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Jan 18, 2013

JPMorgan flaws should ring alarms everywhere

(The authors are Reuters Breakingviews columnists. The opinions
expressed are their own.)

By Richard Beales and Martin Hutchinson

NEW YORK, Jan 18 (Reuters Breakingviews) – JPMorgan (JPM.N: Quote, Profile, Research)
was supposed to be among the best managers of bank risk in the
world. This week it published an internal report into the
failings which led to $6.2 billion of trading losses at its
chief investment office in 2012. If the mix revealed –
conflicting mandates, discredited theory, inadequate checks and
primitive technology – is really as good as it gets, financial
watchdogs and investors everywhere should worry. There are
plenty of lessons for regulators and bank executives who want
things done right.

Jan 8, 2013
via Breakingviews

Chuck Hagel is good choice for U.S. deficit hawks

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

Chuck Hagel, President Barack Obama’s pick for U.S. defense secretary, is a good choice for deficit hawks. He mixes dovish foreign policy views – at least for a Republican – with budget-cutting fervor. The combination could actually slash Pentagon spending. Reducing it to the proportion of GDP seen in the late 1990s would save Uncle Sam a quarter of a trillion dollars a year.

Dec 14, 2012
via Breakingviews

Review: Every monetary system needs a Paul Volcker

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

William Silber’s biography of Paul Volcker is rightly sympathetic to the man whose determination and integrity conquered U.S. inflation. When needed, he overcame opposition from politicians and academic economists. Yet once his work was done, policy slid back and his abilities were wasted.

Dec 13, 2012
via Breakingviews

Difference between “and” and “or” could undo Fed

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By Martin Hutchinson and Richard Beales
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

The difference between “and” and “or” could undo the Federal Reserve. At its meeting Dec. 12 the Federal Open Market Committee replaced its estimated duration for low interest rates with thresholds for the unemployment rate and inflation. If reality makes the two measures diverge, the new approach could prove rocky for markets.

Nov 2, 2012
via Breakingviews

There’s something rotten with U.S. labor picture

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

There’s something rotten with the American jobs picture – even if it’s not immediately apparent from the latest report released by the Bureau of Labor Statistics. In October the economy created 171,000 new jobs, and 84,000 more were added to previous months’ tallies. That’s good for President Barack Obama’s re-election chances. But only half the recession’s job losses have been regained, and with the recovery from each recession becoming harder to overcome than the previous one, it’s clear the next president will need to grapple with some deep structural problems to succeed.

Oct 20, 2012
via Breakingviews

Review: The danger of trading machines

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By Martin Hutchinson

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

It’s a quarter-century since computerized program trading led to Black Monday on the U.S. stock market. A new and more advanced generation of arcane algorithms now threatens capital markets. That is the lesson of “Dark Pools,” a new book on machine-based equity trading by the Wall Street Journal’s Scott Patterson. The book is a great read – and raises an important question: could the trading machines destroy the capital markets?

Oct 5, 2012
via Breakingviews

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
via Breakingviews

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
via Breakingviews

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
via Breakingviews

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.

    • 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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