Fiscal Policy

Obama taps policy guru to elevate his academics

10 Jun 2013

The U.S. president has picked a trusted and loyal adviser, Jason Furman, to head the White House team of economic wonks. As Furman steps out of the shadows, he’ll need to balance a natural desire to boost the council’s profile without watering down its valuable research focus.

Mortgages could upset Fed’s best laid plans

10 Jun 2013

The U.S. central bank would like a graceful exit from quantitative easing. Investors in the $8.2 trln mortgage market will make that hard. Their hedges exaggerate movements in the Treasuries market, as seen in May’s yield spike. The pattern could be dangerously self-reinforcing.

U.S. recovery leaning heavily on McJobs

7 Jun 2013

Lower-paid and temporary work accounted for most of May’s 175,000 employment increase and 40 pct of new jobs in the past year. Meanwhile, part-time work remains high and may rise as Obamacare kicks in. The jump in jobs might look good, but for many it’s not a path to prosperity.

Making sense of the ECB’s negative rates dilemma

3 Jun 2013

European Central Bank officials talk the idea of negative rates up and down. This radical monetary policy might pull the fragmented euro zone back together. It could also backfire. The Breakingviews guide to negative rates explains why policymakers are being coy.

Fed generates the wealth, but where’s the effect?

31 May 2013

Americans’ private worth grew twice as fast as the U.S. economy last year, due largely to the rise in stocks and other financial assets. They can thank Ben Bernanke for that. Consumers aren’t, however, rushing to spend their gains. It’s another reason to question Fed policy.

California surplus is a hidden gem for U.S. economy

28 May 2013

The one-time basket case expects a $1.1 billion surplus next year. Other states are climbing out of deep fiscal holes, too. It’s still unclear what each local government will do with its newfound riches. But their recovery means they won’t be such a drag on the U.S. economy.

Global inflation slide stirs the bogeyman

24 May 2013

In theory, inflation should have picked up when central banks cranked up the printing presses. Instead, it’s slowing down. In the U.S., it’s nearly 1 percentage point below target. Policymakers now have to start worrying about their worst enemy – deflation.

NAFTA veteran is trade-friendly choice to run WTO

6 May 2013

The two men vying to replace Pascal Lamy are both Latin American. But Roberto Azevedo has spent 15 years fighting Brazil’s protectionist corner, while Mexican Herminio Blanco negotiated NAFTA and has 13 years of private sector experience. He looks the likelier free-trader.

The private sector comes to U.S. economy’s rescue

3 May 2013

Enterprises added 176,000 jobs in April, and the private sector grew by 4 pct in the first quarter. Higher payroll taxes, tight state budgets and sequestration downsizing aren’t preventing employment gains. America’s form of austerity by stealth looks to be working.

Healthcare study reveals risks of blind spending

3 May 2013

The trillions of dollars America plans for insuring the poor may not improve health, new research shows. The study’s merits aside, its scrutiny of Medicaid costs and benefits offers a model for making policy. Most programs would profit from a thorough look before Congress leaps.

President’s pragmatism paying dividends for Peru

2 May 2013

Ollanta Humala’s social programs and support for indigenous peoples please his supporters, but he has also welcomed foreign investment and may be rolling back an expensive mining consultation law. The strategy has critics, but could keep Peru on an enviable growth trajectory.

Fed running risk of re-inflating bubbles

1 May 2013

The U.S. central bank is sticking with loose monetary policy and hefty asset purchases. But with stocks at record levels and home prices up 9.4 pct in a year, asset values are heading higher even if growth isn’t. The Fed needs to counter bubbles as well as economic sluggishness.

Corporate America lamely blames U.S. budget cuts

25 Apr 2013

This earnings season, forced deficit reduction is filling a role previously held by the weather, China and other spurious scapegoats. Delta and IBM are among the culprits, but Washington-inflicted damage is trivial. Even so, lawmakers could all but end any financial disruption.

House finance chief puts politics over governing

23 Apr 2013

Jeb Hensarling, head of the U.S. House finance committee, has shunned the new consumer bureau’s chief. He complains Obama appointed Richard Cordray without congressional consent. The lawmaker would better serve finance, and democracy, by making his case with tough questions.

IMF needs more creative ideas on growth

22 Apr 2013

The world’s richest nations are on track to grow just 1.2 pct this year, half the pre-crisis rate. The policy experiments - austerity, stimulus and easy money - aren’t yet paying off. The IMF seems stuck too. More innovative research and advice would make the fund more valuable.

Prioritizing U.S. debt could stamp out market risk

19 Apr 2013

Drama over the cap on Uncle Sam’s borrowing power rattled investors back in 2011. A new proposal would force Treasury to pay bondholders before contractors and seniors. If the debt limit can’t just be scrapped, at least markets could be spared some of Washington’s dysfunction.

Brazil boxes itself into corner on growth

18 Apr 2013

The central bank just raised interest rates to fight inflation. GDP expansion, meanwhile, is already stalling. High public spending and rapid private credit growth, the fuels for Brazil’s boom, are both reaching their limits. President Rousseff may be running out of options.

Whatever happened to the inflation "Weimarists"?

12 Apr 2013

When the U.S. Fed began its massive stimulus campaign, critics invoked Germanic history and wheelbarrows full of cash. Four years on, only the most stubborn hawks still fear hyperinflation. Consistently low price growth has made Ben Bernanke’s easing look safe, if his exit works.

Obama puts other people’s money where his mouth is

10 Apr 2013

The president doubles down on taxing the rich as the Buffett levy makes an official appearance. New revenue is the centerpiece of Obama’s deficit-cutting ambitions, with millionaires, buyout bosses and smokers targeted. That probably dooms his budget plan - and a big debt deal.

Excessive vacancies are a travesty of Justice

9 Apr 2013

Several key posts remain open at Barack Obama’s law enforcement department as deadlines loom to file financial crisis-linked cases. The president is already under fire for not nailing Wall Street miscreants. It’s starting to look like he and the Justice Department are giving up.