Government & Agencies

Ciampi should turn the screws on Fazio

29 Sep 2005

The discredited governor of the Bank of Italy has resisted calls for his head from politicians including Berlusconi, the prime minister. But Ciampi, Italy s wellrespected president, would be harder to resist. Read the transcript of our imaginary phone call.

Greenspan calls stability destabilising

28 Sep 2005

The Fed s achievement of economic stability may cause financial bubbles. But its chairman says he can't identify or deflate them in advance. It looks like Greenspan is anticipating trouble in future but doesn't want to be held responsible for it.

French budget is a triumph of cynicism

28 Sep 2005

The government expects the 2006 deficit to fall within the Stability Pact limit, but only by using an unrealistically high growth rate. The hypocrisy is not particularly dangerous. Nevertheless, French politicians need to get used to lower growth expectations.

Katrina’s $62bn clean-up bill needs testing

27 Sep 2005

The potential for misappropriation of the funds equivalent to the GDP of Peru is huge if left unchecked. Legislators meet today to begin oversight hearings. It s late, but not too late, to account for where the billions are flowing.

How independent should central bankers be?

27 Sep 2005

Enough to be credible to the markets when setting monetary policy. But total independence is not sustainable. Central bankers have to work with politicians. The crisis in Italy has arisen because the central bank has too much freedom.

SEC considers soft dollar limits

23 Sep 2005

Apart from a few wellpublicized abuses, it is not clear there's a big problem here that can't be solved through better disclosure. Moreover, the softdollar pie appears to be shrinking in the US.

Bond conundrum stretches ever further

21 Sep 2005

The UK s new 50year inflation linked bond will yield a feeble 1.2%. Compare that to the 3.3% yield on inflationprotected equities. But demand for the issue has been strong. This is a triumph of regulation and a strange bond market over common sense.

German election stalemate thwarts markets

19 Sep 2005

Investors hoped for a Merkel victory, which might have produced enough reforms to bring back job creation. But German voters, and the rigid electoral system, have let them down. Whatever coalition emerges is likely to be politically paralysed.

Dollar has Ponzi characteristics

19 Sep 2005

The current account deficit is heading for $800bn, or 7% of GDP, but foreigners keeping pouring funds into the greenback. This gives the illusion that all is fine. But it isn't. Borrowing on this scale can't continue much longer.

Bush promises to rebuild New Orleans

16 Sep 2005

That's a noble ambition. But it's not clear where the cash is going to come from. But then Bush has never shown much interest in sound money.

Was Katrina really worse than September 11?

9 Sep 2005

Repairing hurricane damage will cost about $150bn, compared to $50bn or so for the terrorist attacks. But that's just the narrow reckoning. Four years on, the broader costs of September 11 arguably include the Iraq war which has so far cost the US alone $200bn.

De Villepin’s first 100 days fail to impress

8 Sep 2005

The French prime minister pledged to use his first 100 days to transform the country's economic direction. But so far, his accomplishments have been modest. And the latest talk of social growth is simply confused.

Fazio looks increasingly isolated

6 Sep 2005

Italy's government chose a tortuous path to fixing the crisis surrounding the Bank of Italy's governor, but it may at last be getting there. And if Fazio did go, it might not be too late to mitigate the damage done by this affair if the succession is conducted properly.

Katrina chaos exposes fallacy of high US growth

5 Sep 2005

If the US really had such a great economic record, New Orleans would have been better equipped to withstand the hurricane. The problem is that the GDP measure is misleading, because it mixes investment with consumption. And the US is much better at consuming.

Katrina batters the US dollar

2 Sep 2005

Investors are betting that the hurricane disaster will spell an end for now to monetary tightening. That may be bullish for stock markets, but it's not good news for America's huge trade deficit or the dollar.

France spells out its strategic industries

31 Aug 2005

There s no mention of yoghurt. Instead, the government says it will only block foreign takeovers of sectors linked to national security. But security is a flexible concept that can be twisted to include pretty much anything.

German election outcome in doubt

12 Aug 2005

The result of the September 18 vote looks less clearcut. Squabbling within Angela Merkel s CDU coalition has shrunk her early lead. If she fails to win a majority, the best hope of reform may lie in a grand coalition. But that would be hard to manage.

Pay growth may stoke US inflation

11 Aug 2005

Wages are rising at 7%, up from 4% a year ago. That's generally a sign that inflation is on the way. The market expects US interest rates to peak at 4.5%. That could be too optimistic.

Flatter US yield curve yet to hurt

10 Aug 2005

The easy profits from the carry trade, borrowing short and lending long, have gone. But hedge funds and banks have hardly noticed. The institutions have found ways to compensate. But the real test is yet to come, when financial conditions get tougher.

Danone seeks shareholder pacts – reports

26 Jul 2005

Having scared off PepsiCo, the French food group reportedly wants to shore up its defences by selling shares to friendly investors. This would be hard to engineer without triggering a mandatory bid. But if the board succeeds, it would be an abuse of minorities' rights.