Italian elections are complicated – and important 9 Jan 2013 February’s vote could determine Italy’s future, and affect broader euro zone policy. The country’s convoluted electoral system and unsettled political environment make a stable outcome far from certain.
Timing key for Qatar’s $2.5 bln lifeline to Egypt 9 Jan 2013 The aid package underscores the Gulf state’s support for the ruling Muslim Brotherhood. But it’s unclear when the funds were received. If the money came during the previous month, and has been spent, Egypt is in deep trouble. If it just arrived, sighs of relief are in order.
Tim Geithner wore more than firefighter’s hat well 8 Jan 2013 While part of the establishment that allowed the financial system to self-immolate, the departing Treasury secretary helped douse the flames effectively. While that should be his main legacy, Geithner also managed the role’s diverse duties in the toughest economic times.
Greece has started the long climb up 8 Jan 2013 An EU survey says the Greeks are the least pessimistic they’ve been in the last three years. That suggests Greece may finally be adjusting to life without many subsidies. A boom is not around the corner. But after a 19 percent GDP decline, there should be lots of room for growth.
Chuck Hagel is good choice for U.S. deficit hawks 8 Jan 2013 Obama’s pick for defense secretary mixes dovish foreign policy views - at least for a Republican - with budget-cutting fervor. The combination could actually slash Pentagon spending. Reducing it to the proportion of GDP seen in the late 1990s would save Uncle Sam $250 bln a year.
CDB highlights China’s dysfunctional finance 8 Jan 2013 China Development Bank raised $193 billion in 2012 to fuel an unusual mix of vendor financing, M&A lending and infrastructure loans. While it has a legitimate part to play in China’s growth, the policy bank’s habit of undercutting rival lenders smacks of capital misuse.
Fed quandary shows finance lost in economic space 7 Jan 2013 The U.S. central bank says it’s concerned about the economic costs of money-printing. That probably means inflation. They should worry more. Extraordinary policies have distorted asset prices. After providing misinformation for four years, markets risk becoming irrelevant.
Airport mess shows limits of German expertise 7 Jan 2013 Berlin has delayed the opening of its high-tech airport - for the fourth time. The fiasco is all too typical of Germany. Ossified local politics and a penchant for over-engineering have led to many botched infrastructure projects. The legend of German efficiency is exaggerated.
Japan comes dangerously late to currency war 7 Jan 2013 Trash-talk from the world’s third-largest economy has pushed the yen down some 12 percent since September. But Japan is a Johnny-come-lately to the global contest to weaken currencies to support growth. Opening another front at this point only makes the contest more dangerous.
Hugo Dixon: The EU speech Cameron should make 7 Jan 2013 The British PM will make a keynote speech about Europe later this month. He should emphasise the importance of maintaining Britain’s influence within a decentralised market-orientated EU rather than push for greater euro zone integration while retreating to the sidelines.
Egypt’s Brotherhood meets financial reality 7 Jan 2013 The fall of the pound creates inflationary pressure and capital controls underscore the shrinking of foreign reserves. Egypt’s ruling Brotherhood must finalise an unpopular deal with the IMF or risk a currency meltdown. Neither option is appealing ahead of elections.
India’s corporate governance cleanup is welcome 7 Jan 2013 A new law seeks to make it difficult for the same person to be both CEO and chairman. The regulator also wants to ensure listed companies have truly independent directors. The changes, which are tougher than some more advanced countries, will narrow India’s governance discount.
Freer transatlantic trade a worthy G8 goal 4 Jan 2013 British PM David Cameron wants the group to start work on an EU-U.S. free trade agreement. Global trade deals are nearly impossible and bilateral ones tangle world commerce. But a pact between the two Western blocs could set new standards while also boosting the world economy.
Iron ore market shows perverse efficiency 4 Jan 2013 The steel ingredient is a middleman’s dream. Spot prices fell 37 pct from Jan to Sept, then lurched two-thirds higher to end last year up 5 pct. That’s a kind of efficiency; the market is responding to changes in supply and demand. But for steel mill customers, it’s a nightmare.
Liberal economists aid Tea Party in cliff debate 3 Jan 2013 Government spending enthusiasts don’t mind high deficits and don’t like proponents of low taxes. But with the U.S. right more anti-tax than anti-spend, the result is a common acceptance of deficits. That makes budget deals easier, but promotes unrealistic expectations.
U.S. dollar may smile at end of 2013 ugly contest 3 Jan 2013 None of the leading currency contestants is pretty. Central banks across the globe seem willing to debase money with the printing press. The euro’s nerves have improved but the recession-hit zone is fragile. The yen wants to lose. The dollar and the pound may eventually come off best.
Depardieu would find heaven in Putin’s Russia 3 Jan 2013 The French actor, who wants to leave France because of the socialist government’s tax policies, has been made a Russian citizen by his friend Vladimir Putin. The local 13 percent flat tax on income is hard to beat. And Depardieu would live under a regime closer to his liking.
U.S. Congress will listen only to markets 2 Jan 2013 A last-minute, pint-size fiscal deal sets the stage for another cliffhanger in a few months. Worse, chances for deficit reduction are probably weaker now. In theory, everyone should want a broader plan but voters are too narrowly focused. Investors get the final word.
Old-school markets could return in 2013 2 Jan 2013 After five years of macroeconomic mayhem, the next 12 months may be more ordinary. Signs already suggest the focus will shift from central bank interventions and systemic worries like a euro or financial collapse to companies, deals and fundamentals. That would be refreshing.
Ethical economy: The world at work 2 Jan 2013 “The Family of Man”, a 1955 photography exhibit, spawned a best-selling book. The pictures of work are dated and misleading, but still bring out the timeless universality of the human condition. It’s a sobering theme for economists, who place too many hopes on technical progress.