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Sensible Stories | | | | By Staff, EUbusiness, 05/16/2012 |
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MarketMinder's View: While the efficacy of the regulations outlined in the 600-page agreement remains to be seen, the broader deal perhaps removes some uncertainty over pending changes to European banking oversight. For more, see our 05/04/2012 cover story, “Basel Bickering.”
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| | | By Jeremy Torobin, The Globe and Mail, 05/16/2012 |
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MarketMinder's View: Minor quibbles aside, this piece presents a key point policymakers sometimes miss: A country’s currency value isn’t the sole determinant of its manufacturers’ ability to compete in global markets. Though, no argument would be complete without mentioning the impacts of regulatory red tape and trade protectionism.
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| | | By Anthony Faiola and Michael Birnbaum, The Washington Post, 05/16/2012 |
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MarketMinder's View: Merkel’s softening exemplifies the ongoing political will to preserve the euro. And while fiscal stimulus likely isn’t a cure-all for Greece, if it helps curry favor with Greek voters ahead of Election 2.0, the broader political impact could be an incremental positive.
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| | | By Tim Worstall, The Telegraph, 05/16/2012 |
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MarketMinder's View: On balance, this sensibly debunks the myth of peak oil as an economic apocalypse: “Even if we accept the geological conventional wisdom, then there’s still no cause for panic. Prices will rise, yes, so people will go off and do other things. Either use something else instead of oil (that ever cheaper shale gas for example) or simply doing things that require less energy.” For more, see our 05/14/2012 book review on The End of Growth.
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| | | | By Brian Blackstone, The Wall Street Journal, 05/15/2012 |
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MarketMinder's View: We find a few things to quibble with here, but it shouldn’t surprise many folks the European periphery struggled while the core continued exhibiting strength. That’s been the case for some time now. What’s more important is the degree to which the larger core countries continue pulling the rest of the eurozone along—it’s also illustrative of how economic strength in the rest of the world can pull a weak, proportionally smaller Europe along with it. For more, see our 05/10/2012 cover story, “German(e) Data.”
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| | | By Lorraine Woellert, Bloomberg, 05/15/2012 |
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MarketMinder's View: Actually, it blew forecasts out of the water—an indication economic growth continues in the US, despite global pockets of weakness and eurozone concerns.
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| | | By Staff, BBC, 05/15/2012 |
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MarketMinder's View: Yet another milestone in the race toward zero protectionism. For more, revisit our 05/06/2011 cover story, “A Torrent of Free Trade.”
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| | | By Jeffrey Sparshott and Eric Morath, The Wall Street Journal, 05/15/2012 |
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MarketMinder's View: Though retail sales grew slower than last month, the bigger story is they continued advancing. For more, see our recent commentary on The Street.
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| | | | By Staff, Bloomberg, 05/14/2012 |
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MarketMinder's View: Though domestic resistance may indeed arise, that China, Japan and South Korea will begin free-trade talks is a positive for everyone. It seems South Korean President Lee Myung Bak is really on to something: “In times of crisis, if countries, for their own survival, carry out protectionist ideas, then the recovery of the economy will take a long time.” Open markets are key to an overall healthy global economy.
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| | | By Paul Krugman, The New York Times, 05/14/2012 |
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MarketMinder's View: It seems to us a bit forgotten, but panics do happen and have in the past: before the Fed, before fiat money—heck, before Wall Street was paved. What to take from this? All these earlier financial crises—some far more severe than 2008’s—didn’t bring the end of growth in the long run, so we see little reason to believe this time is so fundamentally different.
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| | | By Staff, The Economist, 05/14/2012 |
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MarketMinder's View: Thawing trade relations between India and Pakistan are another milestone in the race toward zero protectionism. For more, see our 04/16/2012 cover story, “Another Step on Kashmir’s Silk Road.”
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| | | | By Jason Chow and Angus Loten, The Wall Street Journal, 05/11/2012 |
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MarketMinder's View: Here’s an example of how political uncertainty (and lack of political freedom) can drive wealthy folks to seek citizenship elsewhere—and why China’s economic model, despite what some believe, isn’t superior to the US’s or other freer countries’.
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| | | By Staff, EUbusiness, 05/11/2012 |
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MarketMinder's View: More evidence Italy continues drawing healthy investor demand.
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| | | By Dick Carpenter and Lisa Knepper, The Wall Street Journal, 05/11/2012 |
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MarketMinder's View: Nope—we think most folks are smart enough to discern whether to trust their barber, license or no. And as this article points out, regulations surrounding licensing requirements differ greatly from state to state (some border on the ridiculous, requiring more training than an EMT!) and stifle job creation—yet another example of onerous regulations overall hurting rather than helping.
