China’s likely finmin choice a win for reformists

By Wei Gu
January 12, 2012

Lou Jiwei could be a good choice to run the finance ministry. As head of sovereign fund CIC, he has rare experience of global finance, and has been vocal about fiscal and other changes. A step up would strengthen the reformist streak in China’s consensus-driven political machine.

China will fudge Iran oil sanctions

January 12, 2012

Simple disobedience of the U.S. freeze would give China cheap oil, but it can’t afford the cost of angering Uncle Sam. Total obedience would push up prices, and could spark social unrest in China. But Beijing can probably find a middle way: do just enough to placate the Americans.

Carlyle’s big payday does private equity no favors

January 12, 2012

David Rubenstein and two partners pocketed $400 mln of profits last year. The 99 pct - pensioners investing in Carlyle funds - did well alongside them. But the lower tax rate paid by the buyout barons cost Uncle Sam some $80 mln. The timing of Carlyle’s disclosure is impeccable.

At least Obama knows which agencies he’s cutting

January 13, 2012

The president is making good on promises to shrink the bureaucracy by merging six federal agencies and cutting up to 2,000 jobs. Though politically clever, it’s a bitty fix. Repairing America’s fiscal imbalances will require deeper cuts and more creative measures than this.

Euro zone’s New Year hopes hit triple downer

January 16, 2012

Standard & Poor’s has stripped France and Austria of their triple-A ratings, and cut Italy to the same level as Ireland. Greek debt talks have broken down. The ECB has criticised the region’s fiscal pact. After a brief lull, Europe’s debt crisis is back with a vengeance.

Spain’s regions need tough love treatment

January 16, 2012

The country’s budget deficit miss last year was mostly due to the regions’ profligate ways. Letting one of them default to set an example would help tame them, but carries risks. A impending liquidity crisis could give Madrid the clout to demand greater say on miscreant regions.

Unravelling India: Part 1

January 18, 2012

India is wasting a good economic crisis. Key reforms tend to follow economic slowdowns. Not this time. Instead of springing into action, the political system is paralysed. The best it can offer are handouts and subsidies, which will further exacerbate the country’s problems.

Social VAT – great idea for after the revolution

January 18, 2012

Also known as fiscal devaluation, a shift of taxes from labour to consumption might help euro zone members rebalance trade. But the actual effect would be limited. The real appeal is conceptual. When goods are ample and jobs are scarce, taxes should not discourage hiring.

Hollywood and Silicon Valley test wikigovernment

January 18, 2012

Film and TV studios tried to sneak heavy-handed legislation to stop piracy past many U.S. lawmakers. Wikipedia and other Internet outfits belatedly woke up to the threat to their traditional openness. The spat reveals clumsy links among old media, new media and Washington.

Unravelling India, Part 2: Corruption

January 19, 2012

What’s the best way for India to slay corruption: punish the culprits or make government so transparent that it is hard for bribery to find places to latch onto in the first place? The answer is both.