Dec 12, 2014 15:52 UTC
Guest Contributor

Review: “Forgotten Depression” worth remembering

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By Edward Chancellor

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

“The central irony of financial crisis is that while it is caused by too much confidence, too much lending and too much spending, it can only be resolved with more confidence, more lending and more spending.” This post-crisis advice from Larry Summers – a former U.S. Treasury secretary, presidential economic advisor and president of Harvard – represents the conventional wisdom of the economic policymaking elite. This is the same elite, you may recall, that failed to see the global meltdown coming in the first place. Could it be that they’ve got things wrong yet again?

COMMENT

Grant keeps peddling his snake oil about a brief and painless 1921 depression. If wages would only collapse we could have growth and prosperity again! In fact, the pain of the 1921 Depression continued until the back end of the 1920′s. Overproduction, deflation and political chicanery by the New York Fed caused the 1924 and 1927 bond buying programs. The two programs were responsible for a great increase in credit that fueled the boom and bust of 1929. Old economic texts from that time provide examples of a great many firms just barely holding on and making little or no profits even in 1929. Today their solution is propagate the old scheme of much lower wages and skimpy benefits as the way to fuel a new economy of revived growth and prosperity for all. It is the old retreaded scheme of the 1800′s- boom and bust with depressions and wars as the main course. We have a good example of slashed wages today in the form of Iceland. Average people working for a small fraction of what they made before the Krona collapsed. This is the old model peddled by Austrian, Laissez-faire and Hoovernomics advocates. The old models are wrong in so many ways. The last act of the New Deal known as Lend-Lease, produced The Golden Age of America. So many decades have passed everyone has forgotten. I enjoy nearly all of James Grant’s writings but Neoliberal snake oil will make a bigger mess than we find ourselves in today.

Posted by snakeoilpeddler | Report as abusive
Dec 3, 2014 11:53 UTC

Sinking rouble puts debt squeeze on Russia Inc

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By Pierre Briançon

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

Russia does not have an external debt problem. At around 37 percent of GDP – versus 1.5 to three times GDP, say, for developed European economies – it should be easily manageable. For Russian companies and banks, it’s a different story.

COMMENT

Once the economy starts contracting, and prices of food start rising- support for Mr. Putin will slowly fade.

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Dec 2, 2014 19:17 UTC

Wall Street in grip of Geithner nostalgia

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By Rob Cox

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

A week before Thanksgiving, Wall Street’s top brass were forced to reckon with an entirely new sensation: nostalgia for their former overlord, Tim Geithner.

Nov 26, 2014 12:37 UTC

Remember the UK housing bubble?

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By Ian Campbell

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

Just months ago a new house price bubble was seen by many as the great danger for the UK. A chorus built for rate rises and special intervention in the mortgage market. Now the alarm calls are fading. A foreign capital flood has receded in London, home-loan approvals are down and house price inflation is easing. Bubble fears were premature.

Nov 25, 2014 16:54 UTC

American banking has its own Tea Party

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By Rob Cox

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

Like the anti-establishment wing of the Republican Party, the American banking business has its own version of a Tea Party: the Independent Community Bankers of America. In just the past week, the trade group has vociferously opposed the nomination of a Wall Street banker to the Treasury and hailed a bill that would increase congressional oversight of the New York Federal Reserve Bank. These are the plaintive cries of a dying breed of banker.

COMMENT

Readers of this commentary need to ignore Mr. Cox’s obvious community bank animosity and focus on the facts. Mr. Cox admits that “community banks didn’t receive bailouts from the federal government” and that the big banks’ lower cost of funds “implies a belief that the biggest banks won’t be allowed to fail.” So, Mr. Cox admits that the market is rigged in favor of big banks, yet apparently community bankers are bad sports for lobbying for an even playing field. One of the reasons that economies of scale matter so much these days is that community banks have been subjected to ever more restrictive regulations that were passed in response to big bank abuses, such as redlining, abuse of the payment system, and loan production offices rewarded for volume and not prudence. The fact that big banks control a larger DOLLAR share of the loan and deposit markets is irrelevant. One would expect banks in major financial markets to serve their customers, such as the Fortune Five Hundred companies. But these banks have no interest, nor should they necessarily, in serving the thousands of small communities where tens of millions of Americans live and work. What’s surprising or antiquated about this market phenomenon? Nothing. To scoff at the thousands of responsible banks and hundreds of thousands of responsible people who do serve this market displays real urban provincialism that one would not expect from such a sophisticated news source.

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Nov 24, 2014 21:56 UTC

Brazil’s epic water crisis a global wake-up call

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By Kevin Allison and Antony Currie

The authors are Reuters Breakingviews columnists. The opinions expressed are their own. 

One of the world’s biggest cities is running out of water. Sao Paulo, a city of 20 million people, could run dry within weeks. The humanitarian and economic cost would be immense. The fiasco should be a global wake-up call for other metropolises.

Nov 24, 2014 13:40 UTC

Boris should pay up but not shut up over U.S. tax

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By George Hay

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

Boris Johnson has a point about his U.S. tax bill, but he should still cough up. The London mayor objects to the fact that his dual UK and U.S. citizenship means he has been issued with an American tax bill, and he says he won’t pay. Though many U.S. expats will share his frustration, it does not warrant civil disobedience.

COMMENT

Rather naïve, campaigning to change anything through the US legislative system is utterly futile.

He may well need to eventually tow the line because of his ambitions but not to protest is to accept a system that is fundamentally wrong.

Posted by Alisdair | Report as abusive
Nov 21, 2014 19:32 UTC
kateduguid

Review: Congo’s problems run deeper than oil

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By Kate Duguid

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

Save the gorillas and save the Democratic Republic of Congo, urges “Virunga,” a new documentary from Netflix and enviro-mensches Leonardo DiCaprio and Howard Buffett. The film chronicles the machinations of British oil firm Soco International’s exploratory venture in Congo’s Virunga National Park, while park rangers struggle to thwart them.

Nov 20, 2014 20:01 UTC

Dizzying revolving door risks overdone response

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By Daniel Indiviglio

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

The dizzying revolving door between Wall Street and the U.S. government risks an overdone response. Going from a job as an overseer to the private sector, or moving in the other direction, can raise conflicts. Such shifts warrant clear rules, but cross-fertilization has value.

Nov 20, 2014 14:24 UTC

London gets closer to harsh bonus cap reality

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By Dominic Elliott

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

London is nearing the stark reality of banker bonus caps. An adviser to the European Court of Justice on Nov. 20 struck down the UK’s legal arguments against a European Union law restricting variable compensation to a maximum of two-thirds of overall pay. If the court agrees with him, the practical consequence will be that banks will hike fixed salaries, and overall industry remuneration may stay higher than it should.