Ian's Feed
Jan 24, 2011
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Sarkozy’s G20 plans fail to impress

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

LONDON — France is to chair the G20 and Nicolas Sarkozy has declared his goals. Unfortunately, the French president’s calls for more commodity markets regulation, a financial transactions tax and reform of the world monetary system look more like gestures to please the gallery than practical proposals.

Jan 6, 2011
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Commodities cast wary eye on dollar and liquidity

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

LONDON — You’d think commodities markets would like reviving economic growth. But despite positive data from Germany and the United States, prices are wobbling. The problem is that oil, food and metals prices have all thrived on a weak dollar, cheap money and inflows into real rather than financial assets. Recovery, a firmer dollar and higher interest rates are giving investors more to think about. There could be a lot of volatility ahead.

Dec 23, 2010
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2011 to bring recovery, inflation, more euro-pain

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

In 2010, little more than a year after celebrations of the euro’s 10th birthday, the very survival of the currency of the world’s largest economic bloc came under threat – a reminder that the world’s economic foundations are never completely stable. So a prediction that the world will do better than expected in 2011 comes with big caveats.

Dec 21, 2010
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Moody’s Portugal warning is too soft

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

LONDON — Sometimes ratings agencies don’t see trouble coming at all. But more often they spot risks and are reluctant to draw ugly conclusions. Just consider Moody’s comments as it put Portugal on negative watch on Dec. 21.

Dec 9, 2010
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Oil price spike points to inflationary recovery

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

LONDON — The global oil price is back up above $90. A gauge of manufacturing exports in the UK is at a 15-year high. U.S. Treasury yields are rising. The link between these apparently disparate stories is that the world is reaping what it has sown. Deflation is over and inflation is coming back — perhaps strongly.

Dec 6, 2010
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Hungary’s freedom bid may be copied in euro zone

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

LONDON — Investors might well wonder what Hungary is up to. After falling out with the International Monetary Fund in July, the government has now raided private pensions and Moody’s has downgraded the country’s debt to just above junk. The risk of default is considerable, as is the danger of inflation and economic crisis. But the temptation of running from IMF strictures is one the euro zone periphery will understand — and may eventually be tempted to copy.

Nov 30, 2010
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The crisis isn’t global, it’s peripheral

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

LONDON — First Greece, then Ireland, next Portugal? It would be easy to think the whole world is sinking. It isn’t. Small euro zone periphery economies are in deep trouble. Spain, if it sinks, which it might, is larger and would force a more expensive and problematic rescue by the euro zone. But for the global economy the periphery is a side show. For now world economic prospects don’t look bad at all.

Oct 22, 2010
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Geithner talks to the G20 but aims at China

Considering its current economic woes, some might wish the United States would focus on its problems before it instructs its G20 partners on how the world should be run. Yet U.S. Treasury Secretary Tim Geithner raises important and difficult topics in a letter to his colleagues ahead of their weekend meeting in South Korea. The most difficult and contentious is on the global divide between “surplus” and “deficit” countries. But Geithner clearly aims at China’s destabilizing use of its fixed exchange rate.

Geithner might start, however, by listening to his own advice. The prime example of a deficit country is the United States, which is still running massive fiscal and trade deficits. What’s required, says the treasury chief rightly, are “credible medium-term fiscal targets”—of the kind that have just been adopted in the UK, but are yet to be taken on in the United States.

Oct 20, 2010
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Britain’s unkind cuts may help growth sprout

It was billed as a bloodbath, and it is. By slashing public spending by 81 billion pounds over five years, Britain’s coalition government is reversing the big increases of previous years. The plan is billed as necessary pain to secure the country’s financial future, but it is also ideological. The aim is to move from unaffordable levels of public employment and welfare to private employment and a balanced budget. The danger, however, is that the economy stalls.

The cuts to the civil service are drastic and will cause distress, even though most departments’ budgets over the life of the parliament have been reduced by a fifth, not the threatened quarter. The BBC, the foreign office, the police, even the royal family: none have been spared. The government wants services to be delivered more cheaply — which means by fewer people.

Oct 15, 2010
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Dollar’s Asian fall is good for the world

The dollar this week touched its lowest level for 2010. That little Singapore’s adoption of a higher trading band helped trigger the sell-off adds to the talk of its demise. The expectation of more quantitative easing at home is certainly not helping the U.S. currency. But the relative rise of Asian currencies is a good thing. Global rebalancing has been called for: this is it.

Asian currencies need to revalue. Many economies are growing fast, with exports a key driver. The countries run trade surpluses and also attract large capital flows. Their response has been to try to prevent currency appreciation. That means soaring foreign exchange reserves, excess money growth — and the risk of inflation and asset bubbles.