The Great Debate

First exit for the Fed

fed– Agnes T. Crane is a Reuters columnist. The views expressed are her own –

Call it a battle for beginnings and endings, and the Federal Reserve is smack in the middle.

As Fed policymakers convene for a two-day meeting starting on Tuesday, the lines are growing more defined between those who want the Fed to do more to stimulate a still fragile economy, and those who are calling for a defined exit strategy to prevent the global economy from going into an inflation-inducing overdrive.

There’s a way to placate both camps, at least in the near-term, and that’s for Ben Bernanke and his colleagues to retire some of the temporary short-term lending facilities put in place at the height of the financial meltdown last year.

It would show good faith that the U.S. is serious about exiting some of those emergency facilities, and it would give the central bank breathing room to keep its ultra-easy monetary policy in place until it’s ready to call the all clear.

Writing history – the Panic of 2008

John Kemp Great Debate– John Kemp is a Reuters columnist. The views expressed are his own –

Economic history is the only field of human endeavor where the past changes as much if not more than the present and the future. Policymakers and practitioners struggle to define and write a “narrative” of the past as a means to control how policy responds to current and future problems.

The debate now over financial reform is a case in point. Even though the banking system has only just emerged from the most severe shock since the 1930s, the battle over how to define the events of the last 18 months, and what they should mean for investors and regulators in future, is already well underway.

BlackBerry’s biggest rival may be itself

Eric Auchard– Eric Auchard is a Reuters columnist. The opinions expressed are his own –

Research in Motion officials do their best not to laugh when asked if they fear the rise of a BlackBerry-killer, some theoretical device that does everything its coveted e-mail phone does, only better.

But BlackBerry’s biggest threat may come from itself. As the company’s latest quarterly results suggest, there is a gulf between its pricey corporate phones and price-sensitive consumer models that are cutting into margins.

Starting a trade war with “Buy America”


–- 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. –-

When Congress inserted “Buy America” protectionist provisions that required some goods (such as steel, cement, and textiles) financed by the stimulus bill to be made in America, our government invited a trade war with important economic partners.  Now China and Canada are imposing their own protectionist regulations, potentially destroying well-paid American jobs in the export sector.  Other countries may follow suit.

This week China reported that the government now requires stimulus projects to use domestic suppliers when possible, even though in February it promised to treat foreign companies equally.  The Chinese $585 billion stimulus package has resulted in a World Bank growth forecast of 7.2% for China this year, far above other industrialized countries.

Regulation reform hints of “Old Europe”

bob-bench– Robert R. Bench, a former Deputy Comptroller of the Currency in the Reagan administration, is a senior fellow at the Boston University School of Law’s Morin Center for Banking and Financial Law. The views expressed are his own. –

“Le laissey faire, c’est fini” – French President Nicolas Sarkozy

There indeed is a French flavor to the administration’s proposals for reforming the structure of regulation and supervision of financial institutions operating across the United States. In many ways the proposals resemble the “Commission Bancaire,” the French regime for financial oversight.

Perhaps the proposals reflect commitments the U.S. has been making at the meetings of the G20 countries, consisting of countries which finance much of U.S. government operations and American consumer credit.

Learning to love falling house prices

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

Optimism has been all but extinguished from the U.S. housing market.

The number of Americans lining up for new home loans is shrinking again, according to Wednesday’s release from the Mortgage Bankers Association, and the best that can be said of homebuilding is that it has stabilized at almost 80 percent below its peak.

With no end in sight to falling prices, perhaps we should look on the bright side. Indeed, there are three good reasons why sliding prices are not such a bad thing.

Bet on small firms to lead China global foray

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

Chairman Mao used to say the truth is always kept by the minority.

A little-known private Chinese machinery company’s bid for a GM marque has been sneered at by even the patriotic Chinese media, but the deal could succeed where mightier plays like Chinalco’s for Rio Tinto have failed.

True that private sector firms face an uphill battle in China against more dominant state-backed firms, but it seems like double standards when Western observers, who extol the virtues of the private sector taking the driver’s seat, praise Chinalco’s deal but dismiss Tengzhong’s bid for Hummer.

Chinese media’s disapproval of Sichuan Tengzhong Heavy Industrial Machinery’s move has tempered concerns about technology and job transfers to China, as well as questions whether China’s military was behind the bid.

Dell’s retail detour starts to look smart

Eric Auchard– Eric Auchard is a Reuters columnist. The opinions expressed are his own –
Dell Inc’s move into retail sales might seem poorly-timed, discretionary spending being what it is. In fact, the world’s No. 2 personal computer maker looks like it’s making the right choices that can get its long-struggling consumer business rolling again.

Dell is gearing up to feature several refreshed lines of consumer PCs in 30,000 stores around the globe. The company’s consumer retail chief Michael Tatelman has set aggressive growth targets for the business.

These targets come despite predictions by market research firm Gartner Inc that the PC industry this year will suffer a nearly 12 percent decline, its biggest-ever unit sales drop.

Ahmadinejad won. Get over it


– Flynt Leverett directs The New America Foundation’s Iran Project and teaches international affairs at Pennsylvania State university. Hillary Mann Leverett is CEO of STRATEGA, a political risk consultancy. Both worked for many years on Middle East issues for the U.S. government, including as members of the National Security Council staff. The views expressed are their own. —

This article originally appeared on Politico.com.

Without any evidence, many U.S. politicians and “Iran experts” have dismissed Iranian President Mahmoud Ahmadinejad’s reelection Friday, with 62.6 percent of the vote, as fraud.mousavi

They ignore the fact that Ahmadinejad’s 62.6 percent of the vote in this year’s election is essentially the same as the 61.69 percent he received in the final count of the 2005 presidential election, when he trounced former President Ali Akbar Hashemi Rafsanjani. The shock of the “Iran experts” over Friday’s results is entirely self-generated, based on their preferred assumptions and wishful thinking.

The Fed needs to get its wallet out

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

The Federal Reserve is putting on a brave face about the rise in Treasury yields.

At the moment, the Fed can afford to put off bringing out the big cannons for a little while. If market optimism is overdone, a few weak economic releases would soon send interest rates plunging again. If the market is right, then higher rates are justified and the economy will cope.