Government & Agencies

EU angst over “Buy American” reopens old wounds

14 Dec 2022

European policymakers are in a tizzy over local subsidies in President Joe Biden’s Inflation Reduction Act. Technical tweaks may level the playing field a bit. Even so, the bill rekindles long-running disputes over who picks winners and losers in the EU – and who should pay.

FTX sins don’t absolve its big-money enablers

13 Dec 2022

The SEC, CFTC and federal prosecutors said the crypto group’s founder Sam Bankman-Fried defrauded investors and users. But venture backers were gullible and regulators idle. Institutions can try to pin blame on just one bad actor. But they can’t ignore their own culpability.

Chinese equities need time to exit lockdown

13 Dec 2022

Local bourses have rallied somewhat as Beijing eases pandemic controls. In the long run, ending policies that depress consumption and investment will boost earnings at listed Chinese firms. The wild card is how the real estate rescue package impacts appetite for stocks.

Democracy remains vulnerable despite a good year

12 Dec 2022

Autocrats like Xi Jinping and Vladimir Putin have suffered setbacks. So have demagogues like Donald Trump. But the tough economic outlook presents further challenges for democratic systems. So does the fact that many people feel their lives have little meaning, says Hugo Dixon.

Sinema widens gap between Democrats and Wall St

9 Dec 2022

The Arizona senator’s exit from the U.S. Democratic Party won’t change much in Washington, but it reflects a growing split between the financial sector and liberal lawmakers. Kyrsten Sinema stood apart in her support for wealthy investors. Wall Street is edging further right.

UK’s Big Bang barely mitigates City’s Brexit pain

9 Dec 2022

Finance minister Jeremy Hunt is fiddling with some peripheral regulations to try and boost the City’s competitiveness. It won’t reverse the flow of bankers to Europe. The exodus might even speed up if the EU finally gets moving on its own financial reforms.

China’s reopening will come with big late fees

9 Dec 2022

Strict quarantine rules have helped authorities to keep money onshore, including $760 bln in travel spending. If China fully relaxes, capital outflows could be Beijing’s next headache. But the damage to outward-facing parts of the economy from keeping borders closed is worse.

Congress can finally end private-equity tax break

8 Dec 2022

Presidents Obama, Trump, and Biden all tried to close the carried-interest tax loophole, and they all failed. Democrats’ latest election win gives them another shot at an overhaul. Lobbyists will push back, but liberals and deficit hawks should unite to end the unfair carve-out.

Rio Tinto plays chancy round of Mongolian roulette

7 Dec 2022

After years of wrangling, the fate of a $3 bln offer for the rest of the Oyu Tolgoi copper mine’s partner heads to a vote. A win would make a key piece of growth easier to manage. If the bid fails, minority shareholders face stake dilution and Rio managers may merit the boot.

Saboteurs add new twist to U.S. outage problem

5 Dec 2022

Over 40,000 customers were plunged into blackouts out after attacks on two U.S. substations. Vandalism on the power grid is costly to secure against, but utilities continue to face much larger vulnerabilities. The threat from storms is orders of magnitude larger and growing.

Railway fight gets stakeholder capitalism on track

5 Dec 2022

After President Biden blocked a strike that threatened to disrupt the U.S. economy, investors want Norfolk Southern and Union Pacific to let shareholders vote on the sick-pay sticking point. Such proposals bring welcome attention to fresh ways of thinking about the bottom line.

South Africa growth is derailed, Ramageddon or not

5 Dec 2022

President Cyril Ramaphosa is under pressure to resign over a graft scandal. The country’s strong finances and small exposure to foreign investors will prevent a full-blown crisis. But his economic reforms are over, whether he stays or goes.

Friendshoring makes sense if done in the right way

5 Dec 2022

The United States and its allies want to build up suppliers of goods such as solar panels in friendly countries so they’re not vulnerable to Chinese disruptions or blackmail. To avoid self-harm they should define friends broadly and not attack China economically, says Hugo Dixon.

Worker scarcity puts pressure on U.S. policymakers

2 Dec 2022

Despite adding more jobs than economists expected in November, the labor participation rate fell again. The shrinking supply available to fill 10.3 mln open roles risks keeping inflation high. Pay hikes have yet to fix the problem. Coordinated congressional and Fed action might.

Flummoxed Congress dims faith in post-FTX fixes

1 Dec 2022

The first public hearing since the crypto exchange’s collapse laid bare Capitol Hill’s collective ignorance. A lack of new laws leaves agencies unfit to oversee digital currencies. It’s a steep learning curve to protect investors without the industry just writing its own rules.

The bubble in predicting the end of the world

1 Dec 2022

The globe faces multiple threats to peace and prosperity. Several new books address the challenges of enormous debt, geopolitical rivalries and climate change, predicting disastrous consequences. The best thing investors can do is keep a level head, writes Edward Chancellor.

Yandex split marks end of Russian tech hopes

1 Dec 2022

The group once known as the “Russian Google” may split its international and Russian businesses. Ex-finance minister Alexei Kudrin will head the shrunken local arm. The company’s founders can start anew, but investors in the former Nasdaq darling will likely remain bereft.

Jiang Zemin made China richer and more unequal

30 Nov 2022

China embraced entrepreneurs, developed markets and alleviated poverty under former President Jiang Zemin, who has died aged 96. His pragmatism probably saved the Communist Party. But the inequality his era spawned still haunts his successors.

UK banks’ Big Bang thankfully looks like big flop

30 Nov 2022

Prime Minister Rishi Sunak wants to use Brexit freedoms to boost the City’s appeal. Yet supervisors plan to introduce tougher bank capital rules than in Europe, and so-called ringfencing will remain for big lenders. That’s good: strong regulation can be a competitive advantage.

China property bailouts leave most out in the cold

30 Nov 2022

Beijing is letting homebuilders use equity financing again, and state banks extended $220 bln in new credit lines. But policymakers want to avoid propping up the whole market, so only a handful of developers passed the test. The rest face more stress – as do foreign bondholders.