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.
Ukraine’s European future needs space for Russia 2 Dec 2013 Demonstrators in Kiev want to boot out the president, who closed the door on a deal with the EU in order to stay close to Moscow. It’s not so easy. Ukraine is broke and its government has failed. It needs help now. And Europe hasn’t paid enough attention to Russia’s concerns.
Markets see only one shade of Mark Carney 2 Dec 2013 Sterling and gilt yields rose after the Bank of England governor said mortgage lending subsidies would end. Traders saw the move as a proto tightening. Maybe. But the BoE could equally be giving itself room to delay rate rises. Markets see black or white when the picture is grey.
The synthetic CDO returns humbled and tame 2 Dec 2013 Mere mention of the complex derivative induces ire and laughter for its role in the crisis and JPMorgan’s whale fail. Citi’s latest iteration of the CDO, though, is less of a monstrosity. It shows that while there’s no way to eradicate greed, buffers for it can at least be built.
BoE’s small-firm stimulus is blueprint for Draghi 2 Dec 2013 The European Central Bank is reportedly mulling cheap loans to banks to gee up lending. The newly tweaked UK Funding for Lending scheme shows this isn’t easy, and replicating it in the euro zone would be even tougher. But Europe’s businesses need a leg-up even more than the UK’s.
Hugo Dixon: Italy has two chances post-Berlusconi 2 Dec 2013 The first is that PM Enrico Letta will push through reforms now Silvio Berlusconi has been kicked out of parliament. If not, Matteo Renzi – who is expected to become the Democrats’ leader on Sunday – should force elections and show he is as radical in deed as he is in words.
Bangkok’s fiscal bias fans Thai political angst 2 Dec 2013 Political turmoil is at least partly a symptom of extreme inequality. About 70 percent of government spending goes to urban Bangkok; the rural north east gets just 6 percent despite having a third of the population. Any lasting solution must include improving the fiscal balance.
China index: Sober lending, spending slows growth 2 Dec 2013 Our alternative index shows China’s growth prospects at a four-month low. Lack-luster exports played a part. But the dip also reflected a healthy slow-down in new loans, sales of property and Audis, as well as a sharp fall in luxury liquor stocks.
Dutch downgrade is a lagging indicator 29 Nov 2013 The Netherlands’ loss of triple-A status stems from weaker growth. The economy is recovering slowly from a housing bust that has pulverised household finances. But property prices are bottoming, debt is low and reform is underway. Other euro zone members are bigger worries.
Carney can do more to curb mad UK house subsidies 28 Nov 2013 The Bank of England governor has rightly binned incentives for banks to pile into mortgage lending. Further focusing cheap central bank funding on small companies also makes sense. But Carney is still pulling his punches. He should demand changes to the UK’s Help to Buy scheme.
UK budget must deliver homes not bubbles 28 Nov 2013 George Osborne can boast that the UK economy is growing and the deficit is diminishing. But the recovery is too typically reliant on house price inflation. The chancellor’s budget update should aim for radical change: getting finance to work for house building, not house bubbles.
Edward Hadas: Bitcoin is a step back not forward 27 Nov 2013 The web currency delights right-wing, anti-government economists. But private-sector money is a fantasy. Currencies need political authority; money matters are naturally the state’s responsibility. Bitcoin’s appeal has a lot to do with governments being bad monetary managers.