UK market watchdogs rely on kindness of foreigners 9 Nov 2022 The Bank of England has intervened in government bond trading twice in less than three years. Both times, selling by overseas funds was partly to blame. British regulators have limited oversight of the $2.4 trln gilts market. Their best hope is help from counterparts elsewhere.
Republican victory paves road to softer dollar 9 Nov 2022 A split Congress will lock the U.S. government in gridlock through 2024. President Joe Biden's spending ambitions are doomed, simplifying the Fed's battle against inflation. Throw in a possible renewed fight over debt, and investors have reason to rethink the strong greenback.
The politics and economics of superpower rivalries 8 Nov 2022 Are America and China heading for a showdown, and what does it mean for the world order? In this edition of the Exchange podcast Paul Tucker, former deputy governor of the Bank of England, discusses the financial and foreign policy fallout and his new book, “Global Discord”.
Capital Calls: Uniper 3 Nov 2022 Concise views on global finance: The German utility’s 40 bln euro loss for the first nine months of 2022 has turned its equity negative and implies a much larger bailout.
Monte Paschi cash gambit leaves bitter aftertaste 3 Nov 2022 The bailed-out lender secured 93% backing for its 2.5 bln euro cash call. Financially, that's a success. But investors will include bank foundations, a past source of political meddling. A conversion of junior bonds would have saved taxpayers high fees and interest payments.
Brazil gives flagging climate fight a timely boost 31 Oct 2022 Luiz Inácio Lula da Silva beat Jair Bolsonaro in the Latin American state’s presidential election. He could curb deforestation that makes the country a big greenhouse gas emitter. It’s a bright spot in a year when public and private sector momentum on climate change has slowed.
America throws South Korean chipmakers for a loop 28 Oct 2022 Samsung and SK Hynix dominate the memory market and can adjust output to protect profits as demand falls. But that flexibility will be eroded under Washington's export curbs against China, where the pair have factories. It's an example of the unforeseen effects from the tech war.
Western economies rediscover meaning of scarcity 27 Oct 2022 For several decades, constraints on supplies of labour, energy and capital appeared to have all but disappeared. Now they are back, humbling leaders like former British Prime Minister Liz Truss. Allocating scarce resources means more state intervention, writes Edward Chancellor.
Italy’s new premier starts with a big faux pas 27 Oct 2022 Giorgia Meloni vowed to hike a 2,000 euro cap on cash payments, reversing attempts to boost electronic transactions. That will make it harder to track 100 bln euros of annual untaxed revenue. With debt at 147% of GDP, Italy cannot afford to be complacent on chronic tax evasion.
Australia has bulwark against China slowdown 26 Oct 2022 Demand from Down Under’s top trading partner is cooling. But Treasurer Jim Chalmers' first budget assumes the price of exports like iron ore will fall while also keeping a tight lid on spending. The fiscal discipline will be a shock absorber if China’s growth disappoints.
China’s chairman of everything wins again 26 Oct 2022 President Xi Jinping dramatically consolidated his political power at the recently concluded Communist Party Congress. In this episode of the Exchange, Dan Rosen of the Rhodium Group and Pete Sweeney delve into the role Xi-style socialism will play in China’s economic future.
Xi’s indifference to economic optics saves time 26 Oct 2022 China’s leader is swapping internationally experienced financial reformers like Liu He with parochial loyalists. The latter will struggle to soothe investors, especially foreigners. Yet the pro-market gloss Liu and peers applied to Xi’s policy was misleading in the end.
Rishi Sunak offers only temporary fix for UK woes 24 Oct 2022 Britain’s borrowing costs fell as the ex-chancellor won the race to become prime minister. Sunak is the least-bad option for restoring Britain’s battered finances and credibility. It’s less obvious he can unite a chaotic party or sort out a longer-term cost-of-living crisis.
Italy’s new boss is missing a trick on tax evasion 24 Oct 2022 Public debt at 147% of GDP and a slowing economy limit Prime Minister Giorgia Meloni’s scope to curb an energy crisis and keep spending promises. Tackling endemic tax evasion would give her more fiscal ammunition. Yet promoting the use of cash and tax amnesties will not help.
Xi’s contract with China needs more signatures 23 Oct 2022 The president has effectively secured a third term. His prize: a country traumatised by pandemic lockdowns and crashing real estate. There are some relatively easy things Xi Jinping can do to compensate his citizens; the next five years will test whether he can grasp them.
Truss’s exit highlights America’s free pass 21 Oct 2022 U.S. fiscal policies, based on tax cuts for the rich and widening budget deficits, have been fairly similar to those of Britain’s ousted prime minister. Only the dollar’s status as the world’s reserve currency keeps the laws of economics from applying in the United States, too.
Delusions of grandeur are root of Britain’s chaos 21 Oct 2022 “Trussonomics” followed hot on the heels of Brexit. Both are symptoms of a country that hasn’t fully come to terms with the loss of its empire, says Hugo Dixon. If the UK now realises it can’t defy the laws of economics and geopolitics, it may emerge wiser albeit weaker.
Britain’s next leader will be on a short leash 20 Oct 2022 Prime Minister Liz Truss is out after just 44 days in office. Whoever replaces her will have to endorse fiscal discipline or risk a similar fate. The ruling Conservatives have little in common except fear of an early election. But only a national vote can restore political order.
Britain’s bond crisis reverses over the government 20 Oct 2022 New finance minister Jeremy Hunt has scrapped most of his predecessor’s unfunded tax cuts, scuppering Prime Minister Liz Truss’s growth plan. In this Viewsroom podcast, Breakingviews columnists debate what the U-turn means for markets – and whether Truss can survive.
Time for Europe to tame its energy cravings 19 Oct 2022 After paying through the nose to fill its gas storage reserves to 92%, the bloc is seeking to secure more affordable fuel. Measures like curbing price volatility, club purchases or flexible caps will be no panacea. While supply is tight, curbing demand is the key.