Chinese reforms could trigger domino effect 5 Nov 2012 To sustain growth and make citizens happier, new leaders must tackle three big challenges: financial efficiency, innovation and the environment. But each policy tweak depends partly on others. As before in China’s history, success is based not on intent, but on political capital.
Asian rice producers’ cartel is a bad idea 5 Nov 2012 Having spent $10 billion to buy rice paddy from farmers at above-market rates, Thailand must dread being forced to sell its stockpiles at the prevailing low prices. But forging an alliance of Southeast Asian exporters won’t give Bangkok more pricing power: unlike oil, rice rots.
There’s something rotten with U.S. labor picture 2 Nov 2012 Friday’s employment report was relatively OK, and good for Obama, with 171,000 job gains. But 32 months from the bottom and only half of lost jobs have been recovered. What’s clear is that each recession is becoming harder than the last, hinting at larger structural problems.
New mortgage market forecaster deserves two cheers 2 Nov 2012 Two U.S. watchdogs are creating a national home loan database. Done properly, it would make mortgages safer for investors and borrowers. But it only covers a sliver of the market and replicates some private initiatives. It’s still welcome, not least as it may protect taxpayers.
Falklands oil politics distract from bigger risk 2 Nov 2012 Despite Argentina questioning rights to the UK archipelago’s resources, hedge funds like Lansdowne have been building stakes in companies exploring the area. Argentina’s claims look weak and any use of force remote. That makes extraction costs the real investment menace.
Bank of England probes avoid elephant in room 2 Nov 2012 The central bank’s reviews into its performance are fine as far as they go. But they weren’t asked to look at the BoE’s culture - particularly, whether it is too hierarchical - and so barely address the topic. The next governor should launch a full cultural audit.
Japan risks consumer electronics death spiral 2 Nov 2012 Panasonic, Sony and Sharp all suffered slumping demand for consumer gadgets. Though the economy is partly to blame, so are successful rivals like Apple and Samsung. The temptation may be to cut product development spending, but that could leave the trio ever further behind.
Pigeons and paranoia belie China’s surprising calm 2 Nov 2012 Flying pigeons, opening taxi windows and buying knives are among the activities banned in Beijing during China’s leadership handover. The anxiety shows cracks in the system, but what’s remarkable is how China remains basically stable, and not all because of heavy-handed measures.
China web truce may strengthen Baidu’s hand 2 Nov 2012 A trade group has asked major companies to sign a code of conduct to moderate rising tensions in the search market. If this helps to slow down upstarts like Qihoo, dominant player Baidu stands to benefit most. But for users, the impact is likely to be mixed.
Even resilient Canada can’t escape global malaise 1 Nov 2012 America’s northern neighbor didn’t have a financial crash or a big housing bubble, it hasn’t zeroed interest rates, and budget deficits are modest. Yet growth could be slower than in the U.S. and jobs are a bit scarce. Canada is too dependent to beat sluggishness elsewhere.
Cameron’s next EU drama lacks decent plot 1 Nov 2012 The UK prime minister has threatened to veto the next seven-year EU budget if he doesn’t get what he wants. He may be tilting at shadows, since other major member countries also want to spend less. As is traditional, it will come down to horse-trading and compromise.
Overdue ECB manpower boost leaves gender gap 1 Nov 2012 Yves Mersch’s appointment to the ECB executive board was delayed by the European Parliament’s desire for a woman in the job. The gender concern is justified, but the post needed to be filled fast. Besides, a token female at the top wouldn’t bring real balance to the central bank.
UK’s "Tarzan" makes wild call for local government 1 Nov 2012 Tough times can generate bad ideas. Lord Heseltine, popularly known as Tarzan, wants to take funds away from national schemes and redirect them to inexperienced local committees. The idea makes no sense, either as philosophy or as policy. Fortunately, it’s set to wither on the vine.
China “hard landing” talk abates, but not for long 1 Nov 2012 A return to growth in the key PMI survey, and a pick-up in the Breakingviews Tea Leaf Index, suggests China is on track for above-7.5 percent growth in 2012. Credit growth has been sustained and a property slump avoided. But the fragilities that worry China bears are still there.
Soft approach sadly best for next Greek debt deal 1 Nov 2012 Euro zone officials should haircut Greece’s debt again, because it is clearly unsustainable. But that would be politically dangerous in the current context, and delay economic reforms. The sad reality is that Greece must be kept hanging on a little longer.
Can Spain, Italy keep their bailouts on the shelf? 31 Oct 2012 The mere threat of ECB bond buying has lowered yields for Spain and Italy. Markets are still under the spell and investors are scared to sell. Rome won’t burn if it declines a bailout, but Madrid should bite the bullet.
Ethical economy: Admit economic ignorance 31 Oct 2012 Policymakers may still sound sure and pundits admit few doubts, but most key questions remain unanswered, even though it has been four years since Lehman Brothers’ collapse blindsided economic visionaries. Unless a new Keynes comes along, expect more stumbling in the dark.
Europe, China holding back Asian export recovery 31 Oct 2012 Gains in September exports have buoyed hopes for a U.S.-led rebound in regional trade. But Asian economies have shifted their focus to Europe and responded to Chinese competition by supplying the manufacturing juggernaut. A U.S. upturn alone won’t revive Asia’s export engine.
Storm dents Wall Street but spares U.S. election 30 Oct 2012 The force of Hurricane Sandy left much of Lower Manhattan dark and could cost $20 bln or more. Luckily for voters, the weather arrived a full week before the Nov. 6 vote. The pundits will spin it, but the political impact of chaos in mostly Obama-leaning states is probably small.
Bank of Japan fails the shock-and-awe test again 30 Oct 2012 The central bank’s decision to print an additional 11 trillion yen was neither impressive nor surprising. The BOJ’s own gloomy assessment of the economy suggests that the predictable timidity of its moves is blunting its ability to fight deflation.