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from MacroScope:

Post-Lehman shadows creeping up on German economy again?

Germany's Minister of Finance Wolfgang Schauble speaks during a discussion during the World Bank/IMF annual meetings in Washington

The recent stretch of dire economic data from Germany is starting to bear an unfortunate resemblance to late 2008 – when Lehman Brothers collapsed and the world tipped into the worst recession since the Great Depression.

On a severity scale, a downturn now will probably be nowhere close to the first quarter of 2009 when Germany’s gross domestic product shrank 4.5 percent on the quarter.

Still, Europe’s biggest economy is careening toward a technical recession unless it's halted by a miraculous upturn in the September data.

An analysis of Reuters polls shows several of four key German economic indicators have come below the Reuters consensus over the past three months, in some cases below even the most pessimistic prediction.

from Breakingviews:

Asset price disinflation may be next big thing

By Edward Hadas

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The great divergence may be about to come to an end. For investors in almost everything but the safest bonds, that is bad news.

from Breakingviews:

Capital crisis making Italy SpA stronger

By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

A procession of Italian industrialists and financiers slipped through the alleyways behind La Scala opera house two weeks ago to discuss the legacy of the man whose name adorns the piazza outside the building where they met: Enrico Cuccia. The group, ranging from a former Treasury minister to an iconoclastic fashion mogul, shared stories of the founder of Mediobanca, who’d passed away 14 years to the day. Yet for all the nostalgia that afternoon, absent was any obvious desire to turn back the clock to the days when Mediobanca was the unchallenged puppet-master of Italian business.

from Breakingviews:

Future financiers condemned to repeat sins of past

By Jeffrey Goldfarb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Future financiers are condemned to repeat the mistakes of the past. Nearly 150,000 wannabe investment advisers, bankers, risk managers and analysts around the world will sit for the CFA exam this weekend. Success hinges on their understanding of the capital asset pricing model and return on equity. Knowledge of disasters like the South Sea Bubble and the Great Crash, though, are not required. Widespread ignorance of financial history is an overlooked systemic risk.

from Nicholas Wapshott:

Yellen shows her hand

The difference between the Federal Reserve Board of Chairwoman Janet Yellen and that of her immediate predecessor Ben Bernanke is becoming clear. No more so than in their approach to the problem of joblessness.

Bernanke made clear that in the post-2008 economy, his principal goal was the creation of jobs, not curbing inflation. He settled on a figure, 6.5 percent unemployment, as the threshold that would guide his actions.

from Expert Zone:

The reform club

(Any opinions expressed here are those of the author and not of Thomson Reuters)

That custodian of the English language, the Oxford English Dictionary, describes a bubble as “anything fragile, unsubstantial, empty or worthless; a deceptive show”. Could this description apply to the current frenzy for “reform” that is seemingly sweeping the global economy? The answer is “yes, in part”. While there are some genuine attempts at reform, market expectations for reform will inevitably be disappointed in some parts of the world.

The global financial crisis has prompted politicians to advocate economic reform in two ways. First, the crisis demonstrated that the status quo needed to be changed -- and in many cases that change required sizeable structural change. Second, as the structure of the world economy has changed (lower global capital flows, slower global trade, etc.) so economies have had to adapt the way that their economies are structured.

from Breakingviews:

Jamie Dimon hits final stage of grief: acceptance

By Rob Cox
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

In coping with the tragedy of the financial crisis, no Wall Street executive has exhibited the five stages of grief like Jamie Dimon. The JPMorgan chief executive has passed through phases of denial, anger, bargaining and depression. His latest annual letter to shareholders finally shows a desire to accept what’s happened and move on.

from The Great Debate:

Are banks too big to indict?

The great 19th century English jurist, Sir James Fitzjames Stephens, once wrote that murderers were hung not for reasons of revenge or deterrence -- but to underscore what a serious breach of the social compact had been committed.

Federal District Judge Jed S. Rakoff was making a similar point when he recently called attention to the lack of criminal prosecutions in the wake of the 2008 financial crisis. Consider the 1980s Savings and Loan crisis. The losses were minuscule compared to this recent paroxysm, but they still led to hundreds of criminal convictions.

from Unstructured Finance:

Jim Chanos, bad news bear, urges market prudence

Prominent short-seller Jim Chanos is probably one of the last true “bad news bears” you will find on Wall Street these days, save for Jim Grant and Nouriel Roubini. Almost everywhere you turn, money managers still are bullish on U.S. equities going into 2014 even after the Standard & Poor’s 500’s 27 percent returns year-to-date and the Nasdaq is back to levels not seen since the height of the dot-com bubble in 1999.

“We’re back to a glass half-full environment as opposed to a glass half-empty environment,” Chanos told Reuters during a wide ranging hour-long discussion two weeks ago. “If you're the typical investor, it's probably time to be a little bit more cautious.”

from Financial Regulatory Forum:

Largest U.S. banks see themselves in “regulatory spiral” with no clear end

By Henry Engler, Compliance Complete

NEW YORK, Dec. 4 (Thomson Reuters Accelus) - Although five years have passed since the height of the financial crisis, top lawyers at some of the largest U.S. banks see themselves pitted in an escalating, and at times adversarial, battle with regulators, the end of which remains unknown.

At a conference sponsored by the Clearing House on Friday, senior legal representatives from JPMorgan and Bank of America painted a picture of unprecedented enforcement actions and fines across a wide range of issues, adding that the zeal of recent actions could potentially disrupt the supervisory and cooperative relationship that has long existed between banks and regulators.

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