Fiscal Policy

Review: Why governments should give away money

13 Jul 2018

Handing out cash with no strings attached is an idea that has fired up a bizarre coalition of Silicon Valley techies and development economists. It may not be the silver bullet that some boosters claim. But as a new book argues, it deserves a serious hearing.

China’s share slump spotlights super-regulator

11 Jul 2018

Exchanges rebounded briefly on reports Beijing might delay investment restrictions due to market ructions. A new regulatory structure put in place after a botched response to the 2015 crash hasn’t overreacted to this year’s 16 pct slump yet. But big problems haven’t been fixed.

Argentina’s $50 bln IMF deal has a year to work

8 Jun 2018

President Macri, like Cardinal Mazarin’s preferred generals, has been lucky as well as bold so far in his efforts to fix Latin America’s No. 3 economy. With elections not due until late 2019 and the deal shielding social spending, he has time to beat opponents’ IMF-phobia - just.

India’s central bank finds comfort in the crowd

6 Jun 2018

A 25 basis point hike in the main rate comes as the rupee is one of the worst performing regional currencies this year. By acting now, the Reserve Bank of India ensures it doesn’t look like a laggard. But higher rates and oil prices mean the recent growth spurt may soon wane.

Mario Draghi may help more in Rome than Frankfurt

31 May 2018

Turmoil in his native Italy threatens the European Central Bank chief’s biggest triumph: saving the single currency. A eurosceptic government would weaken his promise to do “whatever it takes”. He might have more success challenging opponents of the euro as a domestic politician.

How the EU can help save Italy from itself

31 May 2018

A new radical government will cast doubt over euro membership and inflame migration tensions. Other EU countries could help ease voter discontent by tweaking the bloc’s fiscal rules, and taking more migrants. That won’t be easy, but it beats Italy leaving the single currency.

Puerto Rico deaths will take toll on debt talks

29 May 2018

Last year’s hurricane ultimately killed some 5,000 people, a new study claims. That’s more than perished in Katrina in New Orleans or the Sept. 11 attacks. The extraordinary number will buttress the federal overseer trying to curtail payments on the island’s $70 bln of debt.

Only Italy can save itself from self-inflicted woe

29 May 2018

Investors are spooked by the prospect of a eurosceptic government pushing up debt, prompting an exit from the single currency. Contrary to 2011, Italy is the cause of the crisis, rather than a victim. A change of direction depends on voters, not the European Central Bank.

Investors in Italy sell first, ask questions later

25 May 2018

The radical government is not yet in place, but investors are not giving it the benefit of the doubt. Fears of a clash with the EU that forces Italy out of the euro have hit the value of shares and bonds. Party leaders’ reluctance to provide reassurance adds to market jitters.

Turkey’s FX rot demands radical measures

23 May 2018

A massive one-off rate rise is the least it will take to halt the lira’s accelerating slide to new record lows against the dollar. Even then, investors might still fear President Tayyip Erdogan’s monetary policy meddling. Capital controls would then grow more likely.

Italian radical agenda is a recipe for chaos

16 May 2018

A leaked plan by likely coalition allies 5-Star Movement and League says states should be able to exit the euro zone and cancel debt. That, along with a soaring budget and proposals for a shadow government, promise conflict with the EU. Bond markets are too complacent on Italy.

Italy’s radical government will be an EU headache

14 May 2018

The maverick 5-Star party and rightist League are nearing a coalition. Plans to cut taxes and boost social spending will clash with the euro zone’s strict fiscal rules. The new government may also demand more EU help with migrants. It’s a break from Italy’s pro-European stance.

Mark Carney may flummox markets again

10 May 2018

The Bank of England chief’s latest comments made investors doubt he will tighten monetary policy this year. Such scepticism is overdone. The economy doesn’t have to grow very fast to generate inflation and the jobless rate is very low. Rate expectations could shift once more.

Turkish politics will subvert currency defence

10 May 2018

President Tayyip Erdogan wants to support the lira, which has hit record lows against the dollar. That would require measures to curb inflation and the current account deficit. His efforts to pump-prime growth, especially before June elections, will achieve the exact opposite.

Nigeria’s FX reserve fetish is bad for growth

30 Apr 2018

President Muhammadu Buhari is vaunting a rapid rise in foreign exchange reserves. A decent war chest is worth having in case the naira needs defending. But accumulating a vast pile of dollars will deprive the economy of the hard currency it needs to keep growing and create jobs.

Mark Carney can delay UK rate rise with impunity

27 Apr 2018

A sharp slowdown in UK growth is enough reason for the Bank of England boss to defer monetary tightening. He has further grounds to hesitate since euro zone activity has slackened, with French growth more than halving in the first quarter. Discretion is the better part of valour.

Swiss central bank gets FX wish three years late

20 Apr 2018

The franc has weakened to 1.20 against the euro for the first time since the Swiss National Bank ditched its cap on the currency in January 2015. Several factors could explain why. Policymakers are unlikely to care much about the reasons given the moves may help revive inflation.

Brazil’s anti-graft drive may hamper fiscal reform

12 Apr 2018

The jailing of the country's most popular politician, Lula, and voter disgust at corruption among the powerful will give outsiders with clean reputations a chance to shine in October elections. That's welcome, but could mean needed spending cutbacks are less likely to happen.

Trillion-dollar U.S. deficits are funding headwind

10 Apr 2018

Recent tax cuts will push the annual federal budget shortfall into 13 figures and debt to nearly 100 pct of GDP by 2028, Congress’s number-crunchers reckon. The forecast, on the eve of a big auction of Treasury securities, gives investors one more reason to demand higher yields.

Hadas: Populist economics can be sensible

28 Mar 2018

U.S. President Donald Trump, Italy’s 5-Star Movement and other modern populists are floundering with outdated or bad economic plans. They would do more to help those left behind by globalisation if they used higher taxes to create better jobs and strengthen welfare security nets.