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from Hugo Dixon:

Italy has no good Plan B

Matteo Renzi’s Plan A is to push through domestic reforms, hope the European Central Bank manages to get inflation ticking up, and keep his fingers crossed the Italian economy stops shrinking. But if this fails, a mega wealth tax, debt restructuring and/or exit from the euro beckons.

There is no Plan B that wouldn’t tip both Italy, where I spent part of last week, and its neighbours into a severe crisis. That makes it all the more important that Plan A works.

Renzi has been doing a reasonable job since he took over as prime minister in February. He has boundless energy and is not afraid of fighting battles. The latest has been to reform the labour market – something that involved clashing with members of his own centre-left Democratic Party as well as its trade union backers. Last week, he had to call a vote of confidence to push the change through the Senate.

Important reforms of civil justice, the electoral system and the constitution have also started. All this is necessary to make Italy governable as well as a country in which business wants to invest.

from Global Investing:

Measuring political risk in emerging markets

(Corrects to say EI Sturdza is UK investment firm, not Swiss)

Commerzbank analyst Simon Quijano-Evans recently analysed credit ratings for emerging market countries and concluded that there is a strong tendency to "under-rate" emerging economies - that is they are generally rated lower than developed market "equals" that have similar profiles of debt, investment or reform. The reason, according to Quijano-Evans, is that ratings assessments tend to be "blurred by political risk which is difficult to quantify and is usually higher in the developing world compared with richer peers.

However there are some efforts to measure political risks, and unfortunately for emerging economies, some of those metrics seem to indicate that such risk is on the rise. Risk consultancy Maplecroft which compiles a civil unrest index (CUI), says street protests, ethnic violence and labour unrest are factors that have increased chances of business disruption in emerging markets by 20 percent over the past three months. Such unrest as in Hong Kong recently, can be sudden, causing headaches for business and denting economic growth, Maplecroft says. Hong Kong where mass pro-democracy protests in the city-state's central business district which shuttered big banks and triggered a 7 percent stock market plunge last month.

from Breakingviews:

Occupy misses real threats to Hong Kong’s future

By Robyn Mak

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

Hong Kong’s pro-democracy movement misses the real threats to Hong Kong’s future. While tens of thousands of protesters led by students have taken to the streets demanding electoral reform, most of the former British colony's 7.2 million residents have shied away. Universal suffrage deserves public support, but the gradual erosion of rule of law and free speech poses a greater threat to the city's prosperity. It’s unlikely these concerns can unite the region in open confrontation with Beijing.

from Jack Shafer:

All in all, Eric Holder was just another brick in the wall

U.S.  Attorney General Holder stands with President Obama after the president announced Holder's resignation at the White House in Washington

Attorney General Eric H. Holder Jr. first signaled his exit from office so long ago that every reporter and pundit who covers the Department of Justice has stockpiled enough copy assessing his tenure to fill a mattress. Like Derek Jeter, Holder announced his farewell tour this past February, telling the New Yorker's Jeffrey Toobin that he would depart in 2014. The admission prompted journalists to update and fine tune their critiques of the attorney general with emerging details, the way obituary writers tweak their pre-written obituaries of famous, old people to keep them fresh and newsy.

To paraphrase Marcus Raskin, the law is just politics frozen in time. Every attorney general applies the heat gun to the solid mass of law in hopes of melting and refreezing it to serve his boss, be he a Republican president or a Democratic president. These efforts naturally earn them disparaging comments from the opposing party, giving reporters the opportunity to plug in modular language like this passage from today's New York Times story about Holder's resignation: "He … emerged as the primary political antagonist for a Republican opposition in Congress that viewed him as dismissive of existing laws and contemptuous of its oversight of his department." Republicans, the Times continues, "once voted to hold Mr. Holder in contempt of Congress." Deeper in the piece: "Conservatives spent years attacking Mr. Holder’s integrity, especially over the Justice Department’s botched gun-trafficking operation called Fast and Furious."

from The Great Debate:

All in all, Eric Holder was just another brick in the wall

[CROSSPOST blog: 2341 post: 3261]

