Choose outside man for Bank of England governor 16 Nov 2012 Any private company which performed as badly as the UK central bank would be in for a major restructuring, starting with an untainted and imaginative leader. Insider Paul Tucker, the current favourite for the top job, does not fit the bill. John Vickers would be a better choice.
Counterpoint: Tucker best man for impossible job 16 Nov 2012 The new Bank of England chief will be expected to preserve growth, prevent bubbles and keep banks safe. Whoever is chosen will probably fall short. Deputy governor Paul Tucker has the best credentials. And despite being an insider, the contrast with Mervyn King will be large.
China has easier path than buying West’s resources 15 Nov 2012 Companies from the PRC and elsewhere have met political flak trying to acquire U.S. and Canadian energy firms that hold oil and gas rights. A smarter strategy could be to snag know-how needed to unlock reserves at home. Oil services experts like $7 bln Weatherford fit the bill.
Euro zone dodges disaster but doesn’t rebound 15 Nov 2012 With the exception of Greece, the third quarter shows that the monetary union’s members have avoided the vicious cycle of debt deflation and GDP decline. France even managed a little growth. With no exceptions, GDP growth is not fast enough to make debt problems melt away.
China’s leadership line-up gets 6.5 out of 10 15 Nov 2012 The new Standing Committee looks conservative, but its seven members don’t lack experience. Judged on criteria like crisis management and economic growth, there’s enough to offer encouragement. But factional ties and a lack of diversity count against them.
Old hands to become China’s new finance guards 15 Nov 2012 China’s central bank chief may retire after being left out on the Party’s central committee. The head of China’s sovereign wealth fund and Bank of China’s chairman are likely to take key finance jobs. Although the state keeps a tight grip, personal styles still matter.
Fed needs to spend some time out of the spotlight 14 Nov 2012 The hyperactive U.S. central bank has already said it probably won’t raise rates for years. Now it’s considering specifying levels of unemployment and inflation that could change that. It’s a recipe for confusion. Better to keep quiet and finally let markets reassert themselves.
China buzzword bingo shows slow move forward 14 Nov 2012 Little things mean a lot in the highly choreographed Party Congress. To judge by his choice of key terms, outgoing leader Hu Jintao wants to move ahead, but not too quickly. Compared to five years ago, there’s less reform, more socialism, a bit more equality and a lot less Marx.
Law schools’ hard sell unseemly in soft job market 14 Nov 2012 The legal industry is hurting, the good old days might not return and two big firms are merging. Yet deans lure students in with scholarships and hints of an upturn. Schools can’t be blamed for trying to survive. But denying the profession has changed does students a disservice.
If only weed could inspire fiscal joint action 14 Nov 2012 Ideological foes Barney Frank and Ron Paul have passed the peace pipe for marijuana, together urging the feds to stay mellow about new decriminalization votes. Such kinship would keep a fiscal deal from going up in smoke. But anyone who sees similar common ground must be high.
Buba can’t rely on orthodoxy to fight bubbles 14 Nov 2012 The German central bank is nervously eyeing rising property prices and is pledging to prevent a possible bubble early on. However, the traditional armoury of central banks is quite empty. One of the most orthodox central banks might be forced to think out of the box soon.
UK inflation is symptom of global QE-itis 14 Nov 2012 The Bank of England is feeling gloomy, and it should be. UK inflation remains too high while GDP growth is frustratingly low. The underlying problem is a global excess of newly printed money. QE may be hurting more than it helps.
Ethical economy: The angel is in the detail 14 Nov 2012 Barack Obama will not solve America’s most profound economic problems. Mitt Romney couldn’t have either, and the Fed cannot wave a magic wand. Complex problems have only complex solutions, which are constructed by talented people who work in effective organisations.
Maybe Hollande gets it after all 14 Nov 2012 It took six months in the job, but the French president finally seems to grasp the country’s need for fundamental economic reform. He also accepts the hard truth that serious spending cuts are needed to clear up the fiscal mess. Now he must get ready for mighty political fights.
Silicon Valley cash alone won’t salvage Sharp 14 Nov 2012 Even coming from Qualcomm and Intel, a $378 mln investment won’t help the ailing electronics group. It has net debt of $12 bln and is bleeding cash. The best hope is that the U.S. groups see potential in Sharp’s long-overdue restructuring.
Japan shuns fiscal cliff, won’t escape growth funk 14 Nov 2012 Opposition parties have agreed to end the budget impasse in return for an election as early as next month. But if the next government takes an ultra-hawkish stance on debt and deficits, Japan’s economy could slip into a deeper hole.
Lower courts Obama’s best shot at legal legacy 13 Nov 2012 They lack the Supreme Court’s cachet, but can be more influential. Appeals courts often get the last word, especially on financial regulation. And judges’ political leanings matter. With top court vacancies rare, putting allies on the benches below can shape the law for decades.
Investors’ hunger for yield feeds instability 13 Nov 2012 With bond buyers fighting for every basis point, highly rated companies and sovereigns are sensibly extending the duration of their debt. But what’s good for balance sheets looks bad for financial stability. The longer the bond, the bigger the loss when rates eventually rise.
Eviction halt will end up helping Spain’s banks 13 Nov 2012 Spanish lenders have agreed to a two-year freeze on kicking desperate mortgage debtors out of their homes. That’s costly in banking logic. But in a crisis where government aid is crucial, goodwill counts. Besides, shuffling residences won’t add much to total mortgage payments.
Risky assets wobble may turn into a correction 13 Nov 2012 Money printing continues but fundamental fears are growing. The U.S. fiscal cliff, Japanese recession and a simmering euro crisis threaten. Markets stretched by QE may fall back. It looks like time for another rotation from equities and commodities into the dollar and safe havens.