Polls give strife-hit Pakistan a shot at stability 10 May 2013 Investors will discount the pre-election rhetoric: no party explains how a broke government can spend more on welfare and infrastructure. Still, by empowering elected leaders, the May 11 election may offer a ray of hope to a nation battling Taliban and sectarian violence.
Three-digit yen no longer a one-way bet 9 May 2013 The Bank of Japan’s money-printing promise has pushed the currency above 100 to the U.S. dollar for the first time since 2009. Prime Minister Abe’s radical plans point to further depreciation. But concerns about import prices and currency wars will counter any prolonged slide.
U.S. flops at collecting fines and paying them out 9 May 2013 Federal agencies corral only a small fraction of the penalties they levy. Foreclosure-abuse settlements with banks show they’re just as bad at getting lawsuit proceeds to victims. Government glitches can be expected. But such widespread incompetence only encourages scofflaws.
EU needs a swift and lasting unemployment cure 9 May 2013 High joblessness rates are unacceptable but not irreversible. Governments should get serious. Tackle political obstacles, reform job markets, improve education and incentivise hiring. The EU can help by offering investment, structural funds and job guarantees for the young.
America’s consumer protector needs finance lesson 9 May 2013 Elizabeth Warren wants next year’s student-loan rate to match what the Fed charges banks. That ignores the two assets’ differing credit risks. It also sets students up for an adjustable-rate shock if and when the cost goes up. That’s surely not the outcome Senator Warren wants.
India’s bickering lawmakers test investors’ faith 9 May 2013 A net $12 billion of foreign cash has poured into Indian stocks this year on the hope the government will keep its pledge to revive growth. But lawmakers refused to pass key economic bills. The legislative impasse, which will worsen as polls draw nearer, could prompt a reversal.
Stop with the cult of Keynes 8 May 2013 One or two of the great British economist’s ideas are germane to the current policy debate. But too many followers, and opponents, try to second guess his opinions and apply them to the present day. Some even worry about Keynes’ sexual preferences. Times have changed. Get over him.
Edward Hadas: Rana Plaza and union labels 8 May 2013 Disasters such as the 900 plus deaths at a Bangladeshi clothing factory are inevitable when a shared sense of responsibility does not restrain bargain-hungry consumers and business-desperate suppliers. The U.S. garment trade was cleaned up. It can be done again, globally.
Portugal marks triumph of Draghi bluff 8 May 2013 Lisbon’s first 10-year bond since the country’s bailout makes ECB bond buying possible - but less likely. Mario Draghi’s promise to intervene has tamed markets, and central banks worldwide are forcing investors to take on risk. That virtuous circle has one weak link: politics.
Bitter austerity-stimulus debate hides consensus 8 May 2013 Even fans of spending cuts tend to accept “automatic stabilisers” that lead to higher borrowing in a recession. And few deficit-lovers think government spending should be unlimited. The supposed controversy is actually narrow and sterile. There are better things to argue about.
Record aircraft orders point to global growth bump 8 May 2013 When airlines embark on a frenzy of expansion, economic slowdown tends to follow. That’s the conclusion implied by Breakingviews’ study of historical data. If the relationship holds, recent big orders by Asian airlines suggest rising risks of turbulence in the economy next year.
UK minus EU is another loser from Lawson 8 May 2013 Nigel Lawson has done it again. The chancellor responsible for a housing bubble that left the economy struggling for half a decade now recommends an EU exit. But leaving the EU doesn’t do anything at all to help the UK in Asia. It will simply repel multinationals and isolate the UK.
Deterring short-term bank debt has long-term logic 7 May 2013 Fed Governor Daniel Tarullo reckons U.S. lenders relying more heavily on funding that can be withdrawn quickly should be forced to hold more capital. The linkage would layer on regulatory complexity, but also practical nuance. A disincentive on hot money could make banks safer.
Hong Kong dockers’ pay sets tone for future strife 7 May 2013 Port workers have ended a month-long strike and accepted a 9.8 pct pay rise - half their original demand. Yet the conflict highlighted Hong Kong’s growing inequality and rising living costs. As China’s economy slows and shifts, dockers and employers will be increasingly at odds.
Kenyan mobile banking innovation is hard to export 7 May 2013 Vodafone’s Indian arm is launching a local version of the service that has been a hit in Kenya. The government’s push to broaden access to banking services means the plan is well-timed. But financial regulations and fierce competition stand in the way of widespread adoption.
NAFTA veteran is trade-friendly choice to run WTO 6 May 2013 The two men vying to replace Pascal Lamy are both Latin American. But Roberto Azevedo has spent 15 years fighting Brazil’s protectionist corner, while Mexican Herminio Blanco negotiated NAFTA and has 13 years of private sector experience. He looks the likelier free-trader.
Malaysia poll offers only short-term relief 6 May 2013 The ruling coalition managed to cling to power in the country’s general election. That reduces the risk of near-term policy reversals. But the poll also showed a widening racial divide, which doesn’t bode well for the economy. Investors will be more relieved than happy.
Hugo Dixon: How to respond to UKIP’s surge 6 May 2013 Britain’s Conservative party will be tempted to move to the right on immigration and Europe to prevent more defections to the UK Independence Party after last week’s local elections. Business should urge it to stay in the centre.
The private sector comes to U.S. economy’s rescue 3 May 2013 Enterprises added 176,000 jobs in April, and the private sector grew by 4 pct in the first quarter. Higher payroll taxes, tight state budgets and sequestration downsizing aren’t preventing employment gains. America’s form of austerity by stealth looks to be working.
Healthcare study reveals risks of blind spending 3 May 2013 The trillions of dollars America plans for insuring the poor may not improve health, new research shows. The study’s merits aside, its scrutiny of Medicaid costs and benefits offers a model for making policy. Most programs would profit from a thorough look before Congress leaps.