Breakingviews

Review: the two-sidedness of a richer China

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

For multinationals, “The End of Cheap China” is a mixed blessing. Shaun Rein, an American marketing consultant based in Shanghai, has written an interesting book with that title. The good news is that customers can afford to pay more. The bad news is that they’re increasingly reluctant to spend their higher incomes on anything multinationals have to offer.

Review: Why Uncle Sam fails to fix his finances

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

To understand the current state of the U.S. federal budget – and the policies the next president will be forced to pursue from day one – there are two pieces of required reading. The first is a two-year old wonky white paper entitled “The Moment of Truth,” by the National Commission on Fiscal Responsibility and Reform. The second is “Red Ink,” David Wessel’s handy new guide to understanding the politics of the federal budget.

Review: How the West both lost and won Asian minds

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

“What is the cause of the poverty, indigence, helplessness and distress of the Muslims, and is there a cure for this important phenomenon and great misfortune?”

China mistakes foreign law firms for Party poopers

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

China seems to be mistaking foreign lawyers for Party poopers. They’re dealmakers, not threats to communist rule. Yet wary leaders refuse to license non-Chinese law firms. That’s no way to lure overseas investment. Any policy change must wait until a tense murder case and political transition are over. But economic preeminence won’t come without the help of global lawyers.

It’s the budget, not the economy, stupid

By Rob Cox 

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

It’s the budget, not the economy, stupid. That variation of the 1992 slogan that propelled Bill Clinton into the Oval Office may now apply to Mitt Romney’s candidacy. The Republican presidential wannabe’s choice of conservative House budget chief Paul Ryan as his running mate has the power to transform a heretofore mealy campaign into something substantive: a referendum on fixing the American balance sheet.

Review: Not another BRIC in the wall

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

BRICs is by no means an obsolete tag. The acronym coined by Goldman Sachs economist Jim O’Neill in 2001 continues to operate as both a useful shortcut and a fertile provocation to compare and contrast the world’s four biggest developing economies: Brazil, Russia, India and China. But like all neat catchphrases, there is a danger that one day it will veer into cliché. It’s already easy to over-associate the term with all emerging markets.

UK interest in hybrid Libor is on the right track

By George Hay

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

Martin Wheatley is on the right track. The chief executive-designate of the UK’s new anti-market abuse regulator, the Financial Conduct Authority, has published a discussion paper on how to reform Libor. As befits the start of a consultation, Wheatley does not try to give definitive answers. But he is asking the correct questions.

India begins the post-Mukherjee clear-up

By Jeff Glekin

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

Pranab Mukherjee’s reign as Indian finance minister was stained by economic meddling and political favouritism. Now he is gone, and some of his excesses are being reversed. An enemy has been pardoned and a friend has not received a plum job. This could be the beginning of a better era.

Uncle Sam still living well beyond his means

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

Uncle Sam just can’t seem to stop living beyond his means. While U.S. consumer credit failed to match its June 2008 peak, outstanding debt of domestic U.S. non-financial sectors still stands at nearly 250 percent of GDP, against 232 percent just before the financial crisis hit. While the consumer has deleveraged a bit, business debt is flat and government borrowing has soared. At some point, this just has to end. 

Economists Carmen Reinhart and Kenneth Rogoff demonstrated that recessions preceded by a financial crash can be exceptionally deep and long, because of the reduction of debt that needs to occur before normal growth returns. Since 2008, with unprecedented levels of fiscal and monetary stimulus, no net U.S. deleveraging has occurred; rather the liabilities of non-financial sectors have grown faster than GDP. While households have cut back (partly through defaulting on mortgages and credit cards) from 97 percent of GDP to 83 percent, business debt kept pace with GDP and the government’s balance sheet has soared from 57 percent of GDP to 89 percent. 

StanChart anti-U.S. rant will resonate

By John Foley

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

The stand-out quote in the New York financial regulator’s attack on Standard Chartered is the description of an unnamed banker allegedly railing at “f—ing Americans” who “tell us, the rest of the world, that we’re not going to deal with Iranians”. This charmless F-bomb will rankle domestically, but may resonate further afield.