The Great Debate UK
By Chris Hughes
Even the mighty Goldman Sachs makes mistakes. The Wall Street bank's decision to help Greece keep some of its debts hidden from public view in 2001 was one of them.
The transaction allowed the Greek government to present accounts which understated the state's liabilities by 1.6 percent of GDP.
The arrangement was not illegal, not against any regulations and was approved by Europe's statistical authorities. Still, helping a client lessen the transparency of its finances is ethically questionable. For its own sake, Goldman should just admit that the firm compromised the principles it is supposed to hold dear.
At the time, it may have seemed that the deal's goal, comforting Greece's fellow members of the euro zone, justified the means. In retrospect, though, it's hard to reconcile such financial alchemy with Goldman's expectation that its people comply fully with the "letter and spirit of the laws, rules and ethical principles that govern us".
-David Kuo is director at the Motley Fool. The opinions expressed are his own.-
The day of reckoning is looming ever closer.
Political leaders are jockeying for position with ad-hoc appearances here and a flesh-pressing engagements there to curry favour with voters ahead of the general election. How long will it be before we get our first baby-kissing photo opportunity?
But as yet, none of the main parties has told the electorate exactly how bad things are with the UK economy. Instead, they pussyfoot around difficult economic issues in the hope that if they don’t say anything, then maybe we won’t ask.
- Laurence Copeland is a professor of finance at Cardiff University Business School and a co-author of “Verdict on the Crash” published by the Institute of Economic Affairs. The opinions expressed are his own. -
It is hard to be too pessimistic about the economic outlook for the rich countries, and impossible as far as the UK is concerned. With every day that passes, it becomes clearer that, far from being out of the woods, we are once again plunging into recession and possibly crisis.
-Kully Samra is UK Branch Director at Charles Schwab. The opinions expressed are his own.-
There is no doubt that since the lows in March 2009 the U.S. market has rallied massively. However, at Charles Schwab we believe that whilst economic progress will continue, we must look to the months ahead with some caution. We remain optimistic regarding the equity markets in the longer term and the economy in the short term, but recognise that increased volatility will likely characterise 2010.
from The Great Debate:
-- John Kemp is a Reuters columnist. The opinions expressed are his own. --
With clear signs the U.S. and world economies have returned to growth, investors are trying to guess when the Federal Reserve will begin to raise interest rates again.
Voting to maintain the federal funds target at 0.00-0.25 percent at this week's meeting, the rate-setting Federal Open Market Committee (FOMC) reiterated that low rates of capacity utilisation, subdued inflation trends and stable inflation expectations were "likely to warrant exceptionally low levels of the federal funds rates for an extended period".
China needs fertilizer more than steel. If the Middle Kingdom's industrialization follows the course of other nations, per capita demand for infrastructure like concrete and steel will peak long before meat consumption.
This may explain why mergers and acquisitions activity in the agriculture sector has become so hot. For example, miner Vale just agreed to buy Bunge's Brazilian fertilizer assets for $3.8 billion.
from The Great Debate:
Ben Bernanke in peril and the Volcker crackdown on proprietary trading by banks show two truths of the current dispensation: there is no effective hedge against politics and the reflation trade rests on fragile foundations.
Neither of these realities is particularly good for financial markets and neither is going away any time soon.
Cash, not China, is Google's biggest conundrum. More precisely, where should the search giant point its gusher of greenbacks?
The online advertising market recovery and increasing efficiency pushed free cash flow up 44 percent to $2.5 billion in the fourth quarter. Adding that to the company's $24 billion cash hoard doesn't make sense -- but giving it to shareholders does.
Greece's economic statistics are dubious in more than one sense. The country probably bent its figures to get into the euro zone. Now, the EU is angry that Greece has not been straightforward about the size of its fiscal deficit. But the greater doubts concern how an uncompetitive, highly indebted, weakly governed country can live with a strong currency such as the euro.
The Trojans were shocked after Greek guile got them in. The feeling may be similar at Eurostat, the European Union's statistics office. There is particular anger at Greece's increase of its estimate of the fiscal deficit last year from a tolerable 3.7 percent of GDP to a quite intolerable 12.5 percent.
A month before China ushers in the year of the Tiger, its central bank has begun to address the effects of its roaring liquidity boom. It is encouraging that the authorities in Beijing are alert to the threat of an overheating financial system. But with so many countervailing forces, the liquidity tiger will not be tamed so easily.
Markets yelped Tuesday after the central bank raised the minimum ratio of capital to loans at banks by half a percentage point. But this amounts to little more than scooping water out of the sea. Some 1 trillion yuan ($146 billion) of government bills mature in the next two weeks. If they are not rolled over, three times more money would flow into the system than the reserve hike will leech out. Then there are foreign speculative flows - an estimated 378 billion yuan in the fourth quarter of 2009.