EMEA

Putin’s third term undermined by Kudrin’s exit

26 Sep 2011

Russia’s finance minister has dismayed investors by saying he doesn’t want to serve in the next cabinet. Pique at not getting the premier’s job may be to blame. But Kudrin’s decision also reflects policy tensions. Without him, it will be tougher to keep Russia’s finances steady.

Gulf liberal shift is more than sop to Arab Spring

26 Sep 2011

Saudi is giving women the right to vote. It follows the UAE’s decision to expand the electoral roll for its recent elections. These cautious democratic steps will help insure stability. But they’re also crucial for introducing the taxes required to reduce dependence on oil.

Europe can protect itself against a Greek default

26 Sep 2011

A three-pronged plan is required to fight contagion: 175 bln euros for bank recaps; extra liquidity, again for banks; and a beefed-up bailout fund to help Italy, if needed. Europe looks like it is moving in this direction. But, as always, the fear is that it will be too timid.

Putin’s presidential bid step backward for Russia

24 Sep 2011

The prime minister’s decision to run for president again, in place of his more reformist protégé Dmitry Medvedev, dashes hopes for reinvigorating the country’s economy, society and politics. Russia can look forward to a long period of creeping stagnation and seething discontent.

Gruebel’s principled departure leaves UBS adrift

24 Sep 2011

The man brought in to save the Swiss bank felt the need to take responsibility for the rogue trader. But interim boss Sergio Ermotti only just arrived in April. If an estimable veteran like Gruebel couldn’t rid the deep rot from UBS, the future of the investment bank looks dim.

Euro zone bailout sheriff idea looks far fetched

23 Sep 2011

Juergen Stark, the ECB’s departing board member has called for a euro zone “financial receiver” to take over budgets of bailed-out countries. The proposal looks like a provocation and is a political non-starter. And if it could be achieved, it wouldn’t be necessary.

Spain could cut costs by cutting lunch

23 Sep 2011

Competitiveness is one of the Spanish economy’s main problems. Cutting down on the long workday could boost productivity and reduce energy bills. A shorter lunch would be a good first step.

EU bank rescuers have fewer options than in 2008

22 Sep 2011

If lenders fail to recapitalise privately, governments will step in. Some tools from the last crash, like preference shares, now look out of date. State-underwritten rights issues could work. But to solve the crisis, the euro zone also needs coordinated action on bank funding.

Swiss retain the upper hand on their currency

22 Sep 2011

The Swiss National Bank has taken to playing poker. Euro refugees and speculators still fancy the franc. So a central bank adviser has warned of another devaluation. It probably won’t come. But the threat makes it easier to keep the franc down.

No time for ritual sacrifice at UBS

22 Sep 2011

Top brass bear ultimate responsibility for the Swiss bank’s $2.3 bln trading loss. But firing CEO Ossie Gruebel or investment banking chief Carsten Kengeter would add to the upheaval. The board should concentrate on determining strategy - and plan succession accordingly.

Greece shouldn’t put austerity to a vote

22 Sep 2011

Athens may have done enough to secure the latest tranche of bailout cash. Now the government must sell austerity to a fatigued population. Its only chance is to explain that a row with the euro zone would have dire consequences. A vote now would be a costly distraction.

Russia’s rosy numbers can’t hide fiscal profligacy

22 Sep 2011

On the surface the modest deficits of the just-approved Russian three-year budget look reasonable. But these rosy projections are based on over-optimistic oil price assumptions. Russia faces a dangerous fiscal crunch if the crude market were to fall as many expect.

How Europe can get more bang for its bailout buck

22 Sep 2011

The European Financial Stability Facility is too small to help Italy. Expanding it is politically tricky. Using the 300 bln euros of remaining firepower to guarantee sovereign debt would give the fund more clout. Though the idea has flaws, it would buy the euro zone some time.

Monetary moves have lost their magic

22 Sep 2011

Markets spurned the Fed’s latest love offering. The Twist was seen correctly as a small manoeuvre that can do little to speed up growth. It could even be more dangerous than helpful. Central banks should not try too hard - the pains of economic rebalancing cannot be avoided.

European bank rescues risky terrain for Gulf SWFs

22 Sep 2011

It’s 2007 again in the banking sector. Valuations are rock bottom and troubled institutions are turning to the Gulf. But the track record of the region’s sovereign funds is mixed. Some portfolios are already bulging with financials. At least SWFs can try to learn from the past.

Oil price jitters turn up heat on Gulf producers

22 Sep 2011

Governments are sweating as Brent creeps lower with worsening global economics. At $108 a barrel, oil is $18 above the threshold at which producers feel real pain. But shrinking oil revenues leave less room for manoeuvre. And any OPEC supply squeeze will complicate the problem.

IMF issues timely warning on ultra-low rates

21 Sep 2011

Just as Ben Bernanke and his crew contemplate further easing, a new IMF report lays out the multiple threats created by such loose monetary policy. In rich nations, small firms suffer while in emerging markets, capital inflows produce bubble conditions. The FOMC should pay heed.

IMF financial crisis indicator bodes ill for China

21 Sep 2011

The fund has found a measure of credit growth that could predict crunches. It makes the Middle Kingdom look precarious and heralds problems for Turkey and Vietnam. The IMF’s crisis-spotting record is lousy. But overheating nations shouldn’t dismiss what seems a sensible metric.

Foster’s gets full measure from SABMiller

21 Sep 2011

Boozy rows between the Australian and UK brewers are history. Like most hostile M&A, this has turned friendly with a sweetener from SAB. Torrid markets and the absence of rival bidders mean Foster’s has done especially well to extract a punchy $10 bln-plus cash offer.

How much more capital do Europe’s banks need?

21 Sep 2011

Politicians are beginning to accept that lenders need bigger buffers to reflect sovereign risk. Though most could handle a Greek default, they may also require higher ratios to handle contagion. But raising the capital bar would leave governments with a big hole to fill.