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long-term logic 7 May 2013 Fed Governor Daniel Tarullo reckons U.S. lenders relying more heavily on funding that can be withdrawn quickly should be forced to hold more capital.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.
Review: Errors key to global warming trajectory 3 May 2013 Rupert Darwall’s book shows politicians locked us into global warming belief before scientists had evidence for it. Then a self-perpetuating U.N. bureaucracy and conflicted scientists manufactured evidence to order. The results have been toxic.
Ailing South Korea needs monetary remedy 3 May 2013 A weak Japanese yen is hurting Korean firms’ earnings, while anaemic global demand crimps export volumes. Debt-laden households hold out little hope for the economy. The central bank’s reluctance to cut interest rates and head off deflation risk may turn out to be a blunder.
President’s pragmatism paying dividends for Peru 2 May 2013 Ollanta Humala’s social programs and support for indigenous peoples please his supporters, but he has also welcomed foreign investment and may be rolling back an expensive mining consultation law. The strategy has critics, but could keep Peru on an enviable growth trajectory.
ECB sticks to caution with minimum rate cut 2 May 2013 The euro zone’s central bank did as little as expected, a 25 basis point drop in its main rate, to 0.5 percent. A lack of unanimity suggests it won’t cut more soon, or start any bold initiatives. The ECB looks too divided to wage a tougher fight against a sinking economy.
Unsure voters could dim lure of Malaysian assets 2 May 2013 A less than decisive win for either of the two coalitions contesting the May 5 poll could worsen racial discord and damage the economy. A government unsure of survival may also be tempted to dump fiscal prudence to buy popularity. Malaysian stocks and bonds could suffer.
Fed running risk of re-inflating bubbles 1 May 2013 The U.S. central bank is sticking with loose monetary policy and hefty asset purchases. But with stocks at record levels and home prices up 9.4 pct in a year, asset values are heading higher even if growth isn’t. The Fed needs to counter bubbles as well as economic sluggishness.
U.S. debt bosses don’t need no stinkin’ Libor 1 May 2013 The Treasury wants to sell floating-rate debt, but the most common benchmark is discredited. Uncle Sam will use a new one based on government bill auctions. Treasuries are already the world’s touchstone for fixed-rate bonds. The new yardstick could credibly chip away at Libor.
Former junk bond king has more leverage than ever 1 May 2013 Three decades after Michael Milken mastered raising money he now trades mostly in intellectual capital. This year, the likes of Carlos Slim and Tony Blair joined old friends at his annual Beverly Hills jamboree. These growing networks are a better sort of crony capitalism.
Edward Hadas: In favour of much less trading 1 May 2013 When the Chicago options exchange closed for three hours, traders were unnerved. No one else was, and a rationing of liquidity may bring economic benefits. Perhaps it is time to extend traders’ millisecond-long holidays and revert to once-daily price fixings for all markets.
Why China’s “Minsky moment” may be a long way off 1 May 2013 The country’s rising debt and slowing economy point to the kind of financial meltdown theorized by economist Hyman Minsky. But China’s closed, state-controlled system can delay such market panics. The bigger challenge is managing social tensions arising from slower growth.
Euro zone stuck in economic suspended animation 30 Apr 2013 Inflation is surprisingly low, unemployment is depressingly high and GDP remains frustratingly flat. There are ways to make the economy more dynamic, but they are either too revolutionary to be politically acceptable or too slow to matter for years. Expect more of the same.
Germany’s Spanish initiative sends right message 30 Apr 2013 Germany says it has a plan to help fund Spain’s small and mid-sized businesses. This won’t lead to massive north-south fiscal transfers. But a signal from Berlin that Madrid has done its reform homework would be a powerful message to investors - and stragglers like Italy.