|By Paul Krugman, The New York Times, 09/28/2012|
MarketMinder's View: We have much to quibble with here. It overlooks the non-profit cajas' role in Spanish woes. Also, Spain’s structural competitiveness woes (badly in need of an overhaul) are more due to draconian labor laws that discourage hiring and entrepreneurship than anything involving housing. What’s more, prescribing leaving the euro as a quick fix to unemployment woes seemingly disavows historical patterns of employment recoveries—they normally take years.
|By Mark Deen and Helen Fouquet, Bloomberg, 09/28/2012|
MarketMinder's View: We’d argue raising taxes in order to balance the budget is rather misguided. Always remember: Taxes are incentives. And typically, if you tax something, you get less of it, not more. Our hunch is France’s tax increase, if passed, has rather the opposite of the intended effect.
|By Stephanie Strom and Elizabeth Malkin, The New York Times, 09/28/2012|
MarketMinder's View: While the present situation is far from a trade war and this could be just election-year bluster, the concept of the US’s enacting restrictions on imported Mexican tomatoes is poorly thought through. We like tomatoes. And consumers should be able to choose the best-quality tomatoes at the lowest possible price, regardless of where they’re grown. Realistically, protectionism here means actually hurting American consumers. And likely American businesses, too—chances are Mexico wouldn’t sit idly by should the US choose to violate NAFTA.
|By Paul Hannon, The Wall Street Journal, 09/28/2012|
MarketMinder's View: Yes, data have been rather tepid, but it shouldn’t surprise anyone the eurozone could be in recession and may be for a while as its businesses and individuals adapt to overcome its problems. But realistically, history has shown the rest of the world can grow just fine, despite one area being in recession. Meaning the overall market impact is likely not outsized, particularly as eurozone woes have already been around for three years.
|By Peter Eavis, The New York Times, 09/28/2012|
MarketMinder's View: We largely think the quest to extra-regulate money market funds is a bit of a solution in search of a problem—but it is a story worth watching due to potential intended and unintended consequences. Plus, it seems Mr. Geithner is requesting one of the first major rulings from the Dodd-Frank-created regulator of regulators, the Financial Stability Oversight Council. Details at this point are sparse, but we’d suggest staying tuned.
|By Andres Gonzalez and Paul Day, Reuters, 09/28/2012|
MarketMinder's View: Spain’s proposed 2013 budget, though possibly painful in the short-term, reaffirms the country’s dedication to fiscal reform—and if implemented, potentially helps reel in the deficit without seeking further outside assistance. For more on Spain and its political pressure at-home and abroad, see today’s cover story, “Budget and Bailout Burros.”
|By Jeffrey Sparshott and Sarah Portlock, The Wall Street Journal, 09/28/2012|
MarketMinder's View: Consumer spending, the lion’s share of US economic activity, rose 0.5% in August, but much of that was due to increased energy costs. In our view, however, what’s more important is consumer spending grew in the month.
|By Christine Harbin, Investor’s Business Daily, 09/28/2012|
MarketMinder's View: Keeping certain industries in business may seem at first blush to help preserve jobs, but folks often forget, “By diverting labor and capital away from more efficient uses, wind incentives drag on the economy.” In the long run, we’re better off allowing the economy to adjust, despite the short-term dislocations that may create.
|By Jeremy Warner, The Telegraph, 09/27/2012|
MarketMinder's View: Beware arguments that are largely variations on the theme: “It’s different this time.” The fact pure economic theory isn’t a cure-all for the disparate issues various countries face isn’t all that shocking. What’s more likely ultimately successful is politicians doing their utmost to think rationally and avoid knee-jerk reactions that, in the long run, do more harm than good.
|By Simon Johnson, The New York Times, 09/27/2012|
MarketMinder's View: While we agree much of the rhetoric surrounding debt currently basically amounts to overwrought politicking, we disagree the occasionally heated debate surrounding the budget or threats to shut down government really threaten to “undermine the United States’ economic recovery and destabilize the world.” America’s position in the world’s economy is largely due to its vast and robust private sector, including deep capital markets. Perhaps that’s why during 1995’s government shutdown, about the only thing that lost much credibility was the schedule of the Smithsonian’s operating hours.
|By Neil Irwin, Washington Post, 09/27/2012|
MarketMinder's View: First, business spending (like any other economic metric) is volatile. A recent slowdown in one metric’s value doesn’t necessarily translate to broader economic contraction. Furthermore, consider that if businesses aren’t spending as much on capital expenditures, they’re probably doing other things with their profits—which have overall continued growing.
|By Nicola Clark, New York Times, 09/27/2012|
MarketMinder's View: We’d suggest rather than continuing the recent tit-for-tat pattern, the EU and the US (and any other involved parties) move instead to significantly free air travel-related industries of what are effectively trade barriers. Doing so would benefit myriad parties—all the way down to passengers. For more, see our 09/26/2012 cover story, “Boomers, Korean Agriculture and Airlines.”
