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Feb 10, 2011
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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
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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.

Jan 13, 2011
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New Fed may see more dissent — at least privately

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

WASHINGTON — Are hawks with votes more likely to get their way? This year’s voting members of the U.S. Federal Open Market Committee include a trio forming a stronger hawkish group than last year’s lonely Thomas Hoenig. Rocking the boat on the current round of quantitative easing is unlikely. But their differences with Ben Bernanke, the Federal Reserve chairman, may emerge on interest rates.

Jan 7, 2011
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U.S. underclass growing faster than employment

The U.S. underclass is growing faster than employment. Non-farm payrolls increased 103,000 in December, but the ranks of the long-term unemployed rose by 113,000. True, America’s economic recovery is finally accelerating. But the expanding layer of near-permanently jobless people is bad news for long-term fiscal and social health.

At first sight, the last unemployment figures for 2010 were encouraging. While job creation was mediocre, it was accompanied by a total of 70,000 additional jobs in revisions for the two prior months. And the unemployment rate, based on different data, declined unexpectedly sharply to 9.4 percent.

Jan 4, 2011
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De-globalization forces remain strong into 2011

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

The forces of globalization have been challenged by new global market barriers in the Great Recession. In 2011, the de-globalization process even could gather pace if commodity prices continue their surge or if there is another financial crisis.

Dec 14, 2010
via Newsmaker

An Austrian view of the IMF

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

It’s a great pity we didn’t close the IMF down in 2005-07, while we had the chance. It had such a small loan volume outstanding that it was running losses, with operating expenses being paid by depleting its capital. The central problem of the institution is that it represents yet another conduit by which resources are diverted from the productive private sector into propping up unproductive state entities. This reduces overall welfare, prevents the liquidation of malinvestment and is the principal reason why economic recovery from the 2008 recession has been so sluggish in the US and Europe.

Dec 3, 2010
via Breakingviews

U.S. job creation steady for now, but slow

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

The November unemployment report showed that U.S. job creation is steady for now, but too slow to lower the unemployment rate. Job creation was weaker than prognosticators expected, but that was partly because of pre-holiday cautiousness in the retail sector. With no new fiscal stimulus, modest job creation is likely to continue — provided monetary largesse doesn’t undermine it.

Dec 2, 2010
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Fed, WikiLeaks data underline market inefficiency

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

One lesson from recent fat data dumps relates to fat tails. Both the Federal Reserve’s publication of data on its emergency credit facilities and the WikiLeaks releases of State Department messages could have caused market turmoil if they had been made public in real time. But some financial and political insiders were at least partly informed. It is a reminder that even supposedly efficient markets can’t reflect unknowns — and that information is always unevenly distributed.

Nov 29, 2010
via Breakingviews

Global risk of U.S. impotence at heart of WikiLeak

The biggest secret to be revealed by WikiLeaks should have been the easiest to spot without the website’s classified document dump: American hegemony is on the wane. That underscores a heightened risk for global investors that without U.S. leadership, regional rivalries may turn nasty, trade barriers rise and fiscal policies destroy wealth.

It’s hard to avoid the overall impression from the disclosure of 250,000 secret State Department cables that the 1990s vision of U.S. supremacy and peaceful globalization is irrevocably ending. There are a number of risk-reducing advantages to the world in having a clearly defined hegemon, provided its intentions are reasonably benevolent.

    • 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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