Economics

Turkish politics are shifting; economics aren’t

14 Sep 2010

The prime minister's constitutional referendum passed handily, pleasing the EU while dismaying secularists. But political changes won't overcome undesirable economic continuity. Turkey's public spending, payments deficits, debt and inflation all remain problematic.

Tax changes drive private equity’s great selloff

13 Sep 2010

The industry is on track this year to sell more assets than it buys for the first time ever. But this isn t just about realizing cash for investors. Looming U.S. tax hikes on carry give buyout barons a compelling rationale to sell now, even if it doesn t much help their clients.

Buy China makes sense only in China

13 Sep 2010

China will treat any product equally, says its premier so long as it's made in China. That will disappoint foreigners hoping for full market access. Beijing may see an unlevel playing field as key to China's development, but it needs to be wary of calling down protectionism.

Harrisburg rescue shouldn’t be seen as precedent

13 Sep 2010

It s no surprise Pennsylvania advanced its capital city $3.6 mln to cover an interest payment. Such minor fudges are feasible, especially ahead of an election. But even with a decent economic base, Harrisburg remains close to default. It isn t alone. They can t all be bailed out.

China’s yuan plan: a guide for the perplexed

10 Sep 2010

Beijing's dreams of making its currency global could change the world if they get off the ground. But there is far to go, and China's capital controls stand firmly in the way. John Foley and Wei Gu separate the fact from the fable.

Cuba’s economic model not as broken as Fidel says

10 Sep 2010

The Cuban leader is right in one sense: as it stands today the island's economy doesn't work. Opening the market to foreigners would do little to help Cubans. But freeing up property ownership, savings and prices would work wonders. The Castros could even keep their parades.

Sarkozy too weak to deliver needed pension reform

9 Sep 2010

The French president watered down his already modest pension reforms after unions hit the streets en masse. Modernisation is needed. But the obstacle to implementation is Sarko's shortage of political capital. As another general strike looms, the reforms risk further dilution.

How the Destroyer could destroy Japan

9 Sep 2010

Ichiro Ozawa, Japan's PM pretender, has acquired his Destroyer nickname by bringing down governments but his skills seem transferable to the economy. Racking up government spending could eventually lead to an explosive crisis. Hopefully, such destruction would be creative.

Multi-lane zone shows the euro fear

9 Sep 2010

Yields on Irish and Portuguese debt are hitting records in the life of the euro zone while Greek yields remain in the stratosphere. The problem is not just debt but competitiveness and growth. Especially in Portugal and Greece the current signs are not encouraging.

U.S. security hawks should be fiscal hawks, too

9 Sep 2010

Secretary of State Hillary Clinton rightly sees national security implications in America's growing debt. Setting aside jitters over China as a creditor, the weaponry of hard power is expensive. Just as important, profligacy undermines the nation's softer powers of persuasion.

U.S. banks could grab a pay rise from Congress

8 Sep 2010

Wall Street isn't waiting for Washington to figure out the fate of tax cuts due to expire at yearend. Some firms may consider moving forward annual bonuses to December to lock in lower rates for their stars. The impact would be tantamount to a pay hike at little cost to banks.

Euro bank funding revival may leave stragglers

8 Sep 2010

European lenders have increased their issuance of longterm debt. Stress tests have lowered funding costs, while investors want a return on their idle cash. Yet weaker banks must pay far higher rates to reduce their dependence on central banks. They may struggle to compete.

It’s 50 years since shares looked this cheap

8 Sep 2010

Successful longterm investors buy good assets when nobody wants them, and sell when the riskaverse are piling in. Bonds are considered safe havens today, after shares' lost decade. That could be about to reverse; the great bull market in government bonds is probably over.

Gillard win turns thumbscrews on miners

7 Sep 2010

The Australian PM hung on to power by her fingernails, making her tax on miners' profits more likely. How hard and widely it hits hinges on yet more horsetrading. But Rio Tinto and BHP Billiton can probably forget hopes of returning to the superprofitable status quo.

Obama’s offensive may not charm business or GOP

7 Sep 2010

The president's plans to spend $50 bln on roads and railways and grant businesses $300 bln of investment tax credits have merit. But they don't look enough to sway disillusioned executives. And Republicans are in no rush to pass a second stimulus before midterm elections.

China needs political reforms for future growth

6 Sep 2010

President Hu Jintao said economic zones should test political reforms. China's authoritarian system has shown its merit during the crisis. Although changes may be disruptive in the short run, more checks and balances and rule of law are indispensable for sustainable growth.

UK deficit doves should be ignored

6 Sep 2010

It's not just the five Labour leadership candidates who are arguing that the coalition is going in too hard with cuts. Boris Johnson, the Conservative mayor of London, has joined the chorus. While the economic case for the hair shirt isn't watertight, the political case is.

New Rosneft CEO cements political control

6 Sep 2010

While investors may welcome the end of uncertainty, the replacement of independentminded Sergei Bogdanchikov with career bureaucrat Eduard Khudainatov shows that Russia's largest oil company is more politicised than ever. This should temper enthusiasm about privatisation plans.

Export ban ruins Russia’s agricultural dream

3 Sep 2010

Just a couple of years ago, the Kremlin boasted of Russia's ambitions to feed the world. Investors poured into Russian agriculture to tap its huge export potential. But economic slump, drought and now a prolonged grain export ban show how far the dream is from becoming reality.

U.S. jobs figures provide subdued reassurance

3 Sep 2010

The private sector employment gains in August, together with positive revisions for previous months, should dispel fears of an economic doubledip for now. With just one more jobs report before November's elections, the latest data also offer a glimmer of hope for Democrats.