|By Josh Mitchell and Jeffrey Sparshott, The Wall Street Journal, 09/27/2012|
MarketMinder's View: Rather dour headline aside, this is a fairly even-handed reporting of the various US economic data points out today. Always remember: Economic data are volatile. Slowdowns in some areas are normal and to be expected during any period.
|By Staff, EUbusiness, 09/27/2012|
MarketMinder's View: “Italy raised 5.645 billion euros ($7.258 billion) in a five- and ten-year bond auction on Thursday, slightly less than targeted but at lower rates, despite fresh debt-crisis nervousness.” Seems investors remain confident eurozone officials will act as necessary to prevent a sudden, disorderly implosion of the monetary union.
|By Gabriele Steinhauser, The Wall Street Journal, 09/27/2012|
MarketMinder's View: A coherent explanation of Thursday’s various discussions of the ESM and where the current debate stands.
|By Paul Hannon, The Wall Street Journal, 09/27/2012|
MarketMinder's View: While the eurozone as a whole may continue slowing, the fact is there are still pockets of relative economic strength.
|By Philip Aldrick, The Telegraph, 09/27/2012|
MarketMinder's View: Many have feared an outsized recession in the UK, but it seems data are pointing increasingly to an overall rather shallow recession—which may augur well for future growth there.
|By Duncan Black, USA Today, 09/26/2012|
MarketMinder's View: Well, for starters, because it wouldn’t do terribly much, considering demand isn’t nearly as meaningful a driver of growth as this piece assumes. We’d argue finding ways to enhance private-sector competitiveness—giving firms more incentive to develop innovative products—would better support economic growth over time.
|By Brad Tuttle, Time, 09/26/2012|
MarketMinder's View: Beyond our general quibbles with the notion of peak anything, we have a few issues with this argument—like its failure to mention the likeliest reason Europeans are driving less: Ridiculously high fuel taxes, which push prices near $10 per gallon in some nations. Trends in these countries aren’t exactly meaningful evidence of car use leveling off in developed nations.
|By Ambrose Evans-Pritchard, The Telegraph, 09/26/2012|
MarketMinder's View: This rather overestimates the impact of the SNB’s German, French, Finnish and Austrian debt purchases. Core Europe’s debt yields were quite low even before Switzerland began defending its currency peg in earnest, and numerous factors besides a lack of Swiss demand are responsible for the periphery’s higher yields.
|By Robert Powell, MarketWatch, 09/26/2012|
MarketMinder's View: None of these signs seem terribly reliable. In our view, a better gauge of investors’ future inflation expectations is long-term US Treasury yields, which currently suggest investors’ aren’t terribly concerned about runaway inflation.
|By Evan Ramstad, The Washington Post, 09/26/2012|
MarketMinder's View: We’re rather confused by the surprise—announcing even the rumored agricultural reforms would amount to admitting communism’s failed, which we imagine North Korea’s Stalinist leaders aren’t keen to do. If and when North Korea moves toward a more market-oriented system, it likely starts with quiet baby steps, just as China did 30 years ago.
|By Howard Schneider, The Washington Post, 09/26/2012|
MarketMinder's View: Maybe, maybe not, as this balanced piece explains. Recent developments like the ECB’s bond-buying plans have helped ease some immediate pressure, and a near-term messy euro unwinding appears increasingly unlikely, but it will likely take years for the region to work through its deeper issues.
|By Casey B. Mulligan, The New York Times, 09/26/2012|
MarketMinder's View: As this piece demonstrates, forcing people to surrender more of their earnings to the government reduces their incentive to work, and the result is a less competitive workforce. Making public policy less redistributive would likely benefit US labor markets and society as a whole over time.
|By Luke Baker, Reuters, 09/26/2012|
MarketMinder's View: After witnessing three years of eurozone politicking, we’re not surprised leaders disagree over whether the ESM should be allowed to bail out banks with pre-existing balance sheet troubles. The negotiations bear watching as the outcome will determine how Spain and Ireland deal with their troubled banks, though it seems likely leaders continue compromising as needed.
|By Philip Aldrick, The Telegraph, 09/26/2012|
MarketMinder's View: With household lending rebounding and banks beginning to ease funding conditions, it appears UK credit markets are starting to thaw a bit. If this trend holds, it could help ease one of the UK’s greater economic headwinds.
|By Ian Talley, The Wall Street Journal, 09/25/2012|
MarketMinder's View: Well, we rather agree many of the financial regulations passed after 2008 don’t much tackle the issues that led to the panic—but we disagree more, tougher and more complex regulations are the answer. We’d argue a more efficient regulatory system that allows banks to function properly, remain profitable and manage risk appropriately is preferable to laying rules on top of rules on top of rules.
|By Staff, Reuters, 09/25/2012|
MarketMinder's View: As we’ve frequently written, the fiscal cliff likely won’t have the impact many fear. Every member of Congress has incentive to avoid it, assuming they want to be re-elected. Negotiations likely go down to the wire, and legislators may kick the can a few times before finding a longer-term solution, but they likely ultimately find a way.
