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from Nicholas Wapshott:

Does Japan show us the way out of secular stagnation?

Is America’s economy adrift in the doldrums? Lawrence Summers, perhaps the nation’s most inventive applied economist, thinks so. Speaking to an IMF forum last month, he described America’s current condition as “secular stagnation” in which we are stuck in a rut of weak demand, low growth, and low employment. This is the “L-shaped” recovery, or -- strictly speaking, non-recovery -- some warned about after the financial freeze of 2008. It is also sometimes dubbed “the new normal.”

“We may well need in the years ahead to think about how we manage an economy in which the zero nominal interest rate is a chronic and systemic inhibitor of economic activities, holding our economies back below their potential,” Summers said. The phenomenon is not new; after all, before 2008, when Alan Greenspan had ensured endless cheap money through low interest rates, leading to asset bubbles, the real economy did not respond.

“Even a great bubble wasn’t enough to produce any excess of aggregate demand,” Summers said. “Even with artificial stimulus to demand, coming from all this financial imprudence, you wouldn’t see any excess."

Summers explained that monetary policy is inadequate in trying to deal with our predicament because the “natural rate of interest” to ensure full employment and growth is now negative. When you take into account inflation, it is even lower. Central banks can hardly offer below 0 percent interest rates, because anyone holding cash would rather hoard it under the mattress rather than be charged for its safekeeping.

from Global Investing:

Emerging stocks lose again in November

By Shadi Bushra

After years of basking in their reputation as high-return hot spots, 2013 could be the year emerging equity markets finally lost their magic touch. Last month continued the litany of losses -- seventeen of the 20 emerging markets listed on S&P Dow Jones indices ended November in the red, the index provider says. Contrast that with developed markets' fortunes last month-- 18 of the markets listed by the index rose, while eight fell.

So last month's scores: Emerging stocks -- down 2 percent; Developed stocks -- up 1.6 percent. And for 2013 as a whole, emerging stocks are down 3 percent while developed markets are up a whopping 22 percent, approaching their 2007 peaks, according to S&P Dow Jones.

from Anatole Kaletsky:

After initial promise, Japan’s new economy risks backsliding

At a time when economic optimism is growing and stock markets are hitting new highs almost daily, it is worth asking what could go wrong for the global economy in the year or two ahead. The standard response, now that a war with Iran or a euro breakup is off the agenda, is that some kind of new financial bubble could be about to burst in the U.S. But a very different, and rather more plausible, threat is looming on the other side of the world.

Japan is the world’s third-biggest economy, with national output roughly equal to France, Italy, Spain, Portugal and Greece combined. This year, Japan has become, very unusually, a leader in terms of financial prosperity and economic growth. According to the latest IMF forecasts, Japan’s 2 percent growth rate in 2013 will be the fastest among the G7 countries, easily outpacing the next strongest economies, Canada and the U.S., each with 1.6 percent growth. Japan’s stock market has gained 70 percent since last December, far exceeding the 25 percent bull market on Wall Street, and Japan’s corporate profits are projected to increase by 17 percent, according to Consensus Economics, compared with the paltry gains of 3 to 4 percent in Germany and the U.S.

from Breakingviews:

The ‘Abe put’ will keep Japanese equities buoyed

By Peter Thal Larsen

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

Say sayonara to the “Bernanke put” and hello to Shinzo Abe’s alternative. While the Federal Reserve chairman developed a reputation for supporting the price of bonds, the Japanese prime minister’s reforms are designed to push up stock prices.

from Breakingviews:

Nirvana eludes Japan after one year of Abenomics

By Andy Mukherjee

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

The economic nirvana promised by Shinzo Abe when launching his bid to become prime minister a year ago continues to elude Japan.

from Breakingviews:

Japan index: Risks to GDP growth recede

By Andy Mukherjee

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

Breakingviews’ Abenomics Index rose the most in six months in September. The gain would have been higher but for Japan’s unusual current account deficit. Higher revised values for July and August suggest the risk of a significant slowdown in third-quarter GDP growth has ebbed.

from Breakingviews:

Sony stumble gives Loeb headache and opportunity

By Peter Thal Larsen

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

Sony may have given Dan Loeb a headache - and an opportunity. The Japanese group’s quarterly loss knocked almost 12 percent off its market value by midday on Nov. 1 and raised questions about the company’s revival. Poor results from Sony’s entertainment and electronics arms suggest there’s limited upside from the spinoff that activist investor Loeb proposed earlier this year. However, it may give him a chance to push for more radical restructuring.

from Breakingviews:

Debt deal may encourage Asia’s dollar craving

By Andy Mukherjee

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

Washington’s last-minute deal on raising the U.S. government’s debt ceiling made grim viewing for Asian central banks. It’s the second time in two years they have faced anguish over the safety of their enormous U.S. government bond holdings. But even with an agreement to raise the ceiling until Feb. 7, and default averted, the harrowing experience is unlikely to turn America’s largest creditor group into a bunch of angry sellers. They may in fact do the opposite, and buy more.

from Environment Forum:

Disasterology 6: Signs of commerce return to “The Town That Disappeared”

For survivors of Superstorm Sandy in the U.S. Northeast, the Sendai tsunami in Japan and the massive earthquake in Chengdu, China, the scars of disaster are still palpable. I’m part of a group of journalists brought together by the East-West Center in Hawaii to see how the people and environments hit by these catastrophes are faring, one year,  two years and five years later. We began our tour on Sept. 29. Here are the other posts in the series:

As shopping centers go, the Minamisanriku Sun Sun Shopping Village is minor: a fish monger, a beauty parlor, a vegetable stand and a florist, along with a few other stores. The people who run the shops live elsewhere since their homes were destroyed by the 2011 tsunami, and the areas that flooded are still not considered safe for residents to return.

from Environment Forum:

Disasterology 5: When the high ground isn’t high enough

For survivors of Superstorm Sandy in the U.S. Northeast, the Sendai tsunami in Japan and the massive earthquake in Chengdu, China, the scars of disaster are still palpable. I’m part of a group of journalists brought together by the East-West Center in Hawaii to see how the people and environments hit by these catastrophes are faring, one year,  two years and five years later. We began our tour on Sept. 29. Here are the other posts in the series:

The school children in Minamisanriku knew what to do in case of a tsunami: run as fast as they could up the hill to the Togura middle school, perched more than 40 meters, or 131 feet, above Shizagawa Bay. This wasn’t high enough when the waves rolled in on March 3, 2011.

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