Moody’s-S&P spats offer fix to ratings conflicts 22 Oct 2012 Moody’s has publicly trashed its rival’s work on a mortgage bond, the second such squabble in two weeks. Companies may now fear getting punished for cherry picking the most favorable rater. But that’s the best antidote yet to the ratings business’s inherent conflicts of interest.
McGovern embodied U.S. economic left’s last stand 22 Oct 2012 The South Dakota senator, who died on Sunday, lost the 1972 presidential election on a platform proposing the government as employer of last resort. That did not seem wild when communist regimes had full employment. McGovern has no heirs in America’s political mainstream today.
Hugo Dixon: Euro zone doesn’t need Disziplin union 22 Oct 2012 At their summit last week, European leaders nudged forward plans for a fiscal union with discipline as its leitmotif. Such a union is neither desirable nor necessary. It may not be politically feasible either.
Japan exporters should fear slowdown, not boycott 22 Oct 2012 Ire over islands has hit Chinese consumers’ yen for things Japanese. But China’s slowing economy is having an even bigger impact on exports. And while China has toppled the U.S. as Japan’s biggest market, it’s plunging demand from Europe that’s dragging trade down the most.
China’s top reshuffle means suspense for investors 22 Oct 2012 Wang Yang, a vocal supporter of political reform, may miss out on a job on the Communist Party’s top body. Wang Qishan, a darling of foreign investors, should make the cut but may not get a key economic role. That could mean sweeping personnel changes in China’s financial sector.
India in depth: Too soon for central bank rewards 22 Oct 2012 Galloping rural wages and a loose fiscal policy are keeping inflation high even as the nation relies on hot money to fill a large trade deficit. An interest-rate cut now could be risky. The government must pursue more reforms before it can expect a reward from the central bank.
Review: The danger of trading machines 19 Oct 2012 It’s a quarter-century since computerized program trading led to Black Monday on global stock markets. Scott Patterson’s “Dark Pools” is a good introduction to the latest machine-based trading technique. Arcane algorithms have reduced real liquidity and expanded rent-seeking.
Indonesia’s Bob Marley economy’s gonna be alright 19 Oct 2012 Every little thing seems to be conspiring against it: poor infrastructure, political corruption, regulatory caprice and bureaucratic inertia. Falling commodities threaten the spread of wealth to poorer parts. But Indonesia’s immaturity gives it the resilience to muddle through.
Draghi keeps barbarians at Italy’s gate 18 Oct 2012 Some euro zone officials worry that markets could push Rome into a bailout after Madrid requests one. That’s unlikely. ECB bond buying of Spanish debt will benefit Italy too. But as long as that country’s political weaknesses persist, the barbarians will not decamp.
U.S. energy boom spurs economic vs political clash 18 Oct 2012 Meaningful exports of oil are banned. But with output surging and crude fetching a 20 pct discount at home, producers want to ship it overseas - a red flag in Washington. There are similar reasons to export gas, but big practical hurdles. Unblocking trade could benefit everyone.
China’s mild slowdown dims hope for big stimulus 18 Oct 2012 Third-quarter GDP growth of 7.4 percent was the lowest for three years. However, expansion picked up in September, investment is rebounding and exports improved. Though Beijing will want to keep policy loose, the case for a big economic boost is fading.
South Africa risks being overtaken by region 18 Oct 2012 Zambia’s recent Eurobond success highlights how cellphones, the Web and cheap money are allowing Africa to leverage its resources and labor more effectively. But growth needs decent governance and civil peace too. Higher-cost South Africa looks shaky on both counts.
ECB’s "market access" is in the eye of beholder 17 Oct 2012 The European Central Bank’s bond-buying programme requires countries to keep market access. Defining market access is tricky and even circular. But the concept is so vague that it allows the ECB to keep governments and markets guessing.
Murphy’s law means something new for Big Oil 17 Oct 2012 The U.S. energy company’s value jumped 8 pct after executives said they would split off its retail business. Sure, they only acted after pressure from activist investors. But if larger players like Marathon follow suit, it could unlock billions of value for shareholders.
Spain’s bad bank will require financial acrobatics 17 Oct 2012 The next stage in cleaning up the financial system will be hiving off rotten assets into an off-balance sheet asset management company. Madrid has two conflicting objectives: minimising the state’s debts and maximising the clean-up. It should prioritise the latter.
Corporate China beating banks at their own game 17 Oct 2012 Banks and bondholders aren’t the only ones working to keep the country’s debt-fueled party from crashing: companies are also lending more to each other, for longer. As growth slows, the risk is that rising past-due bills make it hard for the private sector to repay mounting debt.
Stock investors vault ahead of housing recovery 15 Oct 2012 Economic signals point to a U.S. property rebound, but the bulls may be chasing a mirage. Last week saw a big bump for a real estate agency’s IPO. Home Depot trades well above its bubble-era highs. Fundamentals suggest the market has bottomed, but a boom still looks distant.
Nobel economics prize a welcome nod to match-makers 15 Oct 2012 Americans Alvin Roth and Lloyd Shapley won the 2012 Nobel prize for economics for their research on efficient match-making. It shouldn’t come as a shock. Unlike sexier fields like finance, successful matching can claim it fixes systems - and even saves lives.
Bernanke’s Asian defence is an implausible yarn 15 Oct 2012 The Fed chief claims money printing by advanced nations is not the “dominant” force behind surging capital flows to emerging economies, and that they benefit from stronger demand in the West. Evidence suggests his first claim is wrong, while the second is impossible to verify.
Hugo Dixon: Spanish circle getting hard to square 15 Oct 2012 Mariano Rajoy’s government has taken important steps to reform the economy. But the recession is deepening, the PM is a poor communicator and his political capital has plummeted. Madrid will also find it harder than first thought to access help from its euro zone partners.