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Jun 4, 2012

Pick-a-pay creator follows dodgy product to grave

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

By Martin Hutchinson

NEW YORK, June 4 (Reuters Breakingviews) – Marion Sandler
has died at the age of 81. She was already a rare female success
story on Wall Street when she bought Golden West Financial in
1963 with her husband Herb. The couple then built the thrift
into one of America’s most efficient mortgage lenders and sold
to Wachovia for $24 billion at the top of the market in 2006.
But it’s as the architects of the pick-a-pay loan that she and
her husband will be remembered.

May 17, 2012
via Breakingviews

US housing recovery shows subsidies need trimming

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

The U.S. housing recovery shows it’s time to trim subsidies. The market finally looks close to bottoming out. Prices are reasonable and rates for borrowing mortgages are ultra-low. Mortgage interest tax deductions, loan guarantees and even some foreclosure assistance are looking increasingly unnecessary.

Take, for example, the delinquency rate. It dropped to 7.4 percent in the first quarter, according to the Mortgage Bankers’ Association. That’s almost a full percentage point below last year. The number of new homes being built is a third higher than this time last year, while sales of both new and existing homes are also on the up. And the National Association of Homebuilders index is 20 points above its nadir and now at its highest level since the end of 2007.

May 4, 2012
via Breakingviews

Obama’s job creation hopes look fragile

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

Barack Obama can at last say he has presided over increased employment in America’s private sector, if not in government, since he arrived in the White House in January 2009. But the slowing pace of job creation evident from Friday’s monthly report and declining labor force participation could make for a tough sell in November’s elections.

May 3, 2012

U.S. Treasury starts thinking like a company

By Daniel Indiviglio and Martin Hutchinson

WASHINGTON/NEW YORK, May 2 (Reuters Breakingviews) – Kudos to the U.S. Treasury for starting to think about Uncle Sam’s funding needs like a major company would. The nation’s borrower is showing more interest in switching some of its funding to floating-rate debt. That’s a smart idea – it may be all it can sell as interest rates rise. But Treasury needs to tread carefully.

Like corporations before it, Treasury’s overreliance on short-term paper now leaves it having to refinance some $5 trillion – half its overall public indebtedness – over the next three years. An interest-rate shock could make rolling that over a painful process. Even if the global economy recovers in a more stable manner, investors willing to accept a little more risk for a little more yield could forgo Treasuries.

Apr 25, 2012
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Fed’s rising growth, falling inflation are wishful

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

Ben Bernanke seems to be just hoping for the best. Wednesday’s Federal Open Market Committee statement talks about a pick-up in growth even as inflation declines from the current run-rate above the Federal Reserve’s 2 percent target. These trends aren’t apparent from recent data, and the U.S. central bank needs contingency plans if things don’t pan out so conveniently.

Apr 23, 2012
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Cambodia must solve two big problems for takeoff

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By Martin Hutchinson

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

Cambodia must solve two big problems to achieve the kind of rapid, sustained growth Asia’s tiger economies have delivered. Opening its stock exchange on April 18 is a good start – it shows the country is relatively friendly to foreign investors and markets. But meeting the needs of a rapidly growing population will be expensive, and Cambodia’s corruption is both dreadful and pervasive.

Apr 20, 2012
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Review: Redeemers who led Latin America astray

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

What has gone wrong with Latin America? In 1900, the region contained six of the world’s 30 richest countries, according to economic historian Angus Maddison. In 2010, Argentina, the richest Latin American country in per capita terms, was 51st on the International Monetary Fund’s list. Enrique Krauze explains in his book “Redeemers: Ideas and Power in Latin America” that the disastrous economic ideas of a group of intellectuals and charismatic leaders led the continent astray. That was a century ago, but the lesson remains topical.

Apr 3, 2012
via Breakingviews

Europe unrecognizable from U.S. Republican rhetoric

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By Martin Hutchinson

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

Europe is mostly unrecognizable from the U.S. Republican rhetoric. Presidential hopefuls Mitt Romney, Rick Santorum and Newt Gingrich, who face off again in Tuesday’s trio of primaries, often accuse Barack Obama of leading America to “European-style socialism.” The monolithic pejorative works to a point but conveniently overlooks the many economic achievements throughout the continent. On this matter, voters shouldn’t take the candidates seriously, and the candidates might do well to consider Europe more so.

Apr 2, 2012
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Quality of life may one day dethrone NY, London

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By Martin Hutchinson

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

The quest for quality of life may one day dethrone cities like New York and London. They’re still the most global cities, according to A.T. Kearney’s biennial ranking, with Paris and Tokyo next. But Vienna, rated only 13th among global cities, tops Mercer’s current quality of living survey. As technology makes location less critical, life quality may matter more.

Mar 30, 2012
via Breakingviews

Lottery mania behavioral quirk also causes bubbles

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By Martin Hutchinson

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

What do the millions of Americans lining up for the record $540-million Mega Millions jackpot have in common with rogue traders on Wall Street? Plenty, as it turns out. Mega Millions punters are fixating on what they’ll do with their winnings. This economically regressive and socially destructive behavior also drives the gambling business. In financial markets the same impulse creates bubbles and encourages excessive risk-taking.

    • 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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