Breakingviews

Wage subsidy could blunt Singapore’s edge

By Andy Mukherjee

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

Singapore’s government hopes that new subsidies for low-wage workers will fix two problems: pressure on company profits, and income inequality. But in doing so, it will just create new problems later on.

Moody’s shaming brings UK gain in currency war

By Ian Campbell

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

The only question had been which rating agency would shoot first. Moody’s did the deed, removing the UK’s triple-A rating on Friday. It is a political humiliation for the UK government, but the downgrade also removes that lingering expectation of being gunned down. The irony is that the humbling may help the UK achieve recovery sooner – and without firing another monetary policy shot in the currency wars.

Asia’s property taxes are covert capital controls

By Peter Thal Larsen

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

Asia’s city-states are experimenting with a new form of capital controls: property taxes. In its latest effort to cool the market, Hong Kong has hiked stamp duty for real-estate transactions, apart from those that involve local first-time buyers. Discriminating against foreign speculators may distort the market and have limited success in constraining prices. Yet its popular appeal is clear.

Soaring kiwi dollar tests faith in inflation goal

By Andy Mukherjee

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

New Zealand’s overvalued kiwi dollar is testing its central bank’s single-minded devotion to price stability. The country, the first in the world to formally adopt inflation targeting as a monetary policy tool in 1990, is struggling to defend the regime following the four-year, 65 percent rise in the local dollar against the US currency.

Gold melts as economy warms and Fed warns

By Ian Campbell

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

Gold is teetering on the brink of a precipitously high cliff. That some U.S. Federal Reserve officials are reluctant to press on with the bank’s quantitative easing was enough to knock it to a seven-month low. What an actual end to QE would mean is not something gold investors want to hang around to find out. Though it may be near to a ledge now, the metal’s medium-term downside looks deep.

Southeast Asia’s growth could lead to credit curbs

By Andy Mukherjee

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

Southeast Asia’s heady debt-fuelled growth is beginning to resemble the unsustainable mid-1990s boom. But authorities are shy to raise interest rates as doing so could attract more overseas capital, stoking inflation and financial instability. Direct curbs on credit and capital flows may prove more attractive.

U.S. deficit dynamic duo remain uncontested champs

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

Alan Simpson and Erskine Bowles remain the uncontested champions in crafting compromise in Washington. The original bipartisan plan to rein in America’s fiscal deficit which the dynamic duo spearheaded in 2010 became part of the vernacular – though was rejected by policymakers. Now they have come up with a revised $2.4 trillion compromise. Like the original, it contains plenty of items not to love. Yet balanced alternatives to restrain the national debt remain elusive.

China’s next debt crisis will be a local affair

By John Foley

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

China’s next credit crisis may be a local affair. A recent suggestion of setting up local bailout funds reflects the fact that it’s no longer big banks that present the biggest risks, but towns and regions. The elaborate ties between local borrowers, lenders and governments could make future credit problems both chaotic – and concentrated.

Singapore kicks off necessary benchmark rate cull

By Peter Thal Larsen

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

Singapore is kicking off a necessary cull of benchmark interest rates. The city-state is expected to kill off the U.S. dollar Singapore Interbank Offered Rate (Sibor) in order to focus on the weightier local-currency version. With alternatives on tap, the switch should be manageable. It will also be a useful test for London’s planned interest rate bonfire.

Dubai’s new boom assumes short memories

By Una Galani

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

Dubai has rediscovered its appetite for grand designs. A replica Taj Mahal four times bigger than the original, the world’s biggest Ferris wheel, several new mega-malls, and over 100 new hotels are amongst a raft of extravagant projects aiming to boost tourism in the emirate. But lingering debt woes from its last boom-and-bust cycle should hopefully reduce the risk of runaway spending.