|By Christopher Matthews, Time, 09/25/2012|
MarketMinder's View: This argument assumes every high-frequency trade works out perfectly for the investor who’s trying to take advantage of market inefficiencies. But that’s not true! And in our view, that means the conclusions drawn here are off base. High-frequency trading simply isn’t the evil it’s often purported to be—as this piece even admits, it creates more liquidity and, consequently, allows prices to more accurately reflect stocks’ values—both good things, in our view.
|By Shawn Tully, CNN Money, 09/25/2012|
MarketMinder's View: Sure, it’s possible at least some countries could exit the euro in an orderly fashion within the next several years—the tight integration leaders are considering will likely require new treaties. Some nations may opt out, and even German leaders have said they may hold an in/out referendum. But markets don’t fear a long-term orderly unwinding—they fear the near-term disorderly unwinding, which appears increasingly unlikely with each passing day.
|By Don Boudreaux, Café Hayek, 09/25/2012|
MarketMinder's View: “Trade’s only purpose is to make consumers better off.” Which means tangling with China over subsidized exports, no matter how well-intentioned, is rather misguided. Yes, subsidies distort markets, and we’d argue they should disappear globally. But slapping retaliatory tariffs on supposedly too-cheap Chinese goods likely only hurts US consumers.
|By Staff, The Wall Street Journal, 09/25/2012|
MarketMinder's View: Given the depth of Greece’s issues, it’s not terribly surprising the government would ask its public creditors to restructure their sovereign debt holdings. Perhaps this gives eurozone officials more incentive to be flexible with Greece’s deficit targets.
|By Raymond Colitt, Bloomberg Businessweek, 09/25/2012|
MarketMinder's View: “In the last month, [Brazil’s President Dilma]Rousseff has announced payroll-tax cuts, reduced the rates industry pays for power, offered private companies licenses to build and operate roads and railways, and unveiled plans to do the same for major airports and ports.” And as these measures take effect and the private sector finds it easier to compete globally, Brazilians likely learn first-hand the importance of free-market reform to overall economic growth.
|By Gabriele Steinhauser, The Wall Street Journal, 09/25/2012|
MarketMinder's View: That Germany is now considering limited fiscal transfers to the peripheral eurozone is more evidence of the political will to preserve the currency union. But that’s about all we’d suggest taking away from this—a centralized budget isn’t a silver bullet solution for the eurozone, and it could take leaders years to agree on a package. Which is fine—better to go slow and find the right solution, if it exists, than rush for the sake of doing something.
|By Todd Bliman, InvestorPlace, 09/25/2012|
MarketMinder's View: Our latest contribution to Investor Place by editorial staff member Todd Bliman illustrates the divergence of emotional economics from actual economics in the political arena.
|By Lara Hoffmans, Forbes, 09/25/2012|
MarketMinder's View: MarketMinder managing editor Lara Hoffmans’s recent contribution to Forbes reviews global special economic zones and their lessons for the US economy.
|By Jeff Rubin, Bloomberg, 09/24/2012|
MarketMinder's View: The biggest problem with arguments like these is they almost entirely ignore human ingenuity and innovation, which likely in time mitigate the impacts of rising conventional fuel prices. For more, see our 05/05/2011 column, “A Common Thread Between Horse Manure and Peak Oil.”
|By Nicholas Winning, Ainsley Thomson and Margot Partrick, , The Wall Street Journal, 09/24/2012|
MarketMinder's View: Our quibble isn’t with the notion increased private-sector lending would help spur business—it likely would. But the proposed mechanism—the government funding a new bank with the express purpose of increasing private-sector lending—seems odd at best, to us. Far better would be finding ways to encourage extant banks to increase small- and medium-business lending.
|By Robert Frank, The New York Times, 09/24/2012|
MarketMinder's View: We don’t disagree economic “solutions” needn’t be painful—but we’d suggest they ought to be nearly entirely focused on incentivizing the private sector to spur its own growth. Not focusing on ways to spur “demand” through increased government spending, which puts the cart before the horse, in our view. Without supply, you can’t have demand—it’s just about that simple.
|By Marilyn Geewax, NPR, 09/24/2012|
MarketMinder's View: This strikes us as an overly dour analysis of likely political jockeying in the months ahead. In our view, it’s far more likely politicians take action rather than not, thereby averting both cliffs and ledges considered fiscal.
|By Gabriele Parussini and David Gauthier-Villars, The Wall Street Journal , 09/24/2012|
MarketMinder's View: It seems France is targeting simplification and streamlining of what amounts to overcomplicated labor laws “ill-suited for an open economy, evolving markets, evolving technologies and the real economy.” Should this move forward, this is a potential benefit to both employers and employees alike.
|By Maxim Lott, Fox News, 09/24/2012|
MarketMinder's View: If this gets off the ground, it will be an interesting experiment to watch in the coming years—and one that likely proves the myriad benefits of a capitalist, free, relatively regulation-free environment not only for employers, but for employees, residents, trade partners … the list goes on.