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| | | By David Böcking, Der Spiegel, 05/11/2012 |
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MarketMinder's View: Spain’s real estate market woes have been known for some time—and whether its move to nationalize some banks proves beneficial remains to be seen. For more on Spain, see today’s cover story, “Slow and Steady Spain,” and our 05/10/2012 research analysis, “Spanish Trials.”
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| | | | By Staff, The Telegraph, 05/10/2012 |
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MarketMinder's View: We largely agree—there just isn’t a solution that magically eliminates the eurozone’s debt woes. As Chancellor Merkel said, “Only one thing is and remains sustainable: accepting that overcoming the crisis will be a long and difficult process that will only be achieved if we attack the origins of the crisis, which are the horrendous debts and a lack of competitiveness in some European countries.” Sounds about right.
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| | | By Jon Hilsenrath, Robin Sidel and Lingling Wei, The Wall Street Journal, 05/10/2012 |
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MarketMinder's View:
More open markets are nearly always beneficial—not just when it comes to trade, but in the financial world, too. While this isn’t yet a done deal, steps toward more open financial interaction between the US and China would likely prove positive for all involved.
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| | | By Ben Rooney, CNN Money, 05/10/2012 |
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MarketMinder's View: We essentially agree—though Greece’s politicians may continue rocking the boat for awhile, it seems to us the reality is too many parties across Europe have too much invested to just walk away at this point. Including Greece, whether they say it or not. Odds are they continue muddling through—uncomfortable though that may prove in the interim. For more, see our 05/08/2012 cover story, “Europe the Morning After.”
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| | | By Lam Thuy Vo, NPR, 05/10/2012 |
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MarketMinder's View: An interesting look at the revenue many US companies generate from royalties and licensing—and further evidence even though the US may increasingly shift from a manufacturing to a service-intensive economy, that needn’t imply economic decline.
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| | | By Stephen Nielsen, Bloomberg, 05/10/2012 |
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MarketMinder's View: It seems Brazil’s learning some common lessons of government regulations’ unintended consequences—namely, that however well-intentioned, government institutions with multiple layers of red tape likely hinder private-sector activity more often than they spur it.
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Market Misperceptions | | | | By Editorial Board, The Wall Street Journal, 05/16/2012 |
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MarketMinder's View: This piece makes some valid points, but it misses a key one: Greece isn’t in its present predicament because the bailouts or euro architecture have failed, but because decades of socialism left it with a bloated public sector and uncompetitive economy. Whether Greeks accept that socialism doesn’t work will be key to the nation’s fate.
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| | | By Lori Spechler, CNBC, 05/16/2012 |
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MarketMinder's View: Gold was never a safe haven in the first place—it’s a just a commodity, albeit a shiny one. And like any commodity, it’s inherently volatile. For more, see our 02/12/2010 cover story, “Gold’s Safety Blanket Myth.”
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| | | By Randall W. Forsyth, Barron’s, 05/16/2012 |
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MarketMinder's View: We recommend taking any chart-based prediction—good or bad—with a huge grain of salt. Technical analysis is inherently backward looking. It ignores forward-looking fundamentals, which typically drive markets over time. For more, see our 12/12/2007 column, “Technical Paralysis.”
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| | | By Marc Frank, Reuters, 05/16/2012 |
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MarketMinder's View: Cuba’s seemingly backward progress on foreign investment is disappointing, but overnight free-market change was likely always an unrealistic expectation for the communist nation. If Cuba were serious about attracting foreign firms and capital, leaders would relax the “rigorous controls” on them.
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| | | | By Lori Montgomery and Rosalind Helderman, Washington Post, 05/15/2012 |
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MarketMinder's View: While Washington’s hemming and hawing no doubt makes some business planning trickier, the likelihood such a widely known and anticipated expiration of tax cuts and other spending measures derails the US economy is exceedingly slim. For more, see our recent commentary on Real Clear Markets.
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| | | By Staff, New York Times, 05/15/2012 |
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MarketMinder's View: More than anything, this betrays a fundamental lack of understanding about how capital markets work. Sure, maybe investors have felt timid in the wake of what was a historically deep recession. But that doesn’t mean by any stretch they’re never returning. Far from it, actually. And to presume this time is different than any time in the past is likely to investors’ ultimate detriment.
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| | | By Michael Sivy, Time, 05/15/2012 |
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MarketMinder's View: Throughout history, there have always been risks and seemingly overwhelming fears for investors to contend with. However, those listed here have been widely known for some time—removing most of their potential surprise power to move markets in the long run, though they could certainly cause some short-term choppiness.
