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Oct 5, 2012
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Review: Lessons for the poor from English history

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

It took England centuries to develop a successful industrial economy. Poor countries today want to recapitulate the process in a few decades. In “The Political Economy of Nation Building” development consultant Mack Ott draws some lessons from the English experience.

Sep 7, 2012
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Obama job adds match Bush, Clinton but not Reagan

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

Thirty months after the U.S. jobs nadir, employment has risen by 3.1 percent, according to Friday’s report for August. That’s roughly in line with the post-recession record of the last 2-1/2 presidents – but far short of Ronald Reagan’s 9.8 percent jobs increase. The picture for August alone was also mixed: President Barack Obama, his Republican presidential rival Mitt Romney, and the Federal Reserve can all take something from it.

Aug 8, 2012
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Uncle Sam still living well beyond his means

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

Uncle Sam just can’t seem to stop living beyond his means. While U.S. consumer credit failed to match its June 2008 peak, outstanding debt of domestic U.S. non-financial sectors still stands at nearly 250 percent of GDP, against 232 percent just before the financial crisis hit. While the consumer has deleveraged a bit, business debt is flat and government borrowing has soared. At some point, this just has to end. 

Economists Carmen Reinhart and Kenneth Rogoff demonstrated that recessions preceded by a financial crash can be exceptionally deep and long, because of the reduction of debt that needs to occur before normal growth returns. Since 2008, with unprecedented levels of fiscal and monetary stimulus, no net U.S. deleveraging has occurred; rather the liabilities of non-financial sectors have grown faster than GDP. While households have cut back (partly through defaulting on mortgages and credit cards) from 97 percent of GDP to 83 percent, business debt kept pace with GDP and the government’s balance sheet has soared from 57 percent of GDP to 89 percent. 

Aug 3, 2012
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Review: Banks bet their lives on neurochemistry

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

Trading is mostly about neurochemistry. That is the persuasive argument of former trader and current neuroscientist John Coates in his book “The Hour Between Dog and Wolf”. The implication is clear: men have too many of the wrong hormones to be trusted.

Jul 19, 2012
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U.S. housing poised to boost economy

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

The U.S. housing sector is poised to boost economic growth. While existing home sales fell 5.4 percent in June from May, other indicators suggest a recovery is under way. A flip to a positive impact after dragging on GDP for five years will give lawmakers a chance to change distorting housing market policies.

Jul 17, 2012
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U.S. senators show manipulation double standards

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

Not for the first time, there are double standards on display in the U.S. Senate. During Federal Reserve Chairman Ben Bernanke’s testimony on Tuesday, lawmakers loudly denounced bank skullduggery to fix Libor rates. Then came demands for Fed action to create U.S. jobs. The latter is at least clearly legal, but it’s still manipulation – and it has far more potential to damage markets for the long term.

Jul 6, 2012
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China grows faster but most Cubans are better off

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By Martin Hutchinson

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

Raul Castro could use his visit to China to pick up a few tips. True, the Caribbean nation hasn’t done so badly despite being isolated by U.S. trade sanctions. It is still richer than China, less unequal and less corrupt. Still, a smattering of China-style reforms, particularly allowing freer movement of prices, could produce a useful boost to growth and prosperity.

Jul 5, 2012
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Mongolia’s task: avoid Nigerian resource curse

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By Martin Hutchinson

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

In much of the developing world, natural resources seem to offer a handy way out of poverty. But they also present a curse. Mongolia, where the center-right Democratic Party led last week’s elections on a wave of resource nationalism, would be wise to avoid the mistakes of Nigeria and other nations. Government and private fingers can get sticky, the bonanza wasted and non-resource activity burdened and disincentivized.

Jun 27, 2012
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Wall Street defeated by Ivory Tower in Virginia

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By Martin Hutchinson and Megan Miller
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Wall Street’s latest defeat has taken place far from the canyons of downtown Manhattan on the Palladian campus of the University of Virginia, and by an unlikely adversary – the ivory tower. The school founded by Thomas Jefferson reinstated Teresa Sullivan as president on Tuesday, overturning an ouster supported by hedge fund titan Paul Tudor Jones and former Goldman Sachs executive Peter Kiernan. But victory may be pyrrhic. For UVA to thrive in a bleaker fiscal world, the paradigm shifts Sullivan resisted look unavoidable.

Jun 22, 2012

Bank regulators should get heavy on risk-weighting

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

By Martin Hutchinson

NEW YORK, June 22 (Reuters Breakingviews) – It’s time for
bank regulators to get heavy on risk weighting. The financial
and euro zone crises have shown the drawbacks of using banks’
home-grown models to weigh different risks. These encourage
unhealthy arbitrage by favoring assets that enjoy favorable
treatment. A tougher cap on the ratio of equity to total assets
would limit abuse. So would banning risk measures that ignore
extreme events.

    • 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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