|By Staff, BBC, 09/24/2012|
MarketMinder's View: According to CBI Director General, John Cridland, “‘Most public services are still state monopolised and it’s time to open some of them to competition.’” We couldn’t agree more—opening services up to private-sector competition likely also allows for more efficiency, thus benefiting all parties involved.
|By Jean H. Lee, Associated Press, 09/24/2012|
MarketMinder's View: While it remains to be seen whether this is in fact true, North Korean farmers will allegedly soon be able to keep any surplus crops to sell or barter, instead of turning them over to the state. In addition to boosting production, the new reforms should help increase the standard of living for farmers and, eventually, non-farmers too.
|By Karen Blumenthal, The Wall Street Journal, 09/24/2012|
MarketMinder's View: The JOBS Act of 2012 is making it easier for investors to invest in private equity and help build the private sector—however, these investments can also be more risky. This piece highlights some sensible points to consider before diving into the private equity pool.
|By Gonzalo Vina, Bloomberg, 09/21/2012|
MarketMinder's View: We’re rather puzzled by the to-do over this news—slowing tax revenue growth should be expected after three quarters of contracting GDP. And while the government borrowed more to make up the shortfall, with gilt yields at historic lows, the extra borrowing shouldn’t much increase the UK’s debt-service burden, which remains manageable overall—a much truer sign of UK solvency than any of the data cited here.
|By Jeremy Warner, The Telegraph, 09/21/2012|
MarketMinder's View: While free trade isn’t a “guarantor of worldly peace,” there is ample evidence tying freer trade to more peaceful international relations—look no further than India and Pakistan in recent months. Beyond that, this piece rather overstates the extent of creeping protectionism—global trade is nearly five times 1990 levels and rising.
|By Zachary A. Goldfarb, The Washington Post, 09/21/2012|
MarketMinder's View: This seems a solution in search of a problem—supposed uncertainty over when the Fed will tighten likely isn’t having anywhere near the impact suggested here. Besides, unemployment is a late-lagging indicator, so tightening as soon unemployment hits a certain level doesn’t guarantee the move’s well-timed. Numerous other variables will determine the appropriate time to rein in recent stimulus.
|By Howard Gold, MarketWatch, 09/21/2012|
MarketMinder's View: Well, we agree fundamentals are better than most assume and stocks seem likely to rise from here … but that’s about it. By over-focusing on supposedly secular trends, this piece seems to miss that we’ve been in a bull market since March 2009. And that another one ran from 2002 to 2007. Yes, the past decade also included two of the deepest bear markets ever and was mostly flat overall—but there were plenty of great years to own stocks.
|By Josephine Moulds, The Guardian, 09/21/2012|
MarketMinder's View: We’d suggest keeping three things in mind. First, they’re merely forecasting a smaller increase—as we’ve written, slower growth is still growth. Second, supranational organizations aren’t known for their economic forecasting expertise. And third, while the WTO cites the eurozone’s troubles as a threat to trade, recent UK trade data show countries can find new export markets quicker than many assume.
|By Prasanta Sahu and Sudeep Jain, The Wall Street Journal, 09/21/2012|
MarketMinder's View: On the heels of allowing more foreign ownership of airlines and retail, India’s lowering taxes on interest paid to overseas lenders from 20% to 5%. Provided they don’t U-turn (always a risk in India), this should help India’s foreign capital flows and make it much easier for private firms to secure financing globally—big positives for India’s economy.
|By John Springford, The Walls Street Journal, 09/21/2012|
MarketMinder's View: Hear, hear! For all the focus on making manufactured exports more competitive, services make up the lion’s share of European output. Removing the many barriers around specific trades and services markets overall would likely increase competition, productivity and output.
|By Staff, EU Business, 09/21/2012|
MarketMinder's View: This seems a rather sensible approach—Spain will soon receive up to €100 billion for its troubled banks, it’s already set aside €18 billion for indebted regions (and has more funds available, if needed) and borrowing costs have fallen substantially. For now, markets don’t seem to see much need for Spain to seek a full rescue.
|By Elisabeth Dellinger, Investor’s Business Daily, 09/21/2012|
MarketMinder's View: The latest from Editorial Staff member, Elisabeth Dellinger, on why we should perhaps be thankful for the US’s polarized political climate.
|By Lawrence Summers, Reuters, 09/20/2012|
MarketMinder's View: Well, we largely agree: “Whenever policy is failing to achieve its objectives, as in Britain today with respect to economic growth, there is a debate as to whether the right response is doubling down—perseverance and intensification of the existing path—or recognition of error or changed circumstances and a change in course.” Trouble is, the UK hasn’t been heading down the fiscal austerity path as is commonly thought—on the contrary, government spending has continued increasing. So if they’re to reverse course, it will by definition require actually reducing government’s overall economic involvement.
|By Jamie Smyth, Financial Times, 09/20/2012|
MarketMinder's View: We’d caution against sounding the alarm just yet—after all, Ireland was one of the troubled eurozone nations that required a bailout and has since done a rather impressive job of instituting economic reforms and even returning to credit markets. For now, that its growth has temporarily stalled needn’t signal anything more than the volatile nature of economic growth.
