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Sep 8, 2011
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Canada’s economy hampered by troubled neighbor

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

Canada’s economic comfort is suffering at the hands of its troubled southern neighbor. The Bank of Canada on Wednesday stopped raising interest rates at 1 percent, largely because of deteriorating U.S. conditions. That’s a pity — Canada would benefit from rates above inflation. But sluggishness and policy wrangling south of the border sap growth and make the Loonie less competitive.

Sep 2, 2011
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Big zero on U.S. jobs a boost to policy activists

By Martin Hutchinson
The author is a Reuters Breakingviews columnist. The opinions expressed are his own. The U.S. economy added no jobs in August. For believers, that provides fresh impetus for stimulus, both fiscal and monetary. Neither has much credibility based on recent history. But even proponents of such efforts must know the 9.1 percent jobless rate won’t come down in a hurry.

 

The details of Friday’s employment report were marginally positive, although the downward jobs revisions for June and July were disquieting. Private sector employment was affected by a strike at Verizon, which caused 45,000 temporary job losses. Adding those back, the private sector gained 62,000 jobs. Still, the trend is sluggish, workforce participation is significantly down over the past year, and long-term unemployment remains worse than in any post-war recession.

Aug 31, 2011
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Gold miners no longer leveraged play on the metal

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

Gold miners’ shares are a damped rather than leveraged play on gold — at least from evidence this year. The yellow metal’s price is up more than a quarter since December 31, but mining shares are roughly flat. Australia and Peru recently showed how governments grab more when commodity prices rise, while operating costs go up with prices, too. Moreover, mining investors tend to discount spikes in the price of gold as merely temporary, offering little uplift to the miners’ value.

Aug 25, 2011

Bernanke should leave any new stimulus to Congress

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

By Martin Hutchinson

NEW YORK (Reuters Breakingviews) – Markets seem to hope Ben Bernanke will repeat last year’s performance. At the Jackson Hole conference in 2010, the Federal Reserve chairman announced his support for a bond purchase program. But circumstances have changed. When he speaks at this year’s conference on Friday, he should leave any further stimulus attempts to Congress. Fiscal action might be just as unhelpful as the monetary kind, but at least it’s easier to reverse.

Aug 17, 2011
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Is Hugo Chavez ahead of the investment curve?

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

Venezuelan President Hugo Chavez plans to move billions of dollars of cash reserves from developed to developing countries, according to media reports. This may reflect politics, or the need to keep creditors sweet. But given the budget and bank woes afflicting the United States and the European Union, Chavez may not be alone seeking alternatives.

Aug 15, 2011
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Return to gold standard seems less unthinkable

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

Fiat money has worked well since Richard Nixon ended the dollar’s peg to gold 40 years ago to the day, but this latest recession must gnaw at believers. If years of ultra-cheap cash give rise to serious inflation or an accelerated retreat of the U.S. currency, the gold standard, however erratic and deflationary, may start to appeal again.

Aug 1, 2011

Weak U.S. growth could swamp $1 trln deal on cuts

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

By Martin Hutchinson

NEW YORK (Reuters Breakingviews) – Weak economic growth could swamp the first $917 billion of cuts included in the political deal struck to raise the U.S. debt ceiling. Friday’s anemic GDP report casts doubt on the pact’s deficit reduction figures. On a simple analysis, if economic growth in 2011-16 falls short of the Congressional Budget Office’s 3.25 percent estimate by 0.5 percentage point, the expected initial cuts disappear completely.

Jul 26, 2011
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U.S. debt capers may expose “risk-free” fallacy

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

Alan Greenspan admitted the financial crisis pulled the rug out from under 40 years of market ideology to expose a “flaw” in his thinking. Uncle Sam’s tottering AAA credit rating may do the same to investors the world over.

Jul 21, 2011
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U.S. downgrade would force bond buyers to rethink

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

Standard & Poor’s could cut America’s AAA rating even if Congress does a deal on the debt ceiling. That would force a rethink. The 18 other top-rated sovereigns are either caught up in the EU mess or tiny. Without the “risk-free” benchmark of U.S. Treasuries, even ultra-cautious bond investors would have to get used to credit risk.

Jun 22, 2011
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Texas economy not proxy for whole of America’s

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

Texas isn’t a proxy for the broader U.S. economy. Rick Perry, the Lone Star State’s governor, may run for president in 2012. And Texas boasts below-average unemployment and decent growth. But it also has no state income tax, a large energy sector and not too much housing trouble. Washington’s bigger problems may not yield to Texan solutions.

    • About Martin

      "Martin Hutchinson is a Reuters Breakingviews columnist and writes about emerging markets, particularly in Latin America, and monetary and macroeconomic issues. He is a former merchant/investment banker with 27 years of experience."
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