Breakingviews

Spain adds bank stress tests to saga of missteps

By George Hay

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

Spain is doing its Don Quixote impression again. The troubled euro state’s latest attempt at shoring up trust in its imploding banking system was supposed to be the final one. Madrid was expected to pump enough capital in its lenders to lay concerns to rest. But the rosy assumptions chosen by the government are still too close to Cervantes’ ever-dreaming literary character.

Vietnam is a bad example to newly emerging markets

By Rob Cox

This column appears in the Oct. 1 edition of Newsweek magazine. The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Almost exactly two years ago this week, Christine Gregoire, the governor of the U.S. state of Washington, was in Vietnam handing out French fries made from potatoes grown in her state at a Kentucky Fried Chicken outlet in Ho Chi Minh City. Gregoire, accompanied by representatives of more than 50 companies from home, was in Vietnam trying to drum up business with America’s former military adversary. But the most important stop on Gregoire’s itinerary may have been a ribbon-cutting ceremony for a new deepwater shipping terminal at Cai Mep.

What’s the best gauge of China’s growth? You pick.

What’s really going on in China’s economy? It depends where you look. Numbers abound, but good explanations are scarce. Take the country’s Gross Domestic Product: it showed year-on-year growth of 7.6 percent in the second quarter of 2012, a whisker above the official goal. Yet vice premier Li Keqiang famously referred to GDP as “man-made” and therefore unreliable, according to a cable published by Wikileaks. Many academics and economists agree.

To get a different perspective, Breakingviews has picked ten alternative indicators. Some, like bank lending and residential property, measure finance and investment. Steel output, rail freight and truck sales offer a gauge of industrial activity. Others are more subjective, like the quality of Beijing’s air, the share-price performance of Kweichow Moutai, a brewer of high-end liquor, and sales of Audis, the car beloved of Chinese officials. An increase in the last three suggests growth, but maybe not the right kind.

Americans can’t feel better than companies forever

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

Consumers are feeling better than companies these days, but that might not last long. Cheerier shoppers splashing out more cash could transform business’s bad attitude. But gloomy executives may be more likely to pour cold water on enthusiastic Americans if their pessimism leads to slower hiring.

Advice to French refuseniks on 75 pct tax: move on

By Pierre Briançon

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

François Hollande’s campaign pledge to slap a marginal 75 percent tax on incomes above 1 million euros a year was so outrageous that it took his advisers by surprise. “Cuba without the sun”, one of them reportedly quipped. The same adviser is now the French president’s deputy chief of staff, in charge of ensuring that politics prevail over economic rationality.

How Sahara left Indian investors feeling deserted

By Jeff Glekin

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

There’s no bigger sport in India than cricket. So you might think that the company which sponsors the Indian national team would be a household name. But Sahara has always been shrouded in mystery. Now, following a ruling by the country’s Supreme Court that the company must return $4.5 billion to millions of small investors, its finances are set for a stiff examination. The saga also raises important questions about Indian financial regulation – and how such scandals can be avoided in the future.

More leeway won’t help SEC without better cases

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

More leeway in taking wrongdoers to court won’t help the Securities and Exchange Commission without better cases. The watchdog is asking the U.S. Supreme Court for additional time to sue investor Marc Gabelli over misdeeds a decade ago. Granting the request could make pursuing fraudsters easier. But effective enforcement requires filing solid cases against prominent perpetrators. The SEC too often falls short.
The regulator hasn’t been shy about pushing legal boundaries. In separate appeals decided last month, it argued unsuccessfully for extending time limits on suits against corporate executives and for using unproven civil allegations as evidence in criminal trials. But last month it also won permission to grab wrongdoers’ salaries and greater freedom to sue individuals who merely help financial criminals.

Euro bank recap battle line limits solidarity

By Hugo Dixon

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

The latest battle lines over euro zone bank recapitalisation show the limits of solidarity. The German, Finnish and Dutch finance ministers have made clear there won’t be a free lunch for Spain, Ireland or other countries if they need euro zone cash to shore up their banks.

Nixing China’s oil bid may create Canada discount

By Christopher Swann

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

Canada is at risk of slapping a national discount on its resources sector. Investors reckon there’s a roughly one-in-four chance that the country’s politicians will block a $15.1 billion offer by China’s CNOOC for local energy company Nexen. Takeovers by state-owned companies raise tricky questions. But hoisting the national flag over a company of little strategic importance risks further alienating outside investors.

Franco-German politics first hurdle for BAE/EADS

By Pierre Briançon

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

France and Germany must clear the air before the merger between BAE and EADS can proceed. Their uneasy alliance over the Airbus maker’s shareholding and governance cannot continue as is – its end is even a prerequisite for the merger. But Paris and Berlin remain obsessed by “parity”, the sacrosanct notion that their position in the company should be identical. Franco-German parity could be preserved in a larger group, as long as political passions are kept under control.