Hugo Dixon: World needs healthy capitalism 29 Oct 2012 The term “healthy capitalism” may seem an oxymoron. But health involves vigour, well-being and resilience. Capitalism can have all those qualities provided warped incentives are corrected and the prevalent culture of greed is tempered by a culture of serving customers.
India’s interminable wait for its next Gandhi 29 Oct 2012 Rahul Gandhi has forfeited his chance to build a track record in government before 2014 polls. The ruling party will now have to rely solely on the 42-year-old’s famous last name to project him as a prime ministerial hopeful. Investors will continue to find him hard to assess.
Berlusconi sentence a mark of Italy in transition 26 Oct 2012 The 76-year-old former prime minister was convicted of tax fraud and sentenced to four years in prison. That is a defeat for Il Cavaliere’s cavalier approach to business and politics. But appeals will drag on, and the country is still without a functioning modern democracy.
Review: A practical guide to writing in Chinese 26 Oct 2012 Mo Yan may have the Nobel, but celebrity blogger Han Han rules online. In his new book of blog posts, China’s self-proclaimed “Most Popular Literary Star” shows how writers can work with the system to speak out - as long as they know when to shut up.
To fix U.S. finances requires compromiser-in-chief 26 Oct 2012 Achieving a grand bargain on tax, entitlements and spending will take a leader who is capable of bipartisan dealmaking. Having worked with Democrats as governor of Massachusetts, Romney may have the edge over Obama, whose signature legislative triumphs were party-line deals.
China insider exposé is explosive and predictable 26 Oct 2012 A New York Times investigation into the wealth of Premier Wen Jiabao’s family is both startling and mundane: China’s elite are very rich. Fund flows suggest investors are comfortable, so long as they think they can benefit too. But growing inequality corrodes China’s prospects.
U.S. housing recovery not as solid as it looks 25 Oct 2012 Prices are up 4 pct. But cash-rich buy-to-rent investors, not consumers, seem to be behind the uptick. Blackstone is snapping up 666 houses a week. While helpful and done with no taxpayer aid, if investor interest dries up before individuals jump back in, the recovery may falter.
China’s SOEs aren’t earning their keep 25 Oct 2012 While their earnings have grown 25 percent a year since 2003 - comfortably faster than nominal GDP - returns on equity of 6.7 percent are still laggardly, considering how much capital has been poured in. Bringing in more private investment might help, but it’s no panacea.
Gupta insider trading sentence apt but incomplete 25 Oct 2012 The former McKinsey boss and Goldman director asked to be allowed to help Rwandans. Instead he got two years in the slammer. His request oozed chutzpah but made a useful point. Ideally, sentences should punish crooks but also exploit their skills. This one goes only half way.
Politics will delay Egypt’s economic reforms 25 Oct 2012 A deal with the IMF, which might come in November, would boost confidence. But President Mursi’s government is inexperienced and constrained by upcoming elections. That will make it tough to cut the subsidies which cripple the government’s finances and slow Egypt’s development.
Fed may hike rates sooner than it reckons 24 Oct 2012 The FOMC’s sticking with its near-zero target till 2015. But after the presidential election longer-term savings and inflation risks of current policies may be more salient than short-term jobless trends. If so, the Fed may soon raise rates, no matter who wins the White House.
Add another 15 bln euros to the euro-dream bill 24 Oct 2012 That’s how much a half-announced two-year delay to Greek deficit targets is likely to cost lenders. Bad deal? Not really. It’s 0.1 pct of annual euro zone GDP and gives valuable support to Athens’ reform-minded government. Besides, time seems to be healing many euro zone wounds.
Buyers too soft on first Bolivian bond in 90 years 24 Oct 2012 The Andean nation’s $500 mln bond carries a 5 pct yield. That’s half what investors charge richer Venezuela on similar debt. They may be putting too much faith in Evo Morales. They’d better hope Bolivia’s president respects debt obligations more than private property.
Ethical economy: Unrealistic Nobel economics 24 Oct 2012 The latest prize rewarded the study of stable pairwise matching. Like so much of game theory, the winning idea is simple, slightly illuminating for economists, occasionally useful for everyone - and profoundly misleading. People should not be reduced to calculating machines.
Facebook shows signs of answering mobile question 24 Oct 2012 The social network’s mobile ad business grew sixfold in three months and provided 14 pct of ad sales in Q3. Worries remain about durability, cost control and competition. But for the first time, the shift to mobile devices seems an opportunity for Facebook rather than a threat.
Hong Kong suffers from being small and open 24 Oct 2012 The territory has intervened again to stop its currency rising. But Hong Kong’s peg is only partly to blame for its liquidity glut. Singapore’s more-flexible exchange rate isn’t faring much better. Small, open Asian economies are basically helpless against Western money-printing.
Last U.S. debate neglects foreign policy realities 23 Oct 2012 Listening to Barack Obama and Mitt Romney spar, it would have been easy to forget that Europe exists, free trade matters or global coordination of finance remains a priority. Worse, the politically facile China-bashing suggests both men are missing the big opportunity.
BBC discovers curse of successful institutions 23 Oct 2012 The UK broadcaster is engulfed in a scandal for its faulty handling of a star and his alleged sexual misdeeds. The BBC’s failures already look painfully obvious. But as BP, the Catholic Church and many others have discovered, self-correction is easier to preach than to practice.
China’s liquidity non-problem could turn ugly 23 Oct 2012 China is thirsty for “ultimate liquidity”, the money and debt which the government guarantees completely. Loans could dry up unless the central bank greases the credit machine more liberally. But the creation of more ultimate liquidity would also - ultimately - be risky.
It’s not too late to choose an Economic Dream Team 22 Oct 2012 As the U.S. presidential candidates head to their final debate, we’ve added new choices for key economic jobs. Should financial reformer Barney Frank have a spot? Can deficit hawk Martin Feldstein, or Treasury’s No. 2 Neal Wolin, help fix the U.S. fiscal mess?