Money‚ Markets & Macroeconomics

Running for president like a hedge fund manager

2 Sep 2011

White House hopeful Jon Huntsman aims to employ a fund-of-funds approach to policy: Combine the best off-the-shelf economic plans on taxes, debt and energy into one broad proposal. Even if Republican voters don’t invest in the underdog’s offering, his opponents might want to.

Market worries and volatility will outlast summer

2 Sep 2011

Investors back from the beach will be rested for the next round of rollercoaster trading - a taste of which came on Friday. The concerns behind August’s bout still haven’t been addressed. European debt trouble, the weak U.S. economy and political conflict spell more wild rides.

How to get Spain working again

2 Sep 2011

With elections looming, political parties must come up with sensible solutions to tackle a 21 percent unemployment rate. Cutting social security contributions makes sense, but it’s harder than it looks.

More U.S. mortgage help isn’t needed

1 Sep 2011

There’s talk of yet more help for careworn borrowers. Washington has already made Herculean efforts. Some were valuable, but there’s no magic bullet and the modest returns are diminishing. It would be better for lawmakers to deploy precious capital, real and political, elsewhere.

Euro zone should slow down on austerity

1 Sep 2011

Portugal is the latest troubled euro member to tighten its budget another notch. But from Italy to Ireland, heavily-indebted countries need growth. As the threat of recession rises, sometimes-costly structural reforms should take precedence over fetishist austerity.

Fluctuating gas estimates needn’t freak investors

31 Aug 2011

Opponents of fracking pounced on a sharply lower government tally of the likely store of gas in one of America’s biggest shale areas. But investors, buffeted by swings in estimates, shouldn’t be too alarmed. Even the ultra-cautious reckoning amounts to 109 years of production.

Europe should strive for bank funding backstop

31 Aug 2011

The European Banking Authority wants to free up bank funding markets by enhancing the euro zone’s rescue fund. That could prove politically contentious with member states tired of ever-increasing bailout liabilities. But a debilitating credit crunch would be far worse.

Tar sands pipeline environment fears are overdone

30 Aug 2011

Despite a sanguine State Dept, there’s heavy opposition to a $7 bln pipeline bringing Canadian oil to Texas. But oil sands are less dirty than their reputation, and the U.S. buys crude from worse polluters. There are better ways to control emissions than boxing in Canada’s oil.

Obama’s new economist faces political headwinds

30 Aug 2011

With U.S. unemployment hovering above 9 pct, Alan Krueger - a Princeton labor market expert - is suited to be the next White House chief economist. But his job creation ideas may not get much of a hearing. With Obama campaigning, political pros will have the president’s ear.

Mother Nature threatens another mark on markets

30 Aug 2011

Just days after a rare earthquake, Wall Street faces a more serious disturbance from Hurricane Irene. The storm may still fizzle out. But it’s heading for a region with $12 bln of daily output and could cripple finance’s capital at a time when investors are already jumpy.

Bernanke’s inaction, even if temporary, is welcome

30 Aug 2011

Stock investors may have been briefly underwhelmed, but the Fed chairman was right not to promise new easing in his Jackson Hole speech. Aside from its likely ineffectiveness, he faces dissent at the Fed. That’ll make the now extended September meeting a new focus for markets.

Worldwide trade has worrying weaknesses

30 Aug 2011

Global trade faces triple vulnerabilities: slowing demand, affordable funding, and protectionism. The first is already happening. Memories of the last crisis should safeguard against the second and third - but there are worrying signs that the lessons haven’t been learned.

Japan’s DPJ should choose the least popular leader

26 Aug 2011

The party’s leading candidates to take over as prime minister are competing to avoid the unpopular policies of tax hikes to fund reconstruction and draconian spending cuts. But with debt at 200 pct of GDP and another Moody’s downgrade, it’s time for a grown-up to take charge.

Taxing the rich makes economic sense

25 Aug 2011

Western governments want the rich to contribute more to their austerity drives. Financially, it won’t do much to cut deficits and debts. But after three years of economic tension, it is a crucial part of making new rounds of tightening politically acceptable. Pain must be shared.

Finnish bolshiness follows Berlin’s bank coddling

25 Aug 2011

Finland has demanded collateral for its part of Greece’s second bailout. The attitude is divisive, but it highlights the disparity between the treatment of private and public creditors in the July deal. Finland is only asking for what Berlin gave bankers.

Bernanke should leave any new stimulus to Congress

24 Aug 2011

The anti-deflation rationale for the Fed’s last bout of bond-buying won’t wash this time. Anyway, its effectiveness was questionable. And the U.S. central bank is already in uncomfortably deep. Fiscal action might be equally unhelpful, but at least it’s easier to reverse.

CBO deficit slash reveals DC financial wonderland

24 Aug 2011

Congress may have done a deal to cut costs, but the new, relatively upbeat 10-year prediction for U.S. finances also relies on some rosy long-term assumptions. Budget experts know next year’s numbers matter most. Washington policymakers need more focus on the here and now.

Four challenges for a common euro bond

24 Aug 2011

Can a debt union save the euro zone? With overall debt at 85 percent of GDP, the region still has the financial capacity to underwrite peripheral economies. But issuing common bonds requires time and political change. Here are the four obstacles to overcome.

Private sector drag sheds harsh light on stimulus

23 Aug 2011

Because it’s included at cost, government spending increases GDP by definition. But as Washington wrote more checks in 2007-11, private sector output slowed down, suggesting a possible crowding-out effect. When the U.S. economy is sick, bigger government looks like bad medicine.

No easy fix for Spain’s housing market

22 Aug 2011

The government hopes to jump start the housing market by temporarily cutting the VAT rate on purchases as part of a package to shrink the country’s deficit. The move might help a bit. But buyers won’t return until job creation resumes, and banks recognise more property losses.