Opinion

The Great Debate

California, harbinger of hard U.S. choices

James Saft Great Debate – James Saft is a Reuters columnist. The opinions expressed are his own –

California’s fiscal train wreck should be watched warily by investors in U.S. Treasuries; as the start of a trend among states seeking bailouts, as a source of pressure on Federal funds and as a harbinger of hard choices at national level.

California voters last week rejected a finance bolstering proposal, setting the stage for billions of dollars worth of  cuts in services, layoffs and a shortened school year.

It also leaves the state with a budget shortfall of more than $21 billion, an exacerbated seasonal revenue shortfall and a fragile reputation in the bond market.

These are just about the last things a state needs when unemployment is high and recession is deep, but California is trapped between its own high cost base, bond investors unwilling to give it the benefit of the doubt and a Federal government that is loath to play Santa Claus. Of the three, the last is most likely to give way, and if the U.S. does widen the bailout it is already giving to states it will have potentially profound consequences.

Financial heaven and hell

denmark1– Christopher Swann is a Reuters columnist. The views expressed are his own –

There is nothing like a home-grown financial crisis to undermine a superpower’s sense of superiority. The United States is finding it has something to learn from some of the world’s lowest profile countries.

Among those that are now being held up as role models are Denmark, Canada and Sweden.

Time for fund managers to act

Alex Smith-GreatDebate– Alexander Smith is a Reuters columnist. The opinions expressed are his own –

It is time for shareholders to start behaving like the owners of listed companies rather than appearing as hapless bystanders as corporate disasters unfold around them.

In the U.S., the SEC move to allow institutional investors to nominate directors is a small but welcome step in the right direction. To some degree it echoes existing arrangements in Sweden, where shareholders already play a greater role in nominating and approving directors.

Fixing health care

morici– Peter Morici is a professor at the Smith School of Business, University of Maryland School, and the former Chief Economist at the U.S. International Trade Commission. The views expressed are his own. –

American health care is broken.

At 16 percent, the United States spends a much larger share of GDP on health care than Western European economies. Yet the United States has about 45 million uninsured, while its peers do not.

Many Americans between 50 and 65 cling to jobs they don’t want simply to keep health benefits. Their European cohorts are not so constrained.

Auto plant wars sparked decline of industry

dewar-headshot-150x150– Robert J. Dewar is a former Ford Motor Company general foreman and author of A Savage Factory: An Eyewitness Account of the Auto Industry’s Self-Destruction. He currently lives in Cincinnati, OH and runs a successful packaging business with his wife and family. The views expressed are his own. –

The war in the auto plants never ended. It flared up and died down, but it never ceased. Management and labor circle each other like sumo wrestlers searching for an opening. Like any war, it ignores honesty, human dignity and common sense. Like any conflict, it leaves collateral damage.

As a supervisor at Ford Motor Company’s largest transmission plant, I fought on the front lines. Despite leaving the auto company many years ago, the factory skirmishes were a key factor in the industry’s disastrous decline in the 1980s, and likely continue to play a part in the failures of the industry today.

Embracing CAFE Society

Gas– Christopher Swann is a Reuters columnist. The views expressed are his own –

President Obama may have a political Midas touch, but his decision to tighten fuel efficiency rules for cars was assailed from two directions.

Some critics charged that the rules would force car prices higher at the worst possible time — dealing a possible lethal blow to the American auto industry and hurting struggling consumers at the same time. Others berated the president for preferring regulation over a simpler tax increase. The Corporate Average Fuel economy standards — or CAFE — are costly, inefficient and politically craven.

Obama and the wrong side of history

Bernd Debusmann - Great Debate—Bernd Debusmann is a Reuters columnist. The opinions expressed are his own.—

Ringing words, smoothly delivered: “To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history, but that we will extend a hand if you are willing to unclench your fist.”

Did that memorable line from President Barack Obama’s inaugural address on January 20 mean his administration would break with a long American tradition of paying lip service to democracy and human rights while supporting authoritarian rulers friendly to Washington? Too early to say for sure, but probably not.

Develop domestic oil reserves for energy independence

 Diana Furchtgott-Roth– Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own. —

President Obama is in favor of moving towards “energy independence,” but his new 2010 Budget specifically seeks to raise taxes on domestic oil exploration by $31 billion over 10 years, a larger tax increase than on any other industry. In addition, oil and gas producers would bear a disproportionately heavy share of other tax increases on business, more than $320 billion.

Surely a president who desires energy independence would leave oil companies alone so that America could develop greater domestic reserves.  But this is not the case.

The ugly attraction of fast shrinking Japan

James Saft Great Debate – James Saft is a Reuters columnist. The opinions expressed are his own –

Sure, seeing your economy shrink at a 15 percent annual clip is depressing, quite literally, but if you believe in even a tepid global economic recovery in the second half, then Japan is actually attractive.

There is no way to sugar coat the first quarter Japanese gross domestic product figures released on Wednesday: they are breathtakingly bad viewed from virtually any angle.

Time for China to act on foreign listings

wei_gu_debate– Wei Gu is a Reuters columnist. The opinions expressed are her own –

China has talked about plans to allow foreign companies to float on its domestic stock markets for at least a decade, but that’s all there has been: talk.

Now would be a good time to convert some of that talk into action. Beijing has been struggling with its own investment strategies: the state gets feeble returns on the U.S. Treasury bonds it owns, and its equity stakes in foreign financial firms are well under water.

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