Economics

Colombia’s new leader can’t evade Andean terrain

9 Aug 2010

President Juan Manuel Santos free market policies should further fuel growth. And his detentes with leftist guerrillas and neighbors may improve security too. But Venezuela and Ecuador remain socialist, and their economic struggles may yet rekindle regional conflict.

Wheat panic raises spectre of food crisis

6 Aug 2010

Prices are up 90 pct since June on fears that Russia's drought will create shortages. Prime Minister Putin is adding to markets' fear by banning exports. But global wheat stocks remain abundant. Even so, the ripple effects of the current alarm will hit the developing world hard.

U.S. unemployment problem looking more structural

6 Aug 2010

Laidoff census workers were the main cause of the July tumble. But the private sector added just 71,000 jobs, suggesting struggles to absorb new workforce participants. New hiring is seriously lagging that of previous recoveries. A new market inefficiency could be forming.

Sterling could reach $1.70 before feeling vertigo

4 Aug 2010

The pound's upward trend should gain continued support from the government's promise of serious fiscal medicine. But the growth and inflation outlook is very uncertain. When the economy tastes the bitter pills, the pound could easily turn back down.

China slows down just enough

2 Aug 2010

One of the world's key growth engines has shown new signs of slowing, with the manufacturing index down to a 17month low. That sounds like fodder for doubledip doommongers. But with further cooling measures looking unlikely, investors are right to take the news well.

U.S. GDP data show recovery lacks bounce

30 Jul 2010

The U.S. economy grew at a 2.4 percent rate in the second quarter. But inventory buildup, government spending and a taxdriven housing blip produced most of that, suggesting sluggishness elsewhere. Even with no doubledip, growth is too slow to help the unemployed much.

Thanks for the profits. Now where’s the growth?

29 Jul 2010

Across the corporate spectrum, from defence and drugs to publishing and packaging, the results message is the same: we've successfully navigated choppy waters, even if we can't see far ahead. But the markets want growth, and see limits to rising earnings from stagnant sales.

UK retirement reform risks charter for geriatrics

29 Jul 2010

A government proposal to scrap automatic retirement at 65 is welcome. But giving the same employment rights to older employees who will accrue more of them while their contribution inevitably dwindles makes no sense.

Schwarzenegger takes out big guns in fiscal crisis

29 Jul 2010

The California governor has declared a financial state of emergency and put government worker furloughs in his crosshairs. That should usefully focus the minds of lawmakers still twiddling thumbs while the Golden State approaches a Greeklike tragedy.

Strong trade growth belies double dip talk

29 Jul 2010

The fear of a double dip in the global economy looks overdone. Global trade is probably back to its precrisis peak. China has kept motoring. German growth is rallying. America is picking up gradually. The world's problems are many but global recovery appears on track.

Mega-jubilee may be least bad answer to debt mess

28 Jul 2010

Some want fiscal austerity, others more stimulus, but neither would really solve the basic global financial problem of too much leverage. It's time for a reset. Forgive debts and write down corresponding assets, says Edward Hadas in his valedictory column for Breakingviews.

Stress tests help reduce market tension

28 Jul 2010

It's more or less all right again in financeworld. Investors grumble, but they have been comforted by the EU's examination. Antibank sentiment is cooling and corporate profits look pretty good. But the economic recovery is still hesitant, and someday the stimulus must end.

Derivatives market blind to sovereign seniority

28 Jul 2010

Sovereigns like to think they're different. But the credit crisis is making banks treat them like any other counterparty when it comes to trading in derivatives. Just look at Portugal.

Banks 2, Basel 1

27 Jul 2010

The global banking rulesetter has agreed muchneeded standards on capital. But Basel has retreated on its toughest proposals, and liquidity and leverage reforms have been kicked out to 2018. Some easing was needed. But much more and Basel will look like it has been nobbled.

Further U.S. house price fall may set banks back

27 Jul 2010

The 4.6 pct yearly rise in May's CaseShiller house price index was driven by the Federal homebuyer subsidy. Still up 47.3 pct from 2000, prices look set for a further drop, as jobs are scarce and confidence falling. That will test the limits of last year's bank stress tests.

UK’s push on banks faces stressed resistance

26 Jul 2010

The business secretary wants to get banks to lend more to good British companies. Shame his predecessors didn't think about that noble goal in the bubble years. Now bankers' response will be slowed by the need to build up capital, the weak UK economy and ingrained bad habits.

Spain’s cajas boosted by Flowers power

26 Jul 2010

JC Flowers is buying a 450 mln euros convertible bond in one of Spain's troubled savings banks a previously pariah sector. It's unclear how the investment will pay off for the U.S. financials boutique. But the injection of private capital into the cajas is a welcome advance.

UK bubble bashers should focus on property

26 Jul 2010

The new bipartite regime, led by the Bank of England, won't find life much easier than the old tripartite system. It will have to grapple with new tools, a new structure and possibly boredom. But if regulators remember that bubbles normally start in property, things may be OK.

Hawkish Trichet should be heeded

23 Jul 2010

The ECB head is calling for fiscal austerity now. His worry about nonlinearity a sudden loss of confidence is all too justified. Now that the worst of the financial crisis and the recession has passed, it's time to abandon radical fiscal and monetary experiments.

Fake degrees give China investors new worry

23 Jul 2010

China's bestpaid executive stands accused of faking his academic credentials. Banks who bring companies to market are supposed to ask tough questions about management but with intense rivalry and big fees at stake, that may not always be easy to do.