Archive
Reuters blog archive
from Chrystia Freeland:
China, technology and the U.S. middle class
President Barack Obama's State of the Union speech this week confirmed it: The pre-eminent political and economic challenge in the industrialized democracies is how to make capitalism work for the middle class.
There is nothing mysterious about that. The most important fact about the United States in this century is that middle-class incomes are stagnating. The financial crisis has revealed an equally stark structural problem in much of Europe.
Even in a relatively prosperous age — for all of today's woes, we have left behind the dark, satanic mills and workhouses of the 19th century — this decline of the middle class is more than an economic issue. It is also a political one. The main point of democracy is to deliver positive results for the majority.
All of which is why understanding what is happening to the middle class is urgently important. There is no better place to start than by talking to David Autor, an economics professor at the Massachusetts Institute of Technology. Autor is one of the leading students of the most striking trend bedeviling the middle class: the polarization of the job market. That is a nice way of saying the economy is being cleaved into high-paying jobs at the top and low-paying jobs at the bottom, while the middle-skill and middle-wage jobs that used to form society's backbone are being hollowed out.
from Breakingviews:
Review: The real story of Bo Xilai’s ruin
By Peter Thal Larsen
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
Sometime in the next few months, Bo Xilai is expected to stand trial in the most high-profile political prosecution in China for over three decades. The former Chongqing party chief, once a contender to join the inner core of China’s leadership, stands accused of corruption, abuse of power and - more prosaically - “improper sexual relations” with women.
from The Great Debate:
Responding to North Korea
Now that Pyongyang has conducted its third nuclear test, the international community must accept what it cannot change: North Korea is a nuclear-arming state.
No sanctions, no carrots, no rhetoric, no threat, no military act is likely to change this fact. The question now is how to minimize risks. First, we need to take a deep breath before we leap to any new policy.
from Breakingviews:
Japan tensions rewrite China shopping lists
By Katrina Hamlin
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
China’s buying habits have taken on an air of the patriotic, at least where Japan is concerned. As tensions rose last year over who owns a group of remote islands, sales of Japanese cars and arrivals of Chinese tourists showed a marked slowdown. Even Chinese acquisitions of Japanese companies fell in the last quarter of 2012.
from Global Investing:
Of snakes, dragons and fund managers
The Year of the Snake is considered one of the less auspicious in the 12-year Chinese zodiac cycle. And 2013 is the year of the Black Water Snake, which comes around once every 60 years and is seen as the least fortuitous. How China's stock markets turn out after years of poor performance remains to be seen but the snake is providing banks and asset managers with plenty of food for thought. Many of them have been gazing into the crystal ball to see what 2013 may hold for Chinese markets.
Fidelity Worldwide investments highlights the ‘Snakes and Ladders’ that could influence Chinese equities this year. (They have a great accompanying illustration)
from The Great Debate:
Rebuilding our economic backbone
We’re getting beat by Estonia.
Not that there’s anything wrong with the tiny state on the Baltic Sea. But the nation that built the Hoover Dam, pioneered the Interstate Highway System and created the best aviation system in the world, is rapidly sliding toward the bottom of the list when it comes to infrastructure.
Infrastructure is the economic backbone of any modern society. Without a reliable, functioning system, things we take for granted would fall apart: roads and bridges, schools, public and private transportation, the energy grid that powers our lives, the water we drink. But today the United States no longer leads the world in infrastructure competitiveness. Countries like the Netherlands, South Korea and Singapore now rank in the top 10, according to the World Economic Forum, while the United States, once No. 1, has fallen to 14.
from Photographers Blog:
The year of the snake
Beijing, China
By Barry Huang
With the year of the dragon coming to an end, Chinese people will embrace the year of the snake. The snake, the sixth sign of the 12 Chinese Zodiac animals, is also called “junior dragon” due to its Chinese dragon-like appearance. According to ancient Chinese belief, the snake is the form of the dragon before it obtained divinity and learn to fly.
Studies show that people born in the year of the snake share certain characteristics. Like the snake, they are keen and determined and know how to maneuver themselves to their own destinations. They are also sophisticated and calm and not outwardly emotional; however, many of them also have an ounce of paranoia that runs in their blood. One of the most well-known people born in the year of the snake is China’s late Chairman Mao Zedong.
from Global Investing:
Weekly Radar: Currency warriors meet in Moscow
G20/EUROGROUP/EURO Q4 GDP/STATE OF THE UNION/BOJ/UST, GILT AND ITALY BOND AUCTIONS/EUROPEAN EARNINGS
Hiccup. February has so far certainly brought a more sober, if healthier, perspective to world markets. Global stocks are off about half a percent this week, letting the air out gently from January’s over-inflated 5 percent surge. The focus is back on Europe, where the threat of a euro FX overshoot (in the face of LTRO paybacks and rising euro interest rates alongside stepped-up "global currency wars") has fused with a plethora of unresolved national debt conundrums and a stream of ‘event risks’ on the region’s calendar. Euro stocks have retreated to December levels as the currency move and fresh political angst has taken the wind out of earnings and growth projections after such a steep rally over the past six months. Name anything you want – the tightening race for this month’s Italian elections and Monte di Paschi scnadal there, a delayed Cyprus bailout and elections there this month, the Irish promissory note standoff with the ECB etc etc – when things turn, they all these get amplified again even if none really are likely to be systemic threats in the way we’d become used to over the past two years. The slight backup in Italian/Spanish yields to December levels shows sentiment turns still pack a punch, the European earnings season has been mixed so far, there are political murmurs about capping the euro and the political calendar over the next six weeks is a bit of a minefield for nervy markets. All the issues still look resolvable – the tricky Irish bank debt rejig looks on the verge of a resolution; few still believe Berlusconi be the next Italian PM (only 5 percent on betting website Intrade think so, for example); and Cyprus is expected by most to get bailed out eventually. Today's ECB will be critical to most of those issues, but next week’s euro group gets a chance to update everyone on its role in them aswell). The issue likely to gnaw deepest at investors is the regional growth outlook and, in that respect, the euro surge is about as welcome as a kick in the teeth at this juncture. (Euro Q4 GDPs out next week). The French clearly want to rein in the currency but don’t have the tools or the German backing. Draghi and the ECB will likely have to come to rescue again, though he will not admit to euro targeting and so may drag his feet on this one until the move starts to burn. Interesting times ahead and interesting G20 finance meeting in Moscow next week as a result.
from Breakingviews:
Dividend reform won’t fix China SOE money-go-round
By John Foley
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
China’s elaborate money-go-round starts and ends with its cash-hoarding state-owned enterprises. So a plan to make them pay bigger dividends sounds promising. Still, if the goal is to return cash to the people, there is a long way to go.
from Breakingviews:
Equity split from commodities may be short lived
By Ian Campbell
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
The often close correlation between equity and commodity prices has faded. World equities are up 15 percent since August while commodities have barely moved. Is this a paradigm shift? Probably not, though shale gas is rattling energy markets. Equities may simply have run too fast on the back of quantitative easing while commodity investors have hesitated over global growth worries.
