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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
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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.

Mar 16, 2012
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Dollars everywhere – so where’s the inflation?

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By Martin Hutchinson and Christopher Swann
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Money supply is rising fast, so where is the inflation? U.S. consumer prices rose 0.4 percent in February, but that was mostly gasoline. Year-on-year, inflation is above the Fed’s 2 percent target but not by much. Yet money supply is going through the roof. Either inflation is on the way, or Milton Friedman should lose his Nobel prize.

Friedman argued that “inflation is always and everywhere a monetary phenomenon.” He proposed that central banks should increase money supply at a constant annual rate, ignoring economic cycles, so as to minimize self-reinforcing bouts of inflation and deflation.

Mar 14, 2012
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Bank stress tests renew dividend-buyback debate

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By Martin Hutchinson

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

The Federal Reserve’s bank stress test results have renewed the debate about whether dividends should trump stock buybacks. JPMorgan and Wells Fargo have both increased dividends and announced large buybacks. But in an industry suffering from slow growth, increasing dividend payout ratios makes more sense for shareholders than repurchasing stock.

Mar 9, 2012
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Improving U.S. jobs trend favors old over young

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

The improving U.S. jobs trend confirmed by Friday’s data favors the old over the young. A solid 227,000 jobs were added, with upward revisions for past months, even though the unemployment rate stayed at 8.3 percent. However in the last five years, people aged 55 and over have gained 3.6 million jobs, while younger workers have lost 7.6 million. The incentives of shrunken savings and funny money are doubly harming the young.

The details of February’s report were strong. Professional and business services, healthcare, leisure and hospitality and manufacturing all saw tens of thousands of new jobs. Construction employment declined slightly, indicating that recent strong data was not due simply to the northeastern United States’ mild winter.

Mar 8, 2012

Brazil is falling short of its BRIC status

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

By Martin Hutchinson

NEW YORK (Reuters Breakingviews) – Brazil is falling short of its status as a BRIC economy. Its 2011 GDP growth of 2.7 percent suggests it’s no longer a real emerging market. The government is largely to blame. Populist mandates have bloated state spending while restrictions and meddling have increased risk.

Mar 5, 2012
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U.S. stock bubble is in profit, not value metrics

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

There’s a bubble in U.S. stocks – but it’s in profitability, not valuation metrics. The S&P 500 Index trades at 14 times historical earnings, so the valuation multiple isn’t excessive. But a measure of domestic U.S. profit margins stands 50 percent above its long-term average. Global profitability has soared even higher. This is unlikely to last long.

Mar 1, 2012
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Kim Jong-un could thaw dictatorship into growth

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By Martin Hutchinson

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

A limited nuclear deal with the United States suggests North Korea’s Kim Jong-un might be looking for a thaw. If the country’s basketball-loving young master really wants to build on that agreement and bring economic growth to his impoverished citizens, land reform would be a good place to start.

Feb 29, 2012
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Painful savings rebalancing ahead for U.S. economy

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By Martin Hutchinson

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

Up to now, Americans have not suffered much for their lack of thrift. Until 2008, higher asset prices kept wealth up while the household savings rate declined, as Barry Bosworth points out in his Brookings Institution study “The decline in saving – a threat to America’s prosperity.” Since then, higher household savings have been offset by large government budget deficits. A painful “anti-Keynesian” rebalancing lies ahead, with much lower consumption by households and government.

Feb 9, 2012
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Harsh IMF approach courts disaster in Romania

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By Martin Hutchinson and Christopher Swann

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

The IMF is courting disaster in Romania. The fund’s draconian conditions led Bucharest to cut public sector wages by 25 percent, far more than elsewhere. Now Romania’s prime minister Emil Boc has resigned and anti-reform forces have been emboldened. Excessive IMF rigour could do lasting harm.

    • 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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