Spain tries to spare its retail bank investors 15 Aug 2012 Preference shareholders in Spain’s bailed-out banks could get a haircut, but high coupons would later offset their loss. The government would be spared the political fallout of burning the cajas’ retail investors - but at the cost of weakening burden-sharing.
An alternative Independence Day message for India 15 Aug 2012 The prime minister’s actual speech was a sugar-coated set of contradictions. His prediction of 6.5 pct growth is optimistic, especially as he failed to deal head-on with the tough political choices needed to achieve that pace. Breakingviews has the speech he should have given.
Philippines just starting fight to shed bad past 15 Aug 2012 In the 1950s, the country had Asia’s highest per capita income outside Japan. Those days are gone, but growth is strong, the peso is rising, and an investment-grade rating is within reach. President Aquino needs to break the hold of oligarchs. “Sin taxes” will provide a test.
European Central Bank faces bond-buying Catch-22 14 Aug 2012 If the ECB wants its bond-buying programme to work, it must reassure investors that it wouldn’t rank above them in a restructuring. But solving that problem could raise another one - accumulated losses for the ECB would amount to massive transfers within the euro zone.
Occupy movement withers in unequal Hong Kong 14 Aug 2012 After a 10-month sit-in, a rag-bag of Occupy sympathisers face eviction from HSBC’s HQ. Their protest never gained traction - despite the region’s yawning wealth gap and HSBC providing free wifi. It’s not just that Occupy was disorganised: inequality alone doesn’t ensure unrest.
Freer fuel price could start Indian chain reaction 14 Aug 2012 The country’s clever new finance chief, Palaniappan Chidambaram, needs a sharp idea to cut the fiscal deficit. Deregulating fuel prices would help in many ways, including a lower subsidies bill, more valuable state-run firms, more efficient resource allocation and eventually more investment.
Asia’s slowdown may heighten tension over isles 14 Aug 2012 A Korean soccer player may have lost an Olympic bronze amid his country’s spat with Japan over mid-sea islands. Asian politicians’ interest in aquatic outposts reflects a desire to look patriotic, and an economic slowdown increases the acrimony over disputed rocks and reefs.
America’s corn monster is unstoppable – for now 13 Aug 2012 The UN is pleading with America to stop its drought becoming a food crisis. The global body wants Uncle Sam to suspend remaining support for corn-based fuel, which diverts crops from hungry mouths. Letting ethanol fend for itself makes sense. But it’s too late to help this time.
Spain’s bad bank valuation looks ripe for fiddling 13 Aug 2012 Madrid wants to fix its lenders by selling their assets to a bad bank. Ireland’s efforts in 2009 to price duff loans before offloading them to its version, NAMA, provide a handy valuation template. But they also suggest ways in which the process can be manipulated.
Egypt makes big leap toward civilian rule 13 Aug 2012 The Islamist president’s ousting of the ruling military chiefs is a decisive move to end the country’s political deadlock. And his reclaiming of legislative powers may help Egypt out of its economic impasse. But until a parliament is in place, power will be too concentrated.
It’s the budget, not the economy, stupid 11 Aug 2012 Mitt Romney’s choice of Paul Ryan as running mate can transform his mealy campaign into something substantive: a referendum on fixing the U.S. balance sheet. It’s sad that it takes a VP to give Romney appeal. But righting America’s finances is long-term legacy-setting stuff.
Uncle Sam seeks to dance around own rules in Sudan 10 Aug 2012 The U.S. wants $3.5 bln for the African nation following a recent oil pact with its southern spinoff. But that could contravene 1997 sanctions, exposing aid providers and investors to a StanChart-like zap. It would be far better to just adopt a new policy altogether.
Review: Not another BRIC in the wall 10 Aug 2012 Ruchir Sharma wants to identify the next great emerging economies by throwing out well-worn labels. “Breakout Nations” reexamines markets one by one, case by case. Sharma draws original conclusions, though a whirlwind tour of the developing world leaves some lingering questions.
Italy starts to get serious on debt reduction 10 Aug 2012 Fears of relentless austerity have prompted a flurry of proposals from Italian politicians and academics on ways to cut the nation’s debt through asset sales. Some ideas may be impractical, others have failed in the past. But the chorus of calls for action gives reason for hope.
Public investors lose in Mongol mining battle 10 Aug 2012 The nomad state seems set on sinking Chinese state firm Chalco’s bid for coal miner SouthGobi. Wild as Mongolia is, a compromise is conceivable. All sides could come away with something, except for investors who bought SouthGobi shares when they were double their current value.
Romney only has one bold option for vice president 9 Aug 2012 An ideal running mate for the GOP ticket provides beauty and brains. Some politicos offer the U.S. presidential hopeful one or the other. But Paul Ryan has legit budget policy chops and might woo swing voters. The move would also help reorient the party toward fiscal probity.
Brazil bourse has more staying power than economy 9 Aug 2012 Bovespa’s been hit by delistings and a dearth of IPOs. Rival exchanges may soon arrive, too, though that’s not easy. And Bovespa has a lock on other business while expanding elsewhere. Operating leverage is wobbly, but the bourse is well placed to weather the economy’s headwinds.
As the euro steadies, safe havens look more risky 9 Aug 2012 The single currency is being bolstered by tentative European Central Bank moves towards greater policy activism which make imminent crisis less likely. Global growth fears are another concern that may ease. Expensive safe havens look more vulnerable now than risk assets.
India begins the post-Mukherjee clear-up 9 Aug 2012 The former Indian finance minister’s reign was stained by economic meddling and political favouritism. Now he is gone, and some of his excesses are being reversed. An enemy has been pardoned and a friend has not received a plum job. This could be the beginning of a better era.
Uncle Sam still living well beyond his means 8 Aug 2012 While June consumer credit just missed its 2008 peak, overall debt in the first quarter was 250 pct of GDP against 232 pct four years ago. While the consumer has deleveraged a bit, business debt is flat and government debt has soared. At some point, this has to end.