Original Post Text:
U.S.  Attorney General Holder stands with President Obama after the president announced Holder's resignation at the White House in Washington

Attorney General Eric H. Holder Jr. first signaled his exit from office so long ago that every reporter and pundit who covers the Department of Justice has stockpiled enough copy assessing his tenure to fill a mattress. Like Derek Jeter, Holder announced his farewell tour this past February, telling the New Yorker's Jeffrey Toobin that he would depart in 2014. The admission prompted journalists to update and fine tune their critiques of the attorney general with emerging details, the way obituary writers tweak their pre-written obituaries of famous, old people to keep them fresh and newsy.

To paraphrase Marcus Raskin, the law is just politics frozen in time. Every attorney general applies the heat gun to the solid mass of law in hopes of melting and refreezing it to serve his boss, be he a Republican president or a Democratic president. These efforts naturally earn them disparaging comments from the opposing party, giving reporters the opportunity to plug in modular language like this passage from today's New York Times story about Holder's resignation: "He … emerged as the primary political antagonist for a Republican opposition in Congress that viewed him as dismissive of existing laws and contemptuous of its oversight of his department." Republicans, the Times continues, "once voted to hold Mr. Holder in contempt of Congress." Deeper in the piece: "Conservatives spent years attacking Mr. Holder’s integrity, especially over the Justice Department’s botched gun-trafficking operation called Fast and Furious."

from Hugo Dixon:

Now on to the Brexit referendum

By Hugo Dixon

Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.

With Scotland voting to stay part of the United Kingdom, attention will turn to the next potential British referendum: on whether the country will remain in the European Union. David Cameron has promised to hold an In/Out referendum on the EU if he is re-elected as prime minister in next year’s general election. There are comparisons and contrasts between the two votes, as well as lessons to be learned.

from Edward Hadas:

The economic lessons from Scotland

Adam Smith, one of the leading figures of the 18th century Scottish intellectual enlightenment, liked free markets and restrained governments. The 21st century campaigns for and against a Scottish political liberation show that governments have acquired an economic importance which Smith could hardly have imagined.

If the government’s economic role was as limited as Smith would have liked, the debate preceding the Sept. 18 independence referendum would mostly have been about national identity and the advantages and difficulties of becoming a small country in a big world. The economy would hardly be an issue, since only the most rabid Scottish nationalist would accuse the English of cruelty in that domain.

from Stories I’d like to see:

Just how strange is Governor Andrew Cuomo?

New York Governor M. Cuomo stands during a news conference following a bi-state meeting on regional security and preparedness in New York

1. What’s the matter with Andrew Cuomo?

By now I assume New Yorker editor David Remnick has assigned someone to do a profile of New York Governor Andrew Cuomo, who is fast becoming the Howard Hughes of big-time politicians.

But just in case he hasn’t, here’s a reminder for him or any other smart editor why it’s time to take a long look at the governor: The New York Times report in late July detailing how Cuomo interfered with his supposedly independent corruption commission was great stuff. Even better were subsequent accounts in the Times and elsewhere about the governor’s clumsy attempts to explain things once he got caught.

from Breakingviews:

Calculator: Does Scoxit = Brexit?

By Hugo Dixon

Hugo Dixon is Editor-at-Large, Reuters News. The opinions expressed are his own.

If Scotland votes for independence, there is a two-in-three chance that the remaining United Kingdom will quit the European Union, according to a new Breakingviews calculator. By contrast, there would be only a one-in-five probability of a “Brexit” (Britain leaving the EU) by the end of the decade if the Scots vote to stay in the UK on Sept. 18.

from Hugo Dixon:

Brexit risks have shot up

Brexit risks have shot up in the past few weeks. The chance of Britain exiting the European Union by the end of the decade is now probably around 50 percent.

The main factor driving Brexit is the knife-edge referendum on Scottish independence. If the Scots vote next week to quit the United Kingdom, it is highly likely that the rump UK will leave the EU. If the UK doesn’t break up, it is much less likely that it will then part from the EU, but this is still a risk.

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