Archive
Reuters blog archive
from Breakingviews:
Global trade surplus: proof of alien life?
By Andy Mukherjee
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Mankind has spent centuries looking for signs of alien life. Now a French graduate student appears to have found evidence in an unusual spot: the ledgers of the world’s customs offices.
Gabriel Zucman, a Ph.D. candidate at the Paris School of Economics, has crunched together data for exports and imports from around the world. In theory, the two should cancel each other out. Yet Zucman’s estimates show that in 2007 the world’s current account was in surplus by $400 billion. That’s impossible, unless aliens are buying iPhones and iPads.
Graphic: World has a trade surplus
Sadly for believers in extraterrestrial life, there is a more mundane explanation. Zucman thinks the global trade surplus probably stems from errors in the accounts of developing countries. Another possibility is that trade may be disguising capital flows.
from Hugo Dixon:
Why Draghi likes London
When Mario Draghi was appointed President of the European Central Bank, the German tabloid Bild gave him a Prussian helmet because it admired his Teutonic anti-inflation credentials. The Sun, Bild’s British equivalent, should give him keys to the City of London because of his pro-market credentials.
Draghi likes London. The Italian still has a flat in the city, kept from his time as a Goldman Sachs banker. He is a man with a natural affinity for the markets.
from Breakingviews:
How capital controls are prolonging Cypriots’ pain
By George Hay
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
Cyprus has a liquidity problem. It has been barely two months since depositors of the two largest lenders of this small island state, Bank of Cyprus and Laiki, learned they were to face losses of 60 to 100 percent on the part of their deposits exceeding 100,000 euros. Yet Nicosia’s streets haven’t been savaged by furious rioting, nor have the banks fallen victim to visible panic. The harm is more pernicious: capital controls are slowly smothering a domestic economy already hit by a heavy dose of austerity.
from Hugo Dixon:
Hugo Dixon: How to respond to UKIP’s surge
By Hugo Dixon
(Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.)
The UK Independence Party will not come close to winning Britain’s next general election. The populist anti-Europe, anti-immigration party may not even win a single seat, despite last week’s surge in English local elections where it won nearly a quarter of the vote - running a close third to Labour and the Conservatives. That’s how the maths of Britain’s first-past-the-post voting system works.
from Breakingviews:
China FX swap may blur Bank of England mandate
By Peter Thal Larsen
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
The Bank of England is discovering the downside of being the City of London’s chief watchdog. The central bank is under pressure from financial institutions to set up a currency swap with the People’s Bank of China. Such a move would help to boost London as a centre for trading offshore renminbi. However, worrying about the City’s competitiveness also risks blurring the BOE’s main objective of preserving financial stability.
from Global Investing:
The Watanabes are coming
With Shinzo Abe's new government intent on prodding the Bank of Japan into unlimited monetary easing, it is hardly surprising that the yen has slumped to two-year lows against the dollar. This could lead to even more flows into overseas markets from Japanese investors seeking higher-yield homes for their money.
Japanese mom-and-pop investors -- known collectively as Mrs Watanabe - have for years been canny players of currency and interest rate arbitrage. In recent years they have stepped away from old favourites, New Zealand and Australia, in favour of emerging markets such as Brazil, South Africa and Turkey. (See here to read Global Investing's take on Mrs Watanabe's foray into Turkey). Flows from Japan stalled somewhat in the wake of the 2010 earthquake but EM-dedicated Japanese investment trusts, known as toshin, remain a mighty force, with estimated assets of over $64 billion. Analysts at JP Morgan noted back in October that with the U.S. Fed's QE3 in full swing, more Japanese cash had started to flow out.
from Breakingviews:
Qatar gives SocGen an honourable exit from Egypt
By Una Galani
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
Qatar has given Societe Generale an honorable exit from Egypt. State-backed Qatar National Bank will buy the French bank’s 77 percent stake in its Egyptian unit, National Societe Generale Bank (NSGB), through a mandatory tender offer valuing the whole at $2.6 billion. The valuation of 2 times book value is lower than pre-revolution multiples, and SocGen will have to carry some currency risk. But with few-sizeable buyers willing to live with Arab spring volatility, it makes sense for SocGen to shrink while it can.
from Breakingviews:
HK exchange plays it safe with equity finance
By Peter Thal Larsen
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Hong Kong’s stock exchange is playing it safe. The bourse’s $1 billion share placing will allow it to repay more than half the debt it took on to buy the London Metals Exchange earlier this year. Ultra-low yields might make bonds look tempting. But a recent share rebound, and HKEx’s hefty dividend payout, justifies its cautious approach.
from Breakingviews:
IMF’s long-term worry: decades of higher rates
By Christopher Swann and Martin Hutchinson
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.
The International Monetary Fund has a new long-term worry: decades of higher interest rates. Don’t get too comfortable with low borrowing costs, is the downbeat message from the normally overoptimistic fund’s flagship World Economic Outlook. Slightly feebler growth of 3.3 percent for 2012 is the short-term concern. But past fiscal excesses and an ageing population could push up interest rates for a generation.
from Breakingviews:
Olympics a bad metaphor for economic rivalry
By John Foley
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
China breaks the rules. The United States loses its edge. As for Britain, it barely registers at all. It’s easy to see the Olympic Games as a metaphor for economic rivalry. Fortunately, the real world is different, and can be much more harmonious – if everyone basically plays fair.
