Legal surrender hurts SEC more than shareholders 7 Sep 2011 The U.S. regulator won’t appeal a ruling that blocked more investor power to challenge corporate boards. That’s understandable given the legal risks and alternative proxy options. But it preserves a precedent that makes it far more arduous for the agency to implement new rules.
Weakening UK growth creates tax cut Catch-22 7 Sep 2011 The UK chancellor is toning down hopes for UK growth. Tax cuts, as suggested by some economists, would help growth and are desirable. But the deficit reduction plan looks behind the curve, making it hard for Osborne to justify cuts. Faster spending cuts would have helped.
U.S. mortgage suits inflict super-damages on banks 6 Sep 2011 The latest U.S. regulatory assault for mis-selling mortgage securities has dragged down bank stocks. But damages previously sought from UBS, and the performance of the underlying loans, suggest the impact of this particular banking nasty is now more than priced in.
Swiss franc defence will work – at a price 6 Sep 2011 If the Swiss National Bank keeps its promise to buy “unlimited quantities” of foreign currency, its effort to peg the franc should succeed. Given the euro’s big risks, the central bank may lose money again. But the gamble is an attempt to prevent recession and deflation.
Nigeria deals the dollar another blow 6 Sep 2011 The oil-rich African state will invest about $3 billion of its foreign reserves into China’s currency. High inflation and closed markets make the yuan a poor choice. Nigeria’s goal may be to secure investment flows: still, it is another sign of the dollar’s weakening influence.
ECB should cut rates now 5 Sep 2011 It would be an embarrassing U-turn but the European Central Bank should swallow its pride and reverse its recent interest rate rises. The euro zone risks falling back into recession even in its core economies, worsening the crisis in its weaker members. Rate cuts are essential.
China may challenge U.S. for shale supremacy 5 Sep 2011 The U.S. so far stands alone in significantly exploiting shale gas, but Chinese major Sinopec is now planning a serious push. Even if geography doesn’t favour Chinese shale, a lack of legal and political roadblocks to drilling mean its ambitions could be more than a pipe dream.
Libya should adopt oil-wealth transparency 5 Sep 2011 The country’s new leaders must decide how to manage Libya’s oil wealth after funding reconstruction. Opaque handouts might be a tempting way to win tribal loyalties. But it would be better to copy oil-rich Norway and create a transparent and accountable sovereign fund.
Obama’s smog backdown won’t help sick U.S. economy 5 Sep 2011 The White House has bowed to critics in Congress and industry, who said new air quality rules would kill jobs. Polluters have previously exaggerated the costs of EPA regulations, and health-related savings matter, too. The rationale for caving in is a smokescreen for politics.
Asian bonds offer new-style refuge in market panic 5 Sep 2011 If markets swoon anew, as negative economic signals suggests they might, Asian bonds and CDS both stand to gain ground. In the past, the two have moved in opposite directions. Their altered relationship offers a handy storm shelter for investors while it persists.
Brazil can’t solve fiscal woes with rates alone 2 Sep 2011 Cutting the benchmark Selic rate to 12 pct isn’t inflationary, since CPI is only 7 pct and global rates are ultra-low. However the government runs big deficits in a huge boom with high commodity prices. That could boost prices down the road - or worsen any downturn.
Running for president like a hedge fund manager 2 Sep 2011 White House hopeful Jon Huntsman aims to employ a fund-of-funds approach to policy: Combine the best off-the-shelf economic plans on taxes, debt and energy into one broad proposal. Even if Republican voters don’t invest in the underdog’s offering, his opponents might want to.
Market worries and volatility will outlast summer 2 Sep 2011 Investors back from the beach will be rested for the next round of rollercoaster trading - a taste of which came on Friday. The concerns behind August’s bout still haven’t been addressed. European debt trouble, the weak U.S. economy and political conflict spell more wild rides.
How to get Spain working again 2 Sep 2011 With elections looming, political parties must come up with sensible solutions to tackle a 21 percent unemployment rate. Cutting social security contributions makes sense, but it’s harder than it looks.
More U.S. mortgage help isn’t needed 1 Sep 2011 There’s talk of yet more help for careworn borrowers. Washington has already made Herculean efforts. Some were valuable, but there’s no magic bullet and the modest returns are diminishing. It would be better for lawmakers to deploy precious capital, real and political, elsewhere.
Euro zone should slow down on austerity 1 Sep 2011 Portugal is the latest troubled euro member to tighten its budget another notch. But from Italy to Ireland, heavily-indebted countries need growth. As the threat of recession rises, sometimes-costly structural reforms should take precedence over fetishist austerity.
Fluctuating gas estimates needn’t freak investors 31 Aug 2011 Opponents of fracking pounced on a sharply lower government tally of the likely store of gas in one of America’s biggest shale areas. But investors, buffeted by swings in estimates, shouldn’t be too alarmed. Even the ultra-cautious reckoning amounts to 109 years of production.
Europe should strive for bank funding backstop 31 Aug 2011 The European Banking Authority wants to free up bank funding markets by enhancing the euro zone’s rescue fund. That could prove politically contentious with member states tired of ever-increasing bailout liabilities. But a debilitating credit crunch would be far worse.
Tar sands pipeline environment fears are overdone 30 Aug 2011 Despite a sanguine State Dept, there’s heavy opposition to a $7 bln pipeline bringing Canadian oil to Texas. But oil sands are less dirty than their reputation, and the U.S. buys crude from worse polluters. There are better ways to control emissions than boxing in Canada’s oil.
Obama’s new economist faces political headwinds 30 Aug 2011 With U.S. unemployment hovering above 9 pct, Alan Krueger - a Princeton labor market expert - is suited to be the next White House chief economist. But his job creation ideas may not get much of a hearing. With Obama campaigning, political pros will have the president’s ear.