Fed’s court slapdown puts regulatory nous on spot 31 Jul 2013 Judge Richard Leon has ruled the watchdog’s 2011 cap on the $16 bln debit card business “utterly indefensible.” The Federal Reserve now carries the taint of both misreading the law and cozying up to banks. Harsh or not, it’s a position no regulator should risk putting itself in.
Boring U.S. growth is here, clear, get used to it 31 Jul 2013 Second-quarter GDP increased at a 1.7 pct rate, fed by 2.2 pct private-sector expansion even as government shrank. Global growth is robust, though America’s slice is smaller. The steady but unspectacular results could cool stocks while bringing the Fed closer to cutting stimulus.
ECB wrongly toys with transparency gimmick 31 Jul 2013 Two members of the central bank’s governing council want to publish meeting minutes. The road to hell is paved with this sort of good intention. Publication would constrain policy and turn the council into another political forum. As if the euro zone doesn’t have enough of them.
Edward Hadas: Detroit, decay and solidarity 31 Jul 2013 Who is my neighbour? That question is as relevant to the bankruptcy of Motown as the decline of the American car industry or incompetent city governments. If the suburbs lived up to their neighbourly responsibilities, Detroit would not be such a mess. It’s not too late.
Mongolia’s economic fairytale faces reality check 31 Jul 2013 The failure of its fifth-largest bank and delays to the development of a giant copper mine underscores the vulnerable foundations of the country’s boom. Weakness in emerging markets, and commodities, provide further tests. Yet greater economic realism may ultimately be welcome.
China index: Drinking, driving through a slowdown 31 Jul 2013 Demand for liquor, Audis and trucks helped take the edge off China’s slowdown in June. Despite Beijing’s curbs, strong home sales played a supporting role in lifting Breakingviews’ Tea Leaf Index. But exports put the brakes on, falling for the first time since January last year.
Obama’s corporate tax plan lacks solid foundation 30 Jul 2013 The U.S. president wants to end a congressional impasse by rewriting the tax code and using new proceeds to fix roads and bridges. Both ideas make sense; combining them doesn’t. Politically, it probably won’t work. Economically, better ways exist to fund infrastructure projects.
Gift coupons could sweeten Japan’s sales tax pill 30 Jul 2013 A plan to double the country’s consumption tax is crucial to convince bondholders that public debt won’t spiral out of control. But the increased levy risks undermining Japan’s economic revival. Shopping vouchers would make the shift more palatable to consumers.
Spain moves steadily towards a slow recovery 30 Jul 2013 GDP hardly shrank at all in the second quarter. A 0.1 percent decline signals the end of a two-year slump. But the next phase is likely to be stagnation. Sustainable strong growth requires more credit, stronger exports and a lasting cure for unemployment.
Shale trailblazer leaves a world awash with crude 29 Jul 2013 The fracking technique pioneered by George Mitchell, who died at 94, unleashed a torrent of U.S. oil and gas output and an environmental backlash. Controversy aside, Mitchell’s 17-year struggle to develop fracking offers a lesson in escaping the tyranny of quarterly reporting.
Paying old debts would set Peru on right track 29 Jul 2013 Peru’s 1970s land reform bonds have become cheap fodder for speculators. But as with U.S. revolutionary war debt and frozen Yugoslavian savings in the 1990s, a genuine effort to pay off creditors can earn a government valuable market confidence. Lima should try it.
ECB enters era when virtual tools do not suffice 29 Jul 2013 A year ago Mario Draghi’s mere pledge to save the euro prevented chaos. But his great bond-buying promise hasn’t delivered a sustainable recovery or restored true faith in peripheral debt. “Virtual” intervention has its limits. The ECB must use its other tools - or invent them.
Hugo Dixon: EU ripe for single-market push 29 Jul 2013 Deepening the single market would do a lot for the EU’s sagging competitiveness. Vested interests, especially in Germany and France, may be opposed. But a new push would help the euro periphery and could keep Britain in the EU - killing two birds with one stone.
China’s next reform: more central planning 26 Jul 2013 The central government wants to cut excess capacity in basic industries by telling 1,400 companies to shut factories. It has to overcome the free-market instincts of local governments and entrepreneurs. But if the plan works, China will be more efficient - and less polluted.
Exploiting the poor will remain a good business 26 Jul 2013 British “payday lenders” gouge feckless borrowers with four-digit interest rates. The new head of the Church of the England wants to take them on with compassionate community banks. Those institutions can do good, but not by being just slightly less rapacious than rivals.
India seeks diaspora bailout without strings 26 Jul 2013 For the fourth time in 22 years, India may ask its expats in other countries for a rescue loan. The practice has its uses. Jewish emigrants have been a cheaper source of financing for Israel than global bond markets. And lenders won’t demand IMF-type fiscal austerity.
Opening oil sector could spur other Mexico reforms 25 Jul 2013 The nation’s ban on foreign investment in crude is almost a sacred cow. Overturning it might boost output while creating momentum for fundamental change in the telecom and power industries as well. That could lead to faster economic growth and attract big money from abroad.
UK’s "operation credit bubble" ripe for rethink 25 Jul 2013 The government’s plan to subsidise high-risk mortgages is bad economics and foolish policy. A nascent economic recovery makes it look redundant. The reasonably strong GDP number provides an opportunity for an almost dignified retreat.
Merkel a collateral victim of U.S. spying scandal 25 Jul 2013 Widespread U.S. spying on German Internet and mobile-phone users is angering voters. Angela Merkel doesn’t seem to take the debate seriously. It’s unclear what she knew about possible German involvement. Her battered credibility could have electoral consequences.
Hooray! Euro zone economy is almost stagnant 25 Jul 2013 The latest numbers point to minuscule GDP growth, although the pace isn’t fast enough to curb unemployment or make a dent in fiscal deficits. Still, stability is far better than decline. And in rich, ageing and sluggish Europe, it may be as good as it gets.