Confused Fed adds to emerging market muddle

March 20, 2014

U.S. policymakers have sent a garbled message about their intention to raise interest rates. Increased uncertainty makes global bond and currency markets more volatile. That raises the risks for developing countries already battling with slower growth and sagging investor morale.

UK’s political budget transfers from young to old

March 19, 2014

The chancellor has given retirees freedom over their pension pots, among other perks for saving. He hopes to unleash spending, help growth and attract votes. But the growth bet is risky, and the budget did far less to help the young or address the UK’s housing shortage.

Japan stock market selloff is a temporary setback

March 19, 2014

Equity indices are down more than 10 pct this year, worse than every large economy but Russia. Jitters over emerging markets and a looming sales tax hike are partly to blame. But with the central bank on standby for more easing, Japanese stocks should benefit from home support.

Real risk to emerging markets lies in real rates

March 18, 2014

The end of the global cheap money era has pushed real interest rates sharply higher in developing nations. That will prompt companies to respond by paring back investment. The loss of demand will be bad news for a world economy still struggling to shake off long-term stagnation.

Review: An unreliable guide to inequality

By Edward Hadas
March 14, 2014

Thomas Piketty’s chunky book on “Capital in the 21st Century” has been widely hailed. But his key equation is faulty, his sociology crude and his historical analysis doubtful. Still, there are good ideas, and the big policy suggestion – a progressive tax on capital – is sensible.

Rouble hard to defend against Putin’s attacks

March 14, 2014

The takeover of Crimea has sent the currency down, along with Moscow stock markets. The president’s erratic moves are hurting an already slowing economy, even before Western sanctions isolate Moscow. Soon even the central bank will find it hard to defend the rouble against Putin.

Russia harms the BRICs and adds to global risks

March 12, 2014

The intervention in Ukraine is bad for Russia’s own economy and will do further harm to emerging economies as they struggle with reduced capital inflows and weak exports. Investors are shifting to developed markets, increasing the risks there.

Credit chains are China’s weakest link

March 11, 2014

Debt levels have grown, but not nearly as much as chains of interconnected borrowers and lenders. Poor capital allocation has encouraged companies and individuals to step in where banks don’t. Longer chains could magnify the effects of a default and turn confidence to chaos.

Japan index: Weak demand shows need for stimulus

March 11, 2014

The Breakingviews Abenomics Index inched higher in January. But manufacturing stumbled, and the trade deficit zoomed, suggesting anaemic demand both at home and abroad. With wages subdued and sales taxes about to rise, the economy may need a fresh dose of monetary easing.

What Putin wants matters less than what he doesn’t

March 7, 2014

The Russian president fears real democracy in Ukraine as much as at home. And he’s afraid of a disruption of trade and financial ties if Kiev turns towards the EU. If the U.S. and Europe want Putin to back down, they have to convince him that he’s wrong on both counts.