Dec 20, 2012 20:42 UTC

Fed’s foreign bank crackdown is price of stability

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By Agnes T. Crane and Daniel Indiviglio

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

The Federal Reserve’s unilateral crackdown on foreign banks is necessary. The regulator’s requirement that overseas lenders properly capitalize their U.S. arms is a prudent way to protect the local and global financial system. The Fed’s approach could prompt other regulators to follow suit. But the fear that fragmentation could stifle global banking looks overblown.

Nov 20, 2012 14:47 UTC

Moody’s downgrade is good news for France

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Pierre Briançon

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

François Hollande has received a little help from an unlikely friend. Moody’s, the ratings agency, has stripped France of its prized AAA status, following rival S&P’s similar move in January. Markets yawned at the long-expected news, with yields on French 10-year bonds up a meagre four basis points. The decision comes with threats of further downgrades, so it puts pressure on France to plough ahead with its reform plans. But the French president should welcome the announcement, which will help him convince his compatriots that more changes are needed, and that time is short.

Nov 13, 2012 08:42 UTC

SOEs could be China’s economic vampire squid

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By John Foley

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

State-owned enterprises are China’s economic version of the giant vampire squid. The 20,253 industrial companies owned and controlled by the government soak up capital, and pay little out. Their costs are low and their bosses powerful. If China’s new leaders are serious about making households wealthy, they need to make these industrial giants behave more like normal companies.

Oct 17, 2012 01:31 UTC

Corporate China beating banks at their own game

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

By Wayne Arnold

Corporate China appears to be beating the country’s lenders at their own game. Even as banks heap credit into China’s economy to keep its credit-fuelled growth from crashing, companies are handing out credit to their own customers. That may help keep the economy revving, but the risk is that past-due bills make it harder for companies to service mounting debt.

Jun 13, 2012 01:53 UTC

UK banks’ euro zone firewall needs government help

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By George Hay

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

UK banks’ euro zone firewall needs strengthening. Despite a range of support measures introduced after the 2008 financial crisis, the Bank of England’s arsenal for managing a pan-European liquidity freeze looks underpowered when compared with the European Central Bank’s three-year loans. But if the euro zone cracks, UK lenders would be better off turning to the government for support.

COMMENT

As an econmist I see real simple solutions to the liquidity issues facing the BoE, ECB and others. It is time to start thinking outside of the box and transfer the debt issues away from governments and expand the base and lesson the risk for all borrowers. Very simple. So all of you who are pointing fingures or have buried your collective heads in the sand, just stop!

Monroe, Maine USA has the solutions!

Posted by edward.gre | Report as abusive
Jun 8, 2012 19:56 UTC

California shows way through tricky pension mess

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By Agnes T. Crane

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

San Jose and San Diego want current public workers to make sacrifices for their pensions, like contributing up to 16 percent more of salaries to fund retirement schemes. The proposals, overwhelmingly backed by voters in elections this week, look to be a sensible way forward in the thorny thicket of pension reform.

COMMENT

I say this as a liberal, and as someone who’s strongly against any further increases to Social Security’s retirement age, but I don’t think we can afford to let people retire at age 55. Barring disability, at least.

The previous commenter says that the city shouldn’t do anything to existing contracts, and it should just accept reduced services. You can only go so far with that. Remember, the city covers education and public safety. How much less of that is acceptable?

In addition, younger adults, of which I am one, won’t go into public service if there’s a huge disparity in benefits between the younger workers and a grandfathered class of older ones. There’ll be resentment. We’ll go into the private sector.

In any case, this is an issue bigger than just San Diego and San Jose. Pensions in general are hard to fund. The sponsor is taking on some very long-term financial liabilities. In addition, you ideally need people paying into the plan as well as drawing from it, and if the sponsor goes into hard times (like state budget cutbacks or the industry declines), then so does the pension.

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Jun 6, 2012 20:05 UTC

BofA reject wins Fannie Mae booby prize

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By Daniel Indiviglio and Agnes T. Crane
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

No good deed goes unpunished. Fannie Mae has chosen Timothy Mayopoulos, its general counsel, as its new chief executive. His promotion won’t improve already tense relations with Bank of America – the mega-bank fired him in 2008 after he questioned mounting losses. But his integrity and background make him a decent fit for the job.

Apr 30, 2012 21:08 UTC

U.S. mortgage lessons lost in student debt policy

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

The lessons of the U.S. mortgage crisis seem to be lost on policymakers tackling student debt. A decade ago, government subsidies and guarantees helped expand the “dream” of homeownership to many Americans who would have been better off renting. Today, it’s college education being made more accessible with cheap funding provided by Uncle Sam.

Apr 30, 2012 21:02 UTC

The rupee looks vulnerable

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

India’s ballooning trade deficit means it has to run just to stand still. Without steady capital inflows, the currency will collapse. But without a steady currency, it is hard to attract foreign capital. The rupee’s 19 percent fall against the dollar over the past year is worrying.

During most of the last decade, the current account deficit has been funded without great difficulty. Foreign direct investment, portfolio investments and about $60 billion a year of remittances have usually exceeded the shortfall in trade. India has accumulated around $300 billion of foreign currency reserves, equivalent to 17 percent of GDP.

Apr 10, 2012 17:24 UTC

Wobbly markets face second-quarter correction

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By Ian Campbell

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

Markets are wobbling on renewed fears about global growth. Rising yields on Italian and Spanish bonds add to the alarm. And it would be wrong to assume that central bankers will ride to markets’ rescue this time – because oil prices and inflation are part of the global gloom.