Xmas overspending doesn’t breed higher returns 24 Dec 2012 If Christmas gifts were an investment, they would fall under the law of diminishing returns. Overspending is unproductive and small presents may be more efficient, behavioural economists suggest. A case where stinginess makes sense. At least economically.
Washington may finally take up mortgage reform 21 Dec 2012 Assuming Congress settles the deficit debate, housing finance should be its next stop. Lawmakers have postponed reforming the government’s role in funding home loans for four years. Some hurdles still remain. But economic, regulatory and political obstacles are dissolving.
Modi’s Gujarat win doesn’t mean he will rule India 21 Dec 2012 The right-wing leader’s third electoral win in his home state has boosted his stature. But Narendra Modi’s chequered past and autocratic personality could prevent him from becoming prime minister. Investors betting on Modi to provide effective governance could be in for a shock.
Made-in-China inventors may have eureka moment 21 Dec 2012 More patent applications were filed in China than any other country in the world in 2011. Government targets and subsidies doubtless helped to inspire inventors. Yet while the country’s mass-manufacturing of patents merits skepticism, it could also produce some bright ideas.
Upward U.S. GDP revisions explain a few surprises 20 Dec 2012 The boffins’ first stab at the Q3 growth rate was 2 pct; the third and final estimate is a much healthier 3.1 pct. That makes unexpectedly good jobs figures seem less odd and may help account for Obama’s win in November. Stronger growth makes the fiscal cliff less scary, too.
A guide for the perplexed: U.S. MBS lawsuits 20 Dec 2012 Banks, trustees and even investors had a hand in the debacle surrounding repackaged home loans. With lawyers running up against post-crisis filing deadlines, the last lawsuits are in sight - but the end of the fallout is years away. Breakingviews explains where things stand.
Narrowing French-UK yield rings hollow for Hollande 20 Dec 2012 Yields on 10-year debt issued by the UK government may soon rise above those on French state bonds of the same maturity. But François Hollande has nothing to brag about: it is more the sign of a deteriorating UK economy than proof of investors’ confidence in Paris.
Ireland gets welcome back-up from IMF 20 Dec 2012 The IMF is urging the euro zone to help Dublin restructure its bank bailout, and warns there are limits to austerity. The Fund is moving to a more pro-active role as bailout partner. With markets slumbering and the crisis abating, Ireland needs all the help it can get.
Fed’s foreign bank crackdown is price of stability 20 Dec 2012 Forcing overseas lenders to properly capitalize their U.S. arms is necessary to protect the local - and global - financial system. The Federal Reserve’s unilateral approach could prompt others to follow suit. But fears that fragmentation will stifle global banking are overblown.
It’s 20.12.2012; and it’s the end of a magical era 20 Dec 2012 One doesn’t have to be a Mayan to believe that tomorrow represents a numerological end of an era. It may not mark the end of the world - as some users of the Mesoamerican Long Count Calendar suggest - but after a fertile period for adorable dates, we are now entering a desert.
Shadow banks lead China towards a dark place 20 Dec 2012 The secret sauce in the country’s growth is no longer bank lending, but an explosion in off-balance sheet credit. The troubling expansion of funds extended through wealth management products - many of them short-term and dependent on confidence - may force a moment of reckoning.
Bank of Japan needs new rules of engagement 20 Dec 2012 The central bank has agreed to print more money. But ending deflation requires it to adopt a government-mandated price target, and for lawmakers to boost its firepower. That need not undermine the BOJ’s independence, provided the new system is transparent and has legal sanctity.
New Korean leader may be more Merkel than Thatcher 19 Dec 2012 Park Geun-hye, the first woman elected president, is the daughter of a military autocrat. Though conservative, policies including social spending and curbs on conglomerates run left of the incumbent’s. Korea can afford it: German pragmatism is needed, not Maggie’s radicalism.
Greece should lure sea turtles back to the Aegean 19 Dec 2012 China calls returning emigrants sea turtles. Greece needs its own, as ever more young people emigrate to escape high unemployment and austerity. The country loses much needed know-how and energy. The Greek government should find the money needed to lure some turtles back.
Ethical economy: Greed, justice and deception 19 Dec 2012 “Greedy” has become a common insult since the financial crisis. But admissions of greed remain scarce. That’s because people see their own immoderate desires as a virtuous search for justice. A humble examination of the flaws in prosperous societies is required to find the truth.
Shanghai stocks set to catch Hong Kong peers 19 Dec 2012 A sharp jump in Shanghai’s index has narrowed the discount between mainland and Hong Kong-listed stocks. Increased quotas for foreign institutions have helped sentiment. If Chinese investors rediscover their enthusiasm for shares, Shanghai may regain its premium.
South Korea’s next leader will face a currency war 19 Dec 2012 Pyongyang’s provocations won’t be the only test awaiting the nation’s new president. The won’s five-year slide against the yen could reverse. The resulting export squeeze means the winner of today’s poll must be careful about clipping the wings of the country’s mighty chaebols.
Rising US inequality shows need for fiscal reform 18 Dec 2012 A Reuters study shows tax changes and federal outsourcing have helped funnel income to the well-off at the expense of the poor and middle class. Such polarization can slow economic growth and fuel financial instability. Restoring some balance would be both just and rational.
Merkel set for uncomfortable electoral victory 18 Dec 2012 The German parliamentary election in the fall of 2013 is one of the most important pre-planned political events in Europe next year. It is certain that the incumbent will prevail, but her policies will take on different shades, depending on her coalition partners.
Grains are the commodities to watch in 2013 18 Dec 2012 Iffy global economics make it hard to gauge the outlook for copper and iron ore. Grains are different. Stocks are low and the drought that hit harvests in 2012 has continued. Low rainfall is also hitting river-borne U.S. trade routes. Expect prices to stay high.