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.
German politics contain tail risk for Europe 27 Nov 2013 Having negotiated a coalition treaty with Angela Merkel, Germany’s Social Democrats now face the harder job of selling the deal to a sceptical party base, which has the last word in an upcoming vote. A “nein” is unlikely, but possible – and would cause political havoc in Europe.
Cameron’s fear of migrants will harm UK economy 27 Nov 2013 The British premier’s restrictions on visitors from Eastern Europe betray a fear of losing votes to the UK Independence Party. But clamping down on immigration is leading to policy inconsistency. It harms British business and risks reducing earnings from tourism and education.
Give thanks for the pope’s anti-free market views 27 Nov 2013 Wall Street bigwigs often lean economically right and socially left. Pope Francis takes the opposite stance. He might like the relatively uncommercialized Thanksgiving holiday. And over turkey, America’s rich might ponder a financial system that “rules rather than serves.”
New U.S. mortgage supremo set to be step backwards 26 Nov 2013 Congressman Mel Watt is President Barack Obama’s pick to be Fannie Mae and Freddie Mac’s new regulatory overlord. Last week’s Senate rule change makes him a shoo-in. But with no experience, clear political bias and campaign cash from both companies, he’s a bad choice all round.
Scots secession opens bank resolution can of worms 26 Nov 2013 Supporters of an independent Scotland envisage a sterling area where financial regulators in Edinburgh and London act in tandem. But resolving a crisis would only be possible with mutual trust. Cross-border regulation all around the world is becoming less collegiate, not more.
Question for dealmakers: what would China do? 26 Nov 2013 Microsoft’s 5.4 billion euro offer for handset maker Nokia met unexpected opposition from workers in Guangdong. With spotty legal protection, the easiest option is just to pay up. The result may be to push up the cost of deals, even where neither buyer nor seller is Chinese.
Thailand’s biggest economic risk is politics 26 Nov 2013 Growing protests in Bangkok have again exposed the country’s deep-rooted divisions. Though the economy is able to cope with higher U.S. interest rates, it needs spending and investment to sustain growth. Political upheaval threatens to derail confidence both at home and abroad.
Moment of truth looms for Britain’s payday lenders 25 Nov 2013 Britain will cap the rates Wonga and rivals can charge borrowers for short-term loans. At present, annualised rates can top 5,000 pct. Payday lenders argue that reflects default risk; regulators worry about limited competition. What happens next should show who’s right.
Iran deal offers the world a ray of hope 25 Nov 2013 Turning the accord to curb nuclear activities into a lasting solution won’t be easy, but diplomatic goodwill makes it harder to go backwards. Reintegrating Iran into the global economy would have profound consequences. For now, the agreement reduces geopolitical risk.