Martin's Feed
Apr 5, 2011
via Newsmaker

The World Bank should work with the private sector

I have yet to see any evidence in the Middle East disturbances of the emergence of any regimes that are either committed to the free market or fully democratic. In addition, many of the region’s countries, such as Libya, have massive oil revenues and hence no need for outside financing. Hence the World Bank’s first priority should be to do no harm, not to discriminate between existing imperfect regimes and mob-fueled changes that have no certainty of producing better outcomes.

As new regimes emerge after reasonably free elections, the Bank should be open to expanding its operations, working as far as possible with the emerging private sector rather than the government authorities, to avoid corruption, political favoritism and politically backed make-work schemes. However it should not attempt to influence political outcomes, which it lacks the expertise to do and will generally get wrong.

Mar 18, 2011
via Breakingviews

Japan’s virtues should help Kan solve its problems

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

By Martin Hutchinson
The Japanese concept of ‘wa’ — or harmony — may help Prime Minister Naoto Kan to solve his country’s mounting problems. The nation’s social cohesion and stoicism have kept a lid on looting and panic, while limiting power outages, since an earthquake rippled across the northeast of the country. Kan has played to these qualities, and since he can blame infrastructure failures on the opposition, he may emerge from the crisis strengthened enough to tackle Japan’s fiscal position.

Mar 15, 2011
via Breakingviews

Japanese stocks may be a post-earthquake bargain

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

By Martin Hutchinson

Japanese stocks may be a post-earthquake bargain. The market lost about $700 billion in value in three days, exceeding likely damages. While the S&P 500 Index is 83 percent above its 2009 low, the Nikkei has recovered only 22 percent. With an economic bounce from reconstruction, and exports powering multinationals, this could be a buying opportunity.

Mar 11, 2011
via Breakingviews

Were Luddites the victims of 2011-style finances?

The British weavers known as Luddites, who destroyed looms precisely 200 years ago, thought rising unemployment within their ranks was due to machinery. But there’s a case to be made that inflation, money supply expansion, budget deficits and trade barriers were equally to blame. Maybe we haven’t learned much in two centuries.

The first Luddite riot occurred on March 11, 1811, an attack on wide knitting frames in the Nottinghamshire village of Arnold. The rioters were mostly skilled artisans, whose livelihoods had been endangered by what they perceived was a “dumbing down” of their skilled work by automated looms. The riots spread to the main cotton center of Manchester late in 1811. Prime Minister Spencer Perceval’s government, which had a robust approach to public order, made frame breaking a capital offense a year later, executing 17 offenders the following year. After that, Luddite activity gradually died down, petering out after 1817, when the economy improved.

Mar 10, 2011

Crony capitalism lives on for mega-rich

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

By Martin Hutchinson

WASHINGTON (Reuters Breakingviews) – It was a good year for billionaires. Rising markets helped create 200 more of them in 2010, bringing the tally to 1,210, according to the new Forbes rich list published on Wednesday. But when counting their fortunes against domestic economies, Russia and India rate among the highest. In some developing economies, connections are still the fastest track to wealth.

Mar 1, 2011

Govt misses opportunity in Budget 2011

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

By Martin Hutchinson

WASHINGTON (Reuters Breakingviews) – India missed a trick or two with its latest fiscal budget. Projections from Finance Minister Pranab Mukherjee of a moderately declining deficit make sense only by ignoring the funny accounting and assuming the economy keeps rocketing ahead. With state spending, inflation and commodity prices all increasing, India looks like it’s choosing a role model more Gordon Brown than Deng Xiaoping.

Feb 24, 2011
via Breakingviews

Why Wisconsin matters to global financial markets

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

WASHINGTON — It’s hard to see how a bucolic Midwestern lakeside college town can matter much to the global financial markets. Yet while Madison, Wisconsin is no Athens or Tripoli, it has become ground zero for a pitched battle between public sector unions and cash-strapped governments over collective bargaining. If the state’s governor can end the practice he may set a precedent for fiscal reform that spreads nationally — and to Washington.

Feb 10, 2011
via Breakingviews

Kevin Warsh could become the next Paul Volcker

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

Kevin Warsh’s resignation as a governor of the Federal Reserve removes one of Chairman Ben Bernanke’s closest advisors — and almost certainly the most hawkish of his inner circle. If current policies produce 1970s-style inflation, as many of Bernanke’s critics predict, Warsh could be well placed to take over as Paul Volcker did in 1979.

Feb 4, 2011
via Breakingviews

Productivity growth keeps U.S. recovery jobless

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

By Martin Hutchinson

Only 36,000 jobs were created in the United States in January. The feeble reading was adversely affected by winter weather, and a decline in the unemployment rate to 9 percent was more encouraging. But despite stronger economic data of late, job growth remains slower than in previous cycles. One culprit may be cheap money, which leads businesses to substitute capital for jobs, raising productivity.

Jan 25, 2011
via Breakingviews

U.S. housing prices likely to keep on dropping

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

U.S. house prices are down 31 percent from their peak. But they may have plenty further to fall. The 1993 low for the Case-Shiller 10-city index was almost another third below the current level in real terms. Lenders had better hope that inflation outpaces rising interest rates, lessening future declines.

    • 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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