|By Mohamed El-Erian, The Financial Times, 09/20/2012|
MarketMinder's View: Though we don’t think further monetary easing terribly necessary or likely to do much to goose economic growth, we also rather doubt the Fed’s intention is spurring inflation. Rather, it seems more likely to us the Fed sees little downside to adding monetary stimulus in an economy where excess capacity is still rather elevated (see: unemployment, etc.) and expects it will have both sufficient time and ample tools at its disposal to rein in inflation, if and when it rears its head.
|By Catherine Boyle, CNBC, 09/20/2012|
MarketMinder's View: While we don’t disagree Spain still has much work to do to restore its economic competitiveness, that Thursday’s bond auction was secretly signaling investors’ counting on an ECB bailout seems overly complicated, in our view. What it more likely signals is overall confidence Spanish and European officials will continue taking necessary steps to shore up eurozone economies—whether those steps involve an official bailout or not.
|By Staff, BBC, 09/20/2012|
MarketMinder's View: “Spain’s borrowing costs eased at the country’s latest bond auction where it raised €4.8 billion (£3.84 billion) after selling three and 10-year bonds”—a positive result for an auction some watched intently based on the belief demand for Spain’s longer-term debt would be telling about overall investor confidence.
|By Connor Adams Sheets, International Business Times, 09/20/2012|
MarketMinder's View: An interesting look at Poland’s impressive growth following the transition from a communist, centrally planned economy to a free market, capitalist one.
|By Diane Cardwell, The New York Times, 09/20/2012|
MarketMinder's View: Well, right—as we’d expect would happen to a business largely propped up by government subsidies. Until wind power is sufficiently economical to attract private business, no amount of government subsidies can make it self-sufficient—nor is that the best allocation of taxpayer dollars.
|By Don Boudreaux, Café Hayek, 09/20/2012|
MarketMinder's View: The eloquent Prof. Boudreaux on Hayek’s prescient observation that, “Government activities that distort prices cause prices to ‘lie’ about underlying economic reality and, hence, cause prices to mislead economic actors into making an unusually large number of plans that are destined to fail.” While there’s a crucial distinction to be made between theory and reality, the reality is too much government meddling does in fact distort prices—and therefore, economic activity.
|By Staff, Bloomberg, 09/19/2012|
MarketMinder's View: Actually, the opposite—that trade concerns trump nationalism and incentivize both sides to soften a bit—seems more likely. Letting this territorial dispute significantly impact bilateral trade benefits neither nation, and it’s likely their respective leaders understand this.
|By Danielle Douglas and Brady Dennis, The Washington Post, 09/19/2012|
MarketMinder's View: Yes, QE3 may not much impact mortgage rates—but in our view, it doesn’t much need to. Mortgage rates are already at generational lows, and housing has been slowly improving for a while now. Moreover, a robust housing recovery isn’t really necessary for the US economy to continue growing.
|By Kathleen Madigan, The Wall Street Journal, 09/19/2012|
MarketMinder's View: Theoretically, anything’s possible—but the hypothetical impasse outlined here is chock full of IFs and, in our view, seems highly unlikely. We continue to believe a far more probable outcome is Congress ultimately finds a workaround—even if that means negotiations go down to the wire and legislators have to pass a few short-term stopgaps, which they’ve proven quite adept at in recent years.
|By Staff, Associated Press, 09/19/2012|
MarketMinder's View: Record-high nonperforming loans isn’t great news for Spain and its banks—but it also shouldn’t materially increase the likelihood of Spain needing a full sovereign bailout. Spain has already secured help for troubled banks and outlined plans to reform its financial sector, and banks should begin receiving EU aid later this autumn.
|By Rajesh Roy and Rumman Ahmed, The Wall Street Journal, 09/19/2012|
MarketMinder's View: Despite its junior coalition partner’s threats to pull out of government, India’s ruling party appears dedicated to last week’s measures to allow foreign investment in retail and airlines. If these measures pass this important test of the government’s resolve, India would likely benefit tremendously over time from the influx of foreign capital. For more, see our 09/17/2012 cover story, “India’s Foreign Retail Ping Pong.”
|By Matthew Sparkes, The Telegraph, 09/19/2012|
MarketMinder's View: After several fits and starts, it appears Greece’s privatization program is resuming—an important step to securing its €31.5 billion aid tranche in October.
|By Philip Aldrick, The Telegraph, 09/19/2012|
MarketMinder's View: Regulatory uncertainty has been a headwind for the UK’s financial sector in recent years, and these proposals to increase oversight may not provide much relief. However, since Treasury and BOE officials are only in the exploratory stage, there’s ample time for some or all of these measures to be watered down, making this an important story to watch.
|By Staff, Reuters, 09/19/2012|
MarketMinder's View: More evidence of housing’s recovery—perhaps not a huge boon to overall economic growth, but an underappreciated area of strength nonetheless.
