Politics

Trump’s fanciful budget relies on voodoo economics

22 May 2017

Paid parental leave and caps on repaying student loans sound appealing. But the rest of the president’s budget plan to cut $3.6 trln relies on pie-in-the-sky assumptions about employment rates and reforming Obamacare and welfare. It’s a non-starter even for a Republican Congress.

Time for UK to lose timidity on taxing property

22 May 2017

Theresa May has backed down on a so-called “dementia tax” following a backlash against older Britons using their homes to fund social care. How much the state should subsidise these costs is up for debate. But unearned housing equity should be taxed more.

Two Irans go in different directions

22 May 2017

Reformist Hassan Rouhani was re-elected president in a landslide victory over hardliners. At the same time, U.S. President Trump placed the country firmly back into the “axis of evil”. The former ought to make Iran more investor-friendly, but it’s the latter that will shape its destiny.

Spain is beginning to look more like Italy

22 May 2017

Pedro Sanchez’s unexpected victory in Socialist primaries could weaken the already fragile minority government. The risk of a crisis is low, but a more fragmented parliament, similar to Italy, makes economic reforms harder, and undermines Spain’s call for European integration.

Review: Democrats’ chief firebrand fumbles message

19 May 2017

Elizabeth Warren's "This Fight is Our Fight" reads like a marker for a 2020 White House run. The senator from Massachusetts targets Donald Trump, lobbyists and Wall Street. Tales of struggling Americans are engagingly woven into the outrage. But her rote views limit her appeal.

ECB snared by bond-buying ambiguity

19 May 2017

European lawmakers have called for more transparency from the European Central Bank over its corporate bond purchases. The demands are flawed: the ECB discloses quite a lot and clarity can backfire. Yet it’s a reminder of the risks from central banks meddling in private credit.

Cox: Time to contemplate Mike Pence-onomics

18 May 2017

There is a whiff of impeachment in the air in Washington. That may still be an unlikely outcome, but Donald Trump's flawed stewardship of the Oval Office should be inspiring risk managers to run their rules over the fiscal views of the vice president from central casting.

Brazil’s corruption vortex engulfs reform hopes

18 May 2017

President Michel Temer has improved economic headlines, for example pushing inflation below 4.5 pct. Now he's implicated in the wider bribery scandal enveloping his government. A 10 pct drop in the stock market reflects fear that his unpopular but effective policies are on hold.

Theresa May’s manifesto leaves Brexit wiggle room

18 May 2017

Britain’s Tory party will slash migration and quit the EU without a deal if need be should it win a June 8 election. But its leader has left herself room to make Brexit very hard or relatively soft. That’s artful, but ensures adherents of one or the other will be disappointed.

China’s confused market strategy reveals old flaws

17 May 2017

Top regulators rattled investors earlier this year with tough talk on financial risks. Now officials are trying to prop up stocks to provide a happy backdrop for showpiece political events. Even creating a proposed super-regulator cannot resolve such conflicting policy goals.

Viewsroom: CEO presidency needs boardroom pushback

17 May 2017

Donald Trump’s promise to run the government like a business is proving difficult but Congress could act like strong independent directors to rein in his wayward management.  China’s ambitious Silk Road project could leave its people holding the bag. Plus: job cuts at Ford.

Wall Street waking up to Washington reality

17 May 2017

A notable dip in the S&P 500 Index represents only a minor setback for the so-called Trump rally. The dollar, however, has given back nearly all its post-election gains. Treasury yields also have retrenched. Stockholders remain too optimistic about any D.C. policy uplift.

Running government like business proves difficult

17 May 2017

Trump vowed to operate the White House as if it was a company. But the skills required in his private firm have been less transferable than for a CEO of a publicly traded one with checks and balances. An independent board, aka Congress, is the best hope for a course correction.

Hadas: Puerto Rico, Greece and bad-faith debt

17 May 2017

Both the U.S. territory and the euro zone laggard have fine beaches, irresponsible governments and a debt crisis. The most just and helpful response to such debacles is to force reckless lenders to write off loans. That’s a hard sell. Thankfully, few sovereigns are so careless.

Lloyds bailout bill still isn’t paid in full

17 May 2017

The UK has recouped its 20.3 bln pounds on the once-failing lender. It wouldn’t matter if it hadn’t, since rescuing Lloyds helped save the banking system. Still, just as the real returns outweigh the financial ones, so do the costs: austerity and mistrust of the industry.

Labour’s risky UK manifesto requires Brexit context

16 May 2017

Britain’s opposition party has outlined tax rises for companies and the rich to pay for higher spending. Potential payers could get around them. Yet what Labour is proposing isn’t that much more risky than the “hard Brexit” the ruling Conservative party may deliver.

Western banks are a poor home for Asian billions

16 May 2017

If sovereign funds are meant to generate superior returns over generations, the sale of UBS shares by Singapore’s GIC is logical. Banks’ futures are clouded by technology, disintermediation and populism. Those still building stakes, like China’s HNA, may have other goals in mind.

Chinese taxpayers have most to fear on Silk Road

16 May 2017

President Xi pledged $124 bln at an international summit to build a modern version of the ancient trading route. Huge global infrastructure spending will burnish Beijing's standing. But the hype could backfire if citizens of the People's Republic fail to reap tangible benefits.

Investors may impose a climate change upon Exxon

15 May 2017

Big pension funds are urging the oil giant to assess the impact of climate change on its reserves. Shareholders rejected the idea last year, but passage of a similar measure at Occidental Petroleum last week signaled a shifting tide that even mighty Exxon may not long resist.

Eddie Lampert’s enemies list sounds presidential

15 May 2017

The CEO threatened to sue a Chinese tool vendor, and blamed it and the “irresponsible” media for Sears’ woes. It’s a page from the playbook of President Trump, who has talked of slapping tariffs on China and often taunts the press. Investors aren’t buying Lampert’s line, though.