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| | | | By Joseph E Stiglitz, Project Syndicate, 05/14/2012 |
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MarketMinder's View: We quibble with many claims here—like citing free trade, free migration and tax competition as principal drivers of the eurozone’s woes. As we’ve written before, the assumption government austerity measures prevent growth overall and indefinitely is a one-sided (demand) point of view. Moreover, we’d suggest the major notion underpinning this piece—that markets need the stability brought by governments—is a bit backwards, which Greece and the eurozone seemingly illustrate rather well.
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| | | By William Deresiwicz, The New York Times, 05/14/2012 |
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MarketMinder's View: Another example of the misperception there’s a strict dichotomy in the division of wealth: rich versus poor. This emotional rhetoric overlooks the fact capitalism works for both corporations and individuals—demonstrated by now commonplace luxury items like smartphones. Additionally, focusing on success of the whole allows corporations to create myriad jobs and widely spread wealth, benefitting people of all categories. As the author even writes, “It’s neither party’s goal (workers or entrepreneurs) to benefit the other, but that’s what happens nonetheless.” Labels and moralistic judgment aside, that’s capitalism at work.
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| | | By John Snow, The Wall Street Journal, 05/14/2012 |
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MarketMinder's View: We agree with a couple points here—if you tax something, you get less of it, and lower taxes are likely an incremental economic positive. However, we doubt “taxmageddon” plays out as suggested here—politicking, extensions and foot-dragging wouldn’t surprise, but politicians likely ultimately understand substantially higher taxes make voters unhappy.
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| | | | By Paul Krugman, The New York Times, 05/11/2012 |
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MarketMinder's View: While we largely agree today’s unemployment situation isn’t very structural at all, using the term “depression” to describe today is beyond bizarre considering the economy is growing, unemployment is falling and other economic data overall continue to be positive.
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| | | By Louis Uchitelle, The New York Times, 05/11/2012 |
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MarketMinder's View: The evidence included in this piece is nearly all anecdotal. But in actuality, much of US manufacturing is doing just fine—and without subsidies at that. In fact, manufacturing has largely led the way during the current economic expansion.
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| | | By Floyd Norris, The New York Times, 05/11/2012 |
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MarketMinder's View: We already largely have global accounting standards, so adding to them could entail some negative, unintended consequences. Plus, global accounting implies a global accounting enforcement body—who exactly would that be?
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| | | By Carolynne Wheeler, The Globe and Mail, 05/11/2012 |
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MarketMinder's View: Economies sometimes grow faster, sometimes slower—and that’s normal. Fact is, China’s still growing, the Chinese government recently announced one trillion yuan in new loans and leaders there typically slow growth right before an election (which is likely what’s happening now). For more, see our 04/13/2012 cover story, “China Check-Up.”
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| | | | By Ambrose Evans-Pritchard, The Telegraph, 05/10/2012 |
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MarketMinder's View: We’ve discussed many times the problems the eurozone overall and Greece specifically still have and need to address—but this reaches overly hyperbolic conclusions at this point. The reality is a disorderly euro breakup and a Greek return to the drachma likely do more harm than good in the short run. Ultimately, politicians seem to grasp this, too. For more, see today’s cover story, “German(e) Data.”
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| | | By Marcus Mabry, International Herald Tribune, 05/10/2012 |
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MarketMinder's View: Let’s be clear: Greece’s problem isn’t really the euro, whether it stays on it or not. A credible currency is one of relatively few things it has going for it at the moment. And leaving it at this point could hurt everyone, perhaps Greece worst of all. And even if it went back in time and didn’t join the euro, Greece could easily be more of a mess than it currently is, not less.
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| | | By Kevin Carmichael, The Globe and Mail, 05/10/2012 |
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MarketMinder's View: One beauty of markets in which goods and funds flow freely is regardless of “imbalances,” globally, all accounts balance. So to be concerned about shifts between current account surpluses and deficits and trade surpluses and deficits is largely fretting over something that isn’t really much of a problem. After all, countries won’t participate in such transactions if they don’t overall benefit in some way.
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| | | By Don Lee, Los Angeles Times, 05/10/2012 |
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MarketMinder's View: Yes, a wider trade deficit could ding the US’s Q1 GDP number some—but that’s more an anomaly of GDP’s calculation than it is a serious comment about the economy’s overall health. Fact is a wider trade gap (with imports and exports increasing nicely) can indicate a higher level of global economic activity. And those dollars “exported” to pay for our increased imports must be used somehow. That’s what’s typically referred to as our current account surplus—and it’s not a bad thing. For more, see our 09/09/2011 cover story, “Trade Deficit Trifles.”
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