Beware the Italian risk in German elections

September 10, 2013

Germany’s election is more open than it looks. Merkel’s current coalition might lose its majority. The Social Democrats are loath to enter another alliance with her conservative party. Protracted negotiations may make Berlin look like Rome, paralysing Europe for weeks.

Japan index: Wages and consumption stymie recovery

September 9, 2013

Firmer prices, stronger bank lending and higher manufacturing output helped the Breakingviews Abenomics Index reverse half the previous month’s decline in July. But unless wages and spending rise, Prime Minister Shinzo Abe will struggle to win his war against deflation.

Japan’s Olympic boost will be mostly psychological

September 9, 2013

Choosing Tokyo to host the 2020 Games has given the country a lift. But expectations that an Olympian investment spree will end deflation are as misplaced as fears that it will trigger a debt crisis. A feel-good effect on consumption is probably the best Japan can hope for.

Review: Will the real Mao please stand up?

September 6, 2013

Mao’s portrait watches over Beijing, but it’s still impossible to know the man behind the myth. Journalist Edgar Snow had rose-tinted specs; writers Jung Chang and Jon Halliday saw red. Mao’s legacy is volatile, and China’s current leaders invoke his name at their own risk.

Australia haunted by imaginary crises

September 6, 2013

They were spooked by the global financial meltdown even though it left the country largely unscathed. Now Australians are worrying about the end of the mining boom. Yet slowdown need not spell economic disaster. An impending change of government may help restore some optimism.

Not all Asian countries need to fear the Fed

September 5, 2013

Plunging currencies have raised contagion concerns. But not all nations are equally vulnerable to receding tides of dollar liquidity. A Breakingviews interactive map shows that while no Asian economy is entirely immune, none is as badly exposed as India.

China’s bad debt could leave $500 bln equity hole

September 4, 2013

That’s how much the biggest lenders would need if 10 percent of their loans go bad and balance sheets continue to expand, according to a Breakingviews calculator. Though earnings can cover some of the shortfall, the potential hit explains why valuations are languishing.

The lessons for China from Japan’s lost decade

September 3, 2013

China faces many of the challenges that hobbled its Asian rival in the late 1980s: a debt-fuelled property boom, less competitive exports, and an ageing society. China is still urbanising and can avoid deflation, but only if it learns from Tokyo’s error by cleaning up its banks.

Emerging market currency rescue is a pipe dream

September 2, 2013

India’s idea of group-selling dollars to prop up emerging market exchange rates would be a tough sell. Participants would be asked to spend their reserves to help others, and probably lose money in the process. The best thing India can do is to revive sputtering growth.

Currency market’s rude wakeup call stirs Indonesia

August 29, 2013

The collapsing rupiah has finally forced the country’s central bank to raise interest rates. It’s a step Jakarta should have taken much earlier. High inflation and a widening trade deficit have shown the country’s loose monetary policy for what it is: a risky growth obsession.