Breakingviews

Predictions 2012: Upside down and inside out

January 12, 2012

Planet finance has a propensity to turn itself upside down and inside out. It’s up to its old tricks again. A new collection of commentaries from Breakingviews sets the financial agenda for the next 12 months.

Stalling German motor is Europe’s other difficulty

January 17, 2012

Germany the strong? Well, yes, fiscally. It was not downgraded by S&P because its fiscal deficit is just 1 percent of GDP. But German growth has stalled again. It depends too much on exports. The irony is that the EU’s biggest economy can’t propel itself – or the euro zone.

Alluring subprime debt can still poison investors

January 19, 2012

Credit Suisse, Goldman Sachs and other banks reckon there’s life yet in the mortgage market’s toxic waste. Double-digit yields, after all, are hard to ignore. But subprime sludge still has the ability to slip buyers up. Investors should tread carefully.

Latest U.S. bank stock surge could prove fickle

January 20, 2012

The big six, including Goldman and Citi, have added $100 bln of market value of late despite meager Q4 earnings. Receding fears over Europe helped valuations align better with balance sheet and income realities. But no further rally is warranted as more bad surprises are likely.

Fed doubles risk of being whipsawed by market

January 25, 2012

By extending its zero-rate commitment from about 18 months to three years the U.S. central bank has doubled the risk that markets may surprise it. Job creation, Bernanke’s departure or inflation could force a damaging reversal - or lead the Fed to drag its feet to avoid one.

Uninvited guest, Mr 99 Percent, crashes Davos

January 26, 2012

The rich and the powerful at the World Economic Forum are haunted by the shadow of the unemployed and disenfranchised. The specter is in the panels, hallway conversations and political speeches. What’s less clear is whether the gathered plutocrats can deal with income inequality.

U.S. private sector emerges from government shadow

January 27, 2012

Headline annualized U.S. GDP growth of 2.8 pct in the fourth quarter looks more anemic when inventory growth is netted out. But private sector output expanded at a more robust 4.5 pct. The government retreated in 2011 as a whole, but private enterprise is regaining strength.

Gingrich makes Goldman 4-letter word – to no avail

January 31, 2012

The former House speaker is set to lose Florida despite labeling rival Mitt Romney an agent of the Wall Street firm. But Romney’s similar conflation of Gingrich’s work with Freddie Mac to the housing bust seems to have hit further home. It’s a small victory for Goldman’s image.

Still a long slog ahead for U.S. jobs

February 8, 2012

Employment growth in the United States has started picking up. But even at a rate of 250,000 a month, roughly January’s figure, full employment may not be reached until 2020. A new Breakingviews calculator shows how a faster or slower pace of job creation changes that picture.

Renters need to flex muscle in U.S. housing debate

February 8, 2012

Though America’s mortgage system subsidizes homebuyers, its dysfunction has cost all taxpayers dearly. Few groups are pushing for change. But the nation’s 39 mln renters - often an afterthought in the discussion - ought to be up in arms. They might find unlikely allies, too.