Economics

SGX’s Bocker must justify M&A ambitions

1 Nov 2010

The Singapore exchange chief once said Asia didn't need consolidation. No wonder shareholders don't like his offer for the Australian bourse. If he really thinks a tieup is compelling, Bocker may have to redraft the deal terms even if that leaves him with a smaller role.

Rousseff should follow Early Lula not Late Lula

1 Nov 2010

Brazil s new president promises to follow Lula s policies, but it s unclear which. Lula started out fiscally cautious, but fought poverty with the Bolsa Familia stipends. Later he flouted property rights while increasing spending. Rousseff seems worryingly keener on Late Lula.

Investors face trick-or-treat week

1 Nov 2010

Highflying markets are braced for an actionpacked few days. Investors expect a treat from the U.S. Federal Reserve and the Bank of England to slam its door. A U.S. election that shuts out Democrats may only add to the merriment. But any surprise tricks could prove dead scary.

Germany hopes to mutualise banking woes

31 Oct 2010

The German government is proposing a European approach to a banking resolution fund. But after Berlin refused to agree on a Greek bailout, EU members with stronger banking systems than Germany won't like being asked to help sort out a financial mess they didn't cause.

American economy exhibits unhealthy zombie look

29 Oct 2010

Thirdquarter GDP shows imbalances rising. The gain in chained dollar GDP was equaled by the growth in net imports and exceeded by the rise in inventories. Consumption was solid but government spending rose sharply as the savings rate fell. It s not an altogether pretty picture.

U.S. economy awaits election storm, split or rally

29 Oct 2010

More Republicans are on their way to Capitol Hill. But the size of the midterm victory matters. Whether the newly numerous GOP takes one house of Congress, both or falls just short in each will impact taxes, trade, jobs and, perhaps, Obama s chances at reelection in 2012.

SGX’s investors should consider blocking deal

28 Oct 2010

Whatever the difficulty in gaining Australian approval for buying rival ASX, it might be thought SGX's own investors will be a rubber stamp. But the Singapore government, the largest, can't vote; the Tokyo Exchange, the second biggest, is doubtful; and others are nursing losses.

New Jersey becomes unlikely blueprint to governors

28 Oct 2010

Against many odds and strong opposition Chris Christie balanced this year s budget. He even killed an overpriced, if worthy, tunnel project. But pension cuts and budget obstacles still loom. His budgetary governance model shows promise, but needs further testing.

Emerging-market bonanza gives home team advantage

28 Oct 2010

Investors hungry for yield and protection against a sagging dollar have this year gobbled up $23 bln of bonds in developingcountry local currencies. Some may be forgetting one key point amid the frenzy. If things go bad, sheriffs playing by different rules will lay down the law.

Kirchner’s death won’t change much for Argentina

27 Oct 2010

True, the former president designed the statist policies pursued by the country since 2003. But high commodity prices have allowed the economy to prosper despite assaults on property rights and the private sector. Voters may yet again reward bad policy in 2011's election.

Portuguese stalemate punctures euro zone calm

27 Oct 2010

The country's main political parties have failed to agree a new budget, ending the euro zone's bond market lull. Portugal is struggling with the strong euro and faces a hefty debt refinancing burden. Renewed turmoil may force the ECB to keep propping up Europe's weakest banks.

Russians back with pricey IPOs

26 Oct 2010

Russian companies are again lining up to list abroad. Offerings in progress in London include hypermarket O'Key and internet holding company Mail.ru. But with many IPOs to choose from, investors' scepticism towards Russian ones won't be easily overcome.

Why are both ASX and SGX shares falling?

26 Oct 2010

The mega Asian stock market deal is getting the thumbsdown for two reasons. ASX is falling because investors fear regulators may kibosh the takeover, removing their premium. Meanwhile, SGX is down because investors don't like the deal but still think it might happen.

UK GDP surprise won’t remove risk of double-dip

26 Oct 2010

Britain s economy grew by a fasterthanexpected 0.8 percent in Q3, with much help from construction and higher state spending. But looming government cuts are likely to squeeze growth, as UK consumers tighten their belts, unemployment rises and house prices fall.

Mervyn King critique spells trouble for big banks

26 Oct 2010

The Bank of England governor has backed away from his singleminded idea of separating retail and investment banking arms. But he is still rightly determined to remove the taxpayer safety net from private institutions. UK banks hoping to defend the status quo face a tough fight.

China’s new powers should persuade it to reform

25 Oct 2010

China will become the thirdlargest power at the International Monetary Fund after reforms greenlighted by the G20. The belated shift reflects its growing economic might. Yet great power comes with responsibilities. Beijing must move faster to help correct global imbalances.

Europe’s default option is risky, but worth trying

22 Oct 2010

Germany's ideas for a crisis resolution regime, on which it may rally the EU, could force losses on private creditors of rescued countries. The scheme eliminates moral hazard. But it risks destabilising markets and making monetary policy more difficult. Still, it's worth trying.

G20 will hopefully knock sense into leaders

22 Oct 2010

With the recovery threatened by protectionism, competitive devaluation and excessive budget deficits, this forum could be pivotal. Mature and growing economies need to smooth frictions now more than ever. With any luck, peer pressure will curb destructive economic habits.

U.S. airlines can soar higher with reverse thrust

21 Oct 2010

Southwest s bumper profit caps a heady week for the industry. The glum economic backdrop makes the rebound even more impressive. Rising fuel prices remain a threat. But U.S. carriers can keep momentum by resisting the selfdestructive surge in plane orders happening in Europe.

Trichet’s gloom drills hole in EU budget deal

21 Oct 2010

The ECB president thinks the FrancoGerman deal on budget discipline doesn't go far enough on imposing sanctions for wayward euro zone members. Still, agreement on the principle of setting up a resolution scheme to deal with future crises could open the way for meaningful reform.