Europe yields to reality on austerity 29 May 2013 The European Commission will give France, Spain and others time to hit hair-shirt deficit targets. A retreat was almost inevitable. Harsh austerity is senseless when investors are docile and voters are restless. The snag is that gentle markets will also ease pressure for reform.
Global trade surplus: proof of alien life? 29 May 2013 That’s one explanation for the finding that the world’s combined exports are worth much more than imports. If extra-terrestrials aren’t buying iPads, billions of dollars in capital must be crossing borders in the garb of trade. It’s another reason to be wary of official data.
Tea Leaf Index: China needs less shady stimulus 29 May 2013 Our index has slumped to the lowest level since August 2012. Then, a surge in “shadow bank” lending drove a property-led recovery. But real estate is already on a tear, and banks are now being reined in. Unless urbanization gets an extra push, recovery looks distant.
California surplus is a hidden gem for U.S. economy 28 May 2013 The one-time basket case expects a $1.1 billion surplus next year. Other states are climbing out of deep fiscal holes, too. It’s still unclear what each local government will do with its newfound riches. But their recovery means they won’t be such a drag on the U.S. economy.
Four-way Latam trade deal holds quadratic power 28 May 2013 Eliminating tariffs on most goods between Colombia, Mexico, Peru and Chile is a big step for the region. For one, it should expand a largely U.S.-centric export program to Asia. More broadly, greater cooperation may create bigger integrating forces for a fractured Latin America.
Even African laggards can hope to kickstart growth 28 May 2013 The war-torn DRC still needs World Bank help. But Ghana is tapping capital markets again, and nearby countries are close behind. One, Rwanda, shows how in favorable conditions even brief stability can open the door to financial investment. The DRC and others should pay heed.
Rumors of credit bubble only partially exaggerated 28 May 2013 Some risky forms of debt have made a dramatic comeback, but few investors seem panicked that another credit crisis is about to erupt. Breakingviews offers its own bubble-meter for the credit market. The reading: frothy, but not yet in the danger zone.
Europe rightly throws shade on solar tariffs plan 28 May 2013 Why would Germany and other EU countries reject punitive tariffs on Chinese solar panel makers? After all, they are the ones who suffer. But European companies in other industries producing in China have more to lose. Fairness may not prevail, but rationality should.
How capital controls are prolonging Cypriots’ pain 27 May 2013 After March’s brutal haircut on bank deposits, the island state’s economy will shrink this year whatever happens. But punitive controls on Cypriots’ access to their own money are making things worse. Efforts to stop the rot clash with the need to avoid financial instability.
HK art boom rests on sketchy foundations 27 May 2013 The city’s blockbuster art fair showed it has the infrastructure and location to draw crowds of rich Asian buyers. But Hong Kong also benefits from other drivers, like cheap money and the financial controls stunting mainland China’s own art scene. Those look less sustainable.
German carmakers should beef up R&D, not lobbying 27 May 2013 The country’s manufacturers are fighting tougher European emission guidelines. The attack may serve short-term profit but is misguided from a broader perspective. Rather than lobbying for the status quo, the industry should invest more in low-emission mobility.
Hugo Dixon: Why Draghi likes London 27 May 2013 The ECB President said last week that Europe needs a more European UK as much as the UK needs a more British Europe. Draghi is a man of the markets and, as such, is sympathetic to the British way of doing things. No wonder he’d prefer Britain to get stuck in than opt out.
Frackers ignore German beer angst at their peril 24 May 2013 Germany’s brewers want to make fracking verboten. In the U.S., the gas drilling technique’s economic benefits trump environmental concerns. Whether it’s the British countryside or German lager, threats to cultural touchstones will hold back a similar boom in Europe.
Global inflation slide stirs the bogeyman 24 May 2013 In theory, inflation should have picked up when central banks cranked up the printing presses. Instead, it’s slowing down. In the U.S., it’s nearly 1 percentage point below target. Policymakers now have to start worrying about their worst enemy – deflation.
Soccer success mirrors Germany’s secret strengths 24 May 2013 For the first time ever, both teams in Europe’s biggest championship will be German. In 2000, the country was the sick man of the pitch. The sport’s resurgence, like the economic renaissance, relied on the social market economy and the ability to push through structural reforms.
Microsoft stages nebulous Chinese comeback 24 May 2013 The software titan has for years been stuck in a piracy trap in China - many use its products, and few pay. Cloud-based services like Windows Azure are less prone to misuse. This time there are new problems: fierce competition, and politicians that favour domestic rivals.
The Great Stagnation spawns Great Confusion 23 May 2013 After years of slow growth and ineffective policy responses, experts are stumped and investors are jittery. Bernanke’s two-sided talk and the Japanese market’s exaggerated response were all too typical. Barring recovery, crisis or revolution, there will be much more of the same.
Slovenia can delay its bailout for another year 23 May 2013 Ljubljana’s ambitious privatisation plan, still-low borrowing costs and upcoming “bad bank” will ease calls for external help this year. But Slovenia’s fragile politics, weak banks and deteriorating finances, if not fixed, will force it into a bailout in 2014.
Jonathan needs good luck to keep Nigeria moving 23 May 2013 The budget is under control, bad banks are being sold, the sovereign wealth fund opens soon and growth is over 6 pct. But a rebellion could hinder President Goodluck Jonathan’s progress. Combining careful anti-insurgent activity with solid economic management is a tall order.
Blame Japan’s debt on companies, not the state 23 May 2013 Perennial budget deficits have helped to offset corporate deleveraging. That explains why public debt is so high. If Prime Minister Abe’s policies revive private investment, the government’s track record suggests it will tighten its belt by raising taxes. Tokyo won’t go bust.