|By Fisher Investments Editorial Staff, The Street, 09/19/2012|
MarketMinder's View: Our latest for The Street, on the perils of letting ideology influence election-year portfolio strategy.
|By Martin Hesse and Christoph Pauly, Der Spiegel, 09/18/2012|
MarketMinder's View: Whether forcing a bank breakup or tougher regulation separating arms of banks, interfering too much with large (and primarily successful) banks could have some unintended downstream effects—like reducing banks’ incentive to lend, which is their basic function and a societal and economic good. For more on bank regulation, see our 09/18/2012 column, “A Month of Anniversaries.”
|By Staff, Reuters, 09/18/2012|
MarketMinder's View: Overall, enforcing joint-audits seems more a noble but misguided idea than a practical application of regulation. More auditors would likely create more costs (ultimately passed onto consumers) and potential accounting disputes—which could undermine confidence in the numbers reported.
|By Staff, Associated Press, 09/18/2012|
MarketMinder's View: Rather than wrangling over subsidies and tariffs, we’d argue all involved would be better off if they simply made trade freer overall. Fortunately though, the US and China’s occasional trade squabbles haven’t much impacted bilateral trade over time. For more, see today’s cover story, “Trade Tussle.”
|By Matthew Yglesias, Slate, 09/18/2012|
MarketMinder's View: Actually, we’d argue they’re still not. Taxing efficient uses of energy simply because they produce carbon emissions to encourage replacing them with less efficient (more expensive and, in many cases, already subsidized) alternatives likely hurts consumers more than helps the environment. In our view, markets, not taxes or subsidies, best encourage energy efficiency and development of alternatives.
|By Staff, The Wall Street Journal, 09/18/2012|
MarketMinder's View: This article addresses many commonly overlooked benefits of imports—like more jobs to sell, advertise and service imported goods, lower prices and greater consumer choice—while debunking some of the erroneous economic assumptions supporting calls for lower imports. Imports play an important role in economic health and growth for all involved.
|By Eric Morath, Dow Jones Newswires, 09/18/2012|
MarketMinder's View: As we’ve written, the current account balance is a less significant metric than most assume—but rising US exports, foreign direct investment and income are yet more signs of the US economy’s underappreciated strength at home and its importance globally.
|By Rebecca Byerly, The Christian Science Monitor, 09/18/2012|
MarketMinder's View: After years of false starts, it appears India is finally taking steps to attract more foreign direct investment, reduce central-government control and cut subsides. Whether these proposals actually take effect remains to be seen, but if they’re allowed to work as intended, over time, the resulting economic freedom could help improve economic growth and many Indians’ access to basic necessities.
|By Jonathan House, The Wall Street Journal, 09/18/2012|
MarketMinder's View: As public-sector wage and pension cuts wear on Spaniards, Spain’s government is trying to find creative ways to meet EU deficit targets without heightening civil unrest. It’s a tough balancing act, but one Spanish leaders appear dedicated to, despite the heavy political capital they may have to spend at home—just the latest example of the political will to preserve the euro.
|By Margaret Talev and Jennifer Freedman, Bloomberg, 09/17/2012|
MarketMinder's View: Rather than starting a (likely relatively minor) trade tiff with China, far better would be for the US (and China) to remove all barriers and reap the many benefits of specialization and trade.
|By Robert L. Pollock, The Wall Street Journal, 09/17/2012|
MarketMinder's View: We find much to disagree with here—particularly the notion those who want to save have few to no alternatives to bonds. What about stocks? Which over the long run, and despite their volatility, have proven the investment likeliest to help most folks achieve their goals and objectives.
|By Anatole Kaletsky, Reuters, 09/17/2012|
MarketMinder's View: This piece downplays the myriad important steps European leaders have taken to preserve the euro and create more stable economies—starting with the EFSF and moving on to the ESM and, now, unlimited bond purchases by the ECB. Such political will argues heavily against a sudden, disorderly eurozone break-up.
|By Noah Barkin and Stephen Brown, The Globe and Mail, 09/17/2012|
MarketMinder's View: In our view, a slower approach to instituting changes, including establishing a new pan-European bank supervisor, is likely advisable and allows more opportunity for all parties to be heard and ensure potential consequences and likely outcomes are fully vetted.
|By Ambrose Evans-Pritchard, The Telegraph, 09/17/2012|
MarketMinder's View: Though no doubt painful in the short term, measures aimed at increasing overall competitiveness and decreasing socialistic policies likely put Spain on a far more sustainable path than its current one. As we’ve argued before, austerity needn’t be the economic scourge frequently portrayed in the media—rather, it likely spurs private sector revitalization, which Spain (among others) is in desperate need of.
|By David Goodman and Mark Deen, Bloomberg, 09/17/2012|
MarketMinder's View: France’s borrowing costs have overall fallen in the wake of S&P’s January downgrade—as we’ve largely see in the US in the wake of S&P’s downgrade just over a year ago. Seems investors are increasingly recognizing ratings agencies’ opinions aren’t usually all that timely or accurate. For more, see our 09/12/2012 cover story, “Wandering Through the World Wide Web.”
