Economics

Counterpoint: ECB can’t print zone to solvency

9 Nov 2010

If central banks could save governments, no country would go bust or suffer hyperinflation. By buying periphery debt, the ECB risks debasing the euro. If Ireland et al can't finance themselves, it's better to bail them out openly, says Ian Campbell in response to Neil Unmack.

ECB may need to open spigots to fight contagion

8 Nov 2010

If Ireland has to borrow from the EU's bailout fund, Portugal and possibly Spain could be sucked into the vortex. The ECB has the tools to stop contagion: massive purchases of government debt and cheap money for banks. The question is whether the EU has the needed political will.

China protests too much over QE

8 Nov 2010

Loose money from the US will mostly bounce off China's capital controls. A falling dollar will bring the yuan with it, aiding exporters. So why are some officials so exercised? Perhaps because QE distracts from China's own contribution to global imbalances: the undervalued yuan.

India more deserving of U.N. Council than Russia

8 Nov 2010

President Barack Obama's support for India's Security Council membership raises the question of who would step aside. Britain and France are normally regarded as next to go. But economically, Russia may make a better case for exit if it teaches that kleptocracy doesn't pay.

Private sector should lead gold standard adoption

8 Nov 2010

A proposal from the World Bank boss to use gold as a reference point could prove destabilizing. Like the Bretton Woods system, such a governmentrun peg would break under stress. A better approach would flip the monetary order and use gold as a private means of global exchange.

Employment starts to look at odds with policy

5 Nov 2010

October s solid U.S. job growth of 151,000 suggests the economy may be gaining traction, as the service sector and temporary help showed strength. With the recovery inching toward a more normal track, it reinforces the need to move to normal fiscal and monetary behavior.

Ireland should make its budget plans clearer

5 Nov 2010

Bond vigilantes seem to think that Ireland's planned spending cuts won't be enough. The country doesn't need to get funding until next year and it can count on the EU bailout mechanism. But if it wants to avoid a bond market stampede, it must act faster and be bolder.

Asian exchange merger faces a problem: customers

5 Nov 2010

They might not oppose Singapore's $8 billion bid for Australia. But if the bourses are crunched together, brokers and traders would probably want to see fees come down to the lowest common level. That will make it hard to extract revenue synergies necessary to justify the price.

Protectionism remains a threat – not a reality

4 Nov 2010

Canada's rejection of the Potash bid is wrong, but not a sign of rising protectionism. Actual barriers to trade of investments haven't multiplied since the beginning of the slump. Governments have wised up to the lessons of the past, and economic populism doesn't pay.

Fed’s QE2 may make for less cooperative world

4 Nov 2010

The U.S. Fed's decision to print more money is sinking the dollar and has upset emerging economies, whose fears about bubbles and inflation are valid. More attempts to curb capital inflows are possible. G20 cooperation on the yuan and global imbalances may be harder to achieve.

Man Group recovery starts to stack up

4 Nov 2010

The world's largest listed hedge fund group has had a tricky year, but performance at its main fund is improving. Assets from the expensive GLG acquisition have also had a good run. No wonder Man's shares have jumped. But until there's sustained performance, they remain a punt.

Russia could pay high price for fiscal populism

3 Nov 2010

The World Bank wants Russia to rethink its loose fiscal policy. The current 3 percent budget deficit looks enviable, but rising spending will add to economic strains. It will boost inflation, lead to higher taxes and fuel corruption and worse if the oil price falls.

Midterm beating could help Obama shift to center

3 Nov 2010

Presidents usually win second terms, even if their parties suffer midterm blowouts. But Obama had better not rely on history for 2012. To lift his and the economy's fortunes after Tuesday's losses he needs to work with incoming Republicans to create jobs and cut spending.

Tea Party set to stir up U.S. fiscal pot

3 Nov 2010

The antiestablishment movement helped Republicans to big midterm gains. But now the newcomers have to turn passion into policy. It could be a rough start, even involving the threat of a government shutdown. But the Tea Partiers' aversion to spending may also bring some realism.

Don’t look for bond bubble in Nigerian debt issue

3 Nov 2010

The most populous African nation s latest attempt at tapping global capital markets isn t necessarily a sign that investors have lost their sanity. As one of the continent s top oil producers, with relatively low debt and some stability, its $500 mln offer deserves a look.

Bernanke’s bond spree raises more risk than reward

3 Nov 2010

The Fed s announcement of $600 bln of Treasuries purchases was well signaled, but the money is very likely to flow into commodity speculation and overheated emerging markets. Pointing a smaller money hose directly at small business would ve been more effective and less risky.

Empowered GOP may have fun kicking Bernanke around

3 Nov 2010

Whether or not their party captures the U.S. Senate, Republicans will find budget cutting difficult and often unpopular. However as several regional Fed bank presidents and many Republicans support tighter money, a GOP Congress may make sport of harassing the Fed chairman.

Tepid animal spirits still restrain M&A recovery

3 Nov 2010

Convenience store chain Casey s and American Idol owner CKX couldn t strike deals despite multiple suitors. HSBC abandoned Nedbank and wouldbe buyers of Potash, Genzyme and Dynegy seem reluctant to dig deeper. Cheap money can t seem to overcome boards afraid to be wrong.

Heed Australia and brace for global acceleration

2 Nov 2010

World recession? Things looks different from the southern hemisphere. Australia's central bank has raised rates again because it sees abovetrend global growth, a stillstrong China and high commodity prices. Cheap western money looks about to push up global growth and inflation.

Ireland needn’t raid pension cookie jar – yet

1 Nov 2010

Government advisers think the state pension pot should be forced to buy sovereign debt. The 18 billion euro fund could help Ireland finance its monster deficit, but the political cost could be great. Besides, the country isn't that desperate for money right now.