen glut is failing to lift global bonds 5 Dec 2013 With the central bank printing money at home, Japanese investors were supposed to be big buyers of global bonds. Instead they have been net sellers this year. While that’s changing, a yen deluge looks unlikely as long as investors remain afraid of the Federal Reserve’s next move.
Forget museum art – Banksy might help Detroit 4 Dec 2013 Christie’s says artworks owned by the bankrupt Motor City could fetch up to $866 mln. That’s nearly 10 pct of unsecured creditors’ claims. But there’s no need to stop there. With 78,000 abandoned buildings and a Banksy tag worth $1 mln or more, graffiti could save the day.
Edward Hadas: The pope takes on economics’ pro-rich bias 4 Dec 2013 Economists generally set out to be value-neutral, but many of their theories are implicitly pro-rich, or at least not pro-poor. Pope Francis is no economist, but his teachings on poverty could improve the profession. Politicians and billionaires could also benefit.
StanChart adds exuberance to offshore yuan race 4 Dec 2013 The UK lender has launched London’s first clearing system for the Chinese currency. It’s good for China’s global ambitions, though not for StanChart’s short-term profitability. Market share and political favour may matter more than immediate financial logic.
Greece on arduous journey back to markets 4 Dec 2013 After years living off EU and IMF bailouts, the country aims at tapping private creditors next year. Brutal austerity means the Greek budget has a primary balance, while the debt load remains. Haircutting official creditors would square the circle – yet is politically toxic.
Westfield shops for premium with $28 bln carve-up 4 Dec 2013 The Australian shopping mall giant is separating its international and local assets in a cash-and-share deal. The cleaner structure may allow Westfield to command a higher valuation like its U.S. peers. To lure new investors, it might need an overseas listing.
Detroit case revs up bankruptcy option for others 3 Dec 2013 Court approval of Motown’s filing may force bondholders, insurers and pensioners to share restructuring pain. The ruling also confirms bankruptcy as a credible choice for even the biggest cities. That could give shaky municipalities a needed kick to get their finances in order.
Brazil’s GDP decline is fiscal wake-up call 3 Dec 2013 The economy shrank 0.5 pct in the third quarter. High interest rates and weak commodity prices are hitting growth. Though output rose 2.2 pct year-on-year, Dilma Rousseff’s public sector largesse is not a sustainable response. It’s a warning for emerging economies everywhere.
“Secular stagnation” lament revives wealth paradox 3 Dec 2013 Larry Summers has warned of long-term stasis in rich nations. If the former U.S. Treasury Secretary is right, emerging markets will need to invest more to end the savings glut causing the malaise. But that means confronting an old puzzle: why hasn’t capitalism solved the problem?
China’s market size gives it trust-busting clout 3 Dec 2013 One of the country’s competition watchdogs is investigating Qualcomm. Though details are scarce, a probe is likely to involve the mobile phone chipmaker’s approach to licensing technology. China’s big and fast-growing market gives it extra heft when going after foreign companies.
Canadian economy far from loony 2 Dec 2013 GDP expanded at a 2.7 pct rate in Q3, while stocks are up 8 pct in 2013. Housing may be set for a downturn and softer commodity prices don’t help. But its well-run banking system and moderate money supply growth mean Canada remains better crisis-proofed than most big economies.