Economics

Japan set for sensible but risky economic change

27 Aug 2009

The DPJ, likely winners in Sunday s election, wants to move 3% of Japan s GDP from public works to social spending. After two bad decades, Japan s voters seem to be ready to try a new approach. But the transition costs could further raise Japan s already excessive public debt.

Excess finance is right target for top regulator

27 Aug 2009

The head of the UK FSA thinks the country s financial sector is dangerously overblown. That makes intuitive sense. Lord Turner would consider slapping a turnover tax on the City to cut it down to size. But more expensive capital requirements could be enough to do the job.

Slow growth puts UK fiscal gamble at risk

27 Aug 2009

Both the US and UK governments have bet on swift economic recovery. The odds are getting better that a strong US recovery will cut into deficits, but hopes of a quick UK turn are ebbing. The UK made its fiscal gamble at the wrong time. It is beginning to look a loser.

Poker leader folds but stakes remain high

26 Aug 2009

World Poker Tour led the game s popularity surge a few years ago. Once valued at more than $500m, the company has just been sold for chump change. The buyer is UK s PartyGaming, which might be making a big new bet on legalised online gaming in the potentially huge US market.

Germany still far from healthy

26 Aug 2009

Government stimulus and a big fall in imports lay behind the return of quarterly GDP growth. But the decline from last year is the worst in forty years and almost twice as deep as in the US. Unemployment could rise further. The mood is better, but the economy still looks frail.

Phoenix could reignite European IPO market

21 Aug 2009

The German drug wholesaler may be floated with a E6bn pricetag as part of the restructuring of the Merckle empire. A trade sale remains likely, and the mooted valuation looks toppy. But if markets hold up, a big European IPO could be the green light for a host of new issues.

Off-piste investors could put credit market on the skids

21 Aug 2009

Research from JPMorgan suggests that nontraditional investors in credit dubbed offpisters could destabilise fixedincome markets. Credit newcomers will feel let down. Only a few months ago, many banks were luring them into the market with the promise of juicy returns.

Much at stake for banks in $5bn China property IPO

20 Aug 2009

Chinese realestate developer Evergrande is getting a second go at flotation, having cut the price since pulling an $8bn IPO last year. A cat s cradle of preIPO loans and shareholdings means the float could offer a neat payback for several investment banks if it gets away.

South America may finally gain independence

20 Aug 2009

Most of Latin America is entering economic recovery, as competition for the region s natural resources intensifies. Higher resource prices will benefit those countries open to free foreign investment, and reduce their economic dependence on the Yanquis.

Markets confused by recovery puzzle

18 Aug 2009

Shares are having a choppy week. That s hardly surprising after such a long rally, and when the signs of global growth remain tentative. Above all, in the midst of revolutionary policy experiments neither theory nor history provides much guidance about what happens next.

Buyout firms race to start over in the east

18 Aug 2009

Foreign private equity firms have finally been allowed to set up Chinese funds for local investors. Perks for early arrivals like Blackstone include a share in government projects, access to prodigious domestic savings and new investors still willing to pay 2and20 fees.

Prawns and risky bonds make for an ugly cocktail

17 Aug 2009

Some bigname hedge funds and an investment bank are bogged down in a dispute after an unusual bet on Indonesian prawn farming went sour. Their pursuit of unconventional returns is laudable. But many of the risks of this peculiar opportunity were visible from the outset.

UK dividends are down but not out

14 Aug 2009

Think the easy money has been made in the stock market? Juicy yields could be the next investment frontier. With the FTSE yielding about 4.4%, more than twice the S&P 500 s 2.1%, there are rich pickings. But investors should be wary of the recession or an oil price decline.

Woodstock 40th a grim anniversary for music business

13 Aug 2009

The industry s fiscal circumstances look nothing like they did during the celebrated 1969 festival. The threeday concert was a financial disaster, but a subsequent live album and documentary made it profitable. Rob Cox looks at the economic reversal in today's rock and roll.

Eurozone enters fragile stabilisation

13 Aug 2009

Recession in Germany and France is over, after their GDP rose slightly in the last quarter. Past recoveries have been vshaped. But that is not likely this time the pain is too global and the financial dislocations are too severe. A recessionary relapse is a greater risk.

Fed taps brakes – but must be wary of the traffic

12 Aug 2009

The central bank said it will slow its purchase programmes of Treasuries and agency securities and it expects inflation to remain subdued. But it must be uncharacteristically vigilant on developing stock market and commodity bubbles to avoid repeating the errors of 200206.

Crisis has changed remarkably few minds

12 Aug 2009

When the world financial system was close to the edge, many bankers, economists and politicians called for new thinking. But prejudices are proving strong. It s almost back to the precrisis mindset as far as worries, strategies, policies and even bonuses are concerned.

When is it time to give up the hedge fund rat race?

12 Aug 2009

For Tim Barakett at Atticus it s at 44 with $1bn in the bank but near the bottom of his game. That s not ideal, but at least it s honest to hand back money when your heart s not in the job. Others make the mistake of hanging on too long and being forced to give up.

Wicked whispers don’t help Rio Tinto – or China

10 Aug 2009

A spurious editorial on a quasistate website alleged Rio had ripped China off to the tune of $100bn. The aim may be to discredit the AngloAustralian miner. But misinformation and confusion over where the state starts and ends do nothing for China s economic relations overseas.

Optimism over US unemployment drop is premature

7 Aug 2009

The stock market s minirally after the report of a 0.1point drop in July unemployment was misguided. The fall was caused by a decline in the labour force, which is not a sign of revival. The fiscal and monetary mess could lead to a halting recovery with ongoing job losses.