|By Mark J. Perry, Carpe Diem, 09/17/2012|
MarketMinder's View: In the wake of real estate’s 2008 collapse, historically low interest rates plus significantly lower home prices have combined to make home ownership significantly cheaper than renting—a trend which likely eventually spurs home purchases and potentially provides a nice tailwind to the already growing economy.
|By Staff, BBC, 09/17/2012|
MarketMinder's View: Though not a cure-all, increasing liquidity is likely an incremental help to an overall sluggish Indian economy, ideally spurring lending and encouraging businesses to grow and, ultimately, create jobs.
|By Christopher Matthews, Time, 09/14/2012|
MarketMinder's View: We think it’s fairly unlikely unemployment will be much affected by the latest rounds of twisting and QE—growth, not monetary policy, begets jobs. And the economy already seemed to be steadily improving, especially in the private sector, without more QE.
|By Ben Rooney, CNN Money, 09/14/2012|
MarketMinder's View: It seems to us the recent happenings in the eurozone (plans for centralized bank regulation, the German court’s backing of the ESM and the ECB’s new bond-buying plan) actually demonstrate political will to sustain the euro. Compromise is a function of political will, not a risk to it.
|By David Goodman and Emma Ross-Thomas, Bloomberg, 09/14/2012|
MarketMinder's View: Despite heightened chatter about the possibility of a Spanish bailout, it seems Spanish leaders don’t see much need to pursue one at the moment—10-year yields are down to 5.64%, where Spain didn’t have much trouble issuing debt earlier this year. Eurozone leaders may try to influence Spain’s decision, but for now, Spanish officials likely let markets, not other politicians, determine how they secure financing.
|By Staff, Reuters, 09/14/2012|
MarketMinder's View: With that rumor quashed by Greece’s finance minister, it seems Greece’s negotiations for its upcoming aid tranche remain more or less on track. Greece may need additional financing at some point, but for now, it seems officials are merely seeking more time to meet conditions from its second bailout—something some troika partners seem willing to give.
|By Sarah Portlock and Eric Morath, The Wall Street Journal, 09/14/2012|
MarketMinder's View: Rising sales provide more evidence of a growing US economy and a strong private sector, perhaps helping offset volatility and falling industrial production.
|By Staff, BBC News, 09/14/2012|
MarketMinder's View: Since a similar plan was scrapped last year, we’d suggest tempering enthusiasm. But that India is still looking to increase foreign investment is encouraging, and following through would likely pay dividends for the Indian and global economies. Not only would companies have new opportunities, but the increased investment would likely bring Indians higher standards of living, greater wealth and more jobs.
|By Steve Hargreaves, CNN Money, 09/14/2012|
MarketMinder's View: The study highlighted here presents a nicely balanced view of outsourcing, highlighting the benefits while addressing potential downside as well. Among the key findings: “Even though some people lost jobs due to outsourcing, the greater efficiencies the industries realized allowed them to hire even more people in the United States than were laid off.”
|By Nouriel Roubini, Project Syndicate, 09/13/2012|
MarketMinder's View: An overly dour assessment, in our view, based primarily on possibilities, not probabilities. But only the latter can be reliably used in making forward-looking assessments of any value.
|By Stephen Castle, The New York Times, 09/13/2012|
MarketMinder's View: Beware OECD forecasts—they’re rarely all that accurate. Even more, beware reporting on OECD forecasts, which could suddenly make slower growth sound instead like contraction—as is largely the case here. Slower growth is still growth.
|By Conor Dougherty and Anna Wilde Mathews, The Wall Street Journal, 09/13/2012|
MarketMinder's View: There’s little evidence here to back up the claim it will likely “be a generation before Americans regain the peak income levels reached at the close of the ’90s.” If anything, there’s evidence to the contrary in the included graph, which shows quite rapid increases in the 1990s—what’s to prevent a similar outcome this time?
|By Eric Reguly, The Globe and Mail, 09/13/2012|
MarketMinder's View: We rather disagree European governments are likely to ease up when it comes to needed reforms—particularly when participation in newly announced backstop measures is predicated heavily on reform progress.
|By Rana Foroohar, Time, 09/13/2012|
MarketMinder's View: Folks often forget markets are forward-looking, not backward. Meaning markets are pricing in what’s likely ahead of us—which would seemingly point to continued economic growth. In that sense, the S&P isn’t defying economic reality at all.
|By Douglas J. Elliott, CNN Money, 09/13/2012|
MarketMinder's View: As largely anticipated, an overarching bank regulator’s creation in Europe won’t be an easy task by any stretch—expect a lengthy debate on this topic. For more, see today’s cover story, “Bluster, Barroso and Bazookas.”
|By Hester Peirce, Real Clear Markets, 09/13/2012|
MarketMinder's View: This sums it up well: “If the CFPB truly seeks to embody ‘starry-eyed principles’ of regulation, it must look beyond superficial attempts at good government. Particularly an agency with such enormous powers and so little accountability ought to fulfill its regulatory responsibilities in a manner that truly invites close scrutiny and participation by everyone whom it has the power to affect.”
|By Victoria McGrane, The Wall Street Journal, 09/13/2012|
MarketMinder's View: And the same is probably true for developed nations, for largely the same reasons: “…too much complexity ‘may reduce transparency and accountability, increase regulatory arbitrage opportunities, and significantly strain regulatory resources and capacity.’”
|By Phil Izzo, The Wall Street Journal, 09/13/2012|
MarketMinder's View: And we largely agree—given QE2 didn’t have an outsized effect on the economy, it seems rather doubtful further monetary easing would do much to spur economic growth at this point.
|By Alessandra Galloni and Christopher Emsden, The Wall Street Journal, 09/13/2012|
MarketMinder's View: Whether or not Italy ultimately seeks aid is less important than the fact the very existence of immense backstops likely helps stem some of the sentiment-driven market response to the eurozone crisis. And that in turn may give struggling countries the breathing room they need to truly pursue much needed reform efforts.
|By Staff, Bloomberg, 09/12/2012|
MarketMinder's View: This is overly dour and predicated largely on possibilities, not probabilities. Is it possible there’s more trouble ahead and the current measures prove inefficient? Yes—but at this point, we don’t see an imminent blow-up as terribly likely. That distinction is critical—particularly for investors seeking clarity and sound assessments upon which to base their forecasts for future likely market and economic direction.
|By John Makin, Desmond Lachman and Aparna Mather, Real Clear Markets, 09/12/2012|
MarketMinder's View: Our sense is these are essentially three overwrought concerns. Regarding monetary policy, we agree more Fed quantitative easing isn’t necessarily a growth rate-enhancing metric. And it’s true more easing could make sopping up the excess liquidity harder. But the inflation fears here have existed for years and have proven hollow. Worth watching, but it’s unlikely hot inflation suddenly appears any time soon. The Greek fears are very old and quite overdone. And finally, why anyone pays much attention to the credit ratings agencies is beyond us.
|By Cheyenne Hopkins and Ian Katz, Bloomberg, 09/12/2012|
MarketMinder's View: This strikes us as a plan particularly fraught with the potential for negative unintended consequences because fact is, we simply can’t regulate and/or legislate around every possible outcome ahead of time. Attempts to do so far more often produce unsought outcomes than they avert the next big crisis. For more, see our recent contribution to the Investor’s Business Daily.
|By Karin Matussek, Bloomberg, 09/12/2012|
MarketMinder's View: “Germany’s top constitutional court rejected efforts to block a permanent euro-area rescue fund, handing a victory to Chancellor Angela Merkel, who championed the 500 billion-euro ($645 billion) bailout facility”—and another impediment removed from continued eurozone progress.
|By Amanda Williams, Investor’s Business Daily, 09/12/2012|
MarketMinder's View: The latest from MarketMinder editorial staff member Amanda Williams, discussing the inherent perils in believing ourselves capable of micromanaging our economy.
|By Sam Schechner, The Wall Street Journal, 09/12/2012|
MarketMinder's View: One interesting side effect of Europe’s economic weakness is it’s made hoteliers and the travel industry compete harder to attract business. In addition, the euro’s depreciation further makes it a cost-competitive destination. As a result, visitation from non-Europeans is up nicely—with the exclusion of Greece, where it seems the tumult has kept visitors at bay. We guess that’s one more way Greece is an outlier.
|By Laurence Norman and Riva Froymovich, The Wall Street Journal, 09/12/2012|
MarketMinder's View: Though an interesting plan, any implementation of a banking union and/or broader political and fiscal coordination across Europe likely take a significant amount of time—and may not be all positive in the end. For now, this seems mostly a development worth keeping an eye on.
|By Annalyn Censky, CNN Money, 09/12/2012|
MarketMinder's View: We pretty much agree about the likely effects of further monetary easing: They’re probably minimal. Interest rates are historically low, QE2 money is seemingly mostly parked at the reserves and, though there can be correlation between job creation and lending, current interest rates probably aren’t discouraging hiring (which, as we’ve said, historically lags economic recovery and growth).
|By Tom Barkley and Sarah Portlock, The Wall Street Journal, 09/11/2012|
MarketMinder's View: Trade data, like all monthly metrics, are volatile—falling exports in July aren’t necessarily a sign of a slowing US economy, especially considering most other economic indicators were just fine in the month.
|By Zunaira Zaki, ABC News, 09/11/2012|
MarketMinder's View: Moody’s rationale echoes S&P’s justification their downgrade last year’s—political discord, but with the “fiscal cliff” replacing the debt ceiling. However, squabbling politicians aren’t new, and they don’t have any bearing on the issues that truly determine credit risk—like interest costs, which have fallen since the S&P downgrade. For more, visit MarketMinder Managing Editor Lara Hoffman’s recent column on Forbes.
|By Cyrus Sanati, CNN Money, 09/11/2012|
MarketMinder's View: Aside from being simply incorrect on major items, like what Germany’s constitutional court is really ruling on tