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.
India in depth: Consumption bets will outperform 18 Dec 2012 In 2013, the economy will plod through its fifth year of deficit-fuelled, bad-quality GDP growth. A stock-picking strategy tilted toward consumption will yield greater rewards than premature bets on an investment recovery, which is still some distance away.
Congress should push for mandatory gun insurance 17 Dec 2012 Firearm ownership is a U.S. constitutional right. But it comes at a cost. Requiring liability coverage could pass legal muster while helping to compensate victims. The market might also do a better job than politicians at keeping the most dangerous weapons from unstable hands.
U.S. VAT could become practical politics in 2013 17 Dec 2012 Washington’s budget spat shows that reducing deficits will be tough without new sources of revenue. A value-added tax could soon become a serious option. Using VAT to replace other taxes, especially corporate levies, could help boost U.S. competitiveness and growth.
Warning to investors: Chavismo doesn’t need Chavez 17 Dec 2012 A big win for the Venezuelan president’s allies in regional elections, despite his absence for cancer treatment, hints at the popularity of his approach. Anyone hoping that Chavez’s successor will have to ditch his ideology for more market-friendly policies should take note.
Central bank independence at risk in 2013 17 Dec 2012 The Fed celebrates its centennial next year. In recent decades the independence of the U.S. lender of last resort and its peers elsewhere has become an article of faith. But with Western central bank balance sheets swelling toward 30 pct of GDP, that faith is far from rock solid.
When your town is Newtown 17 Dec 2012 The scene of last week’s school massacre is a bucolic New England town with a deep sense of community. That will play a crucial role as its residents deal with their grief, says Breakingviews Editor Rob Cox, who grew up in Newtown and returned to live there with his family.
Abe era will herald a three-digit yen 17 Dec 2012 Japan’s newly elected prime minister will slay the currency to save the economy. That means it will make the kind of move it made after Lehman collapsed in 2008 – but in reverse. Then, risk aversion saw the yen rise 20 percent. In 2013, a U.S. dollar will buy 100 yen or more.
Hugo Dixon: Why Mario Draghi scores AAA on PPP 17 Dec 2012 The ECB boss is Europe’s most powerful man. The reason? He rates highly on the three Ps of power: position, personality and pivot points. Draghi may not outrank Angela Merkel, but he outscores other men such as Francois Hollande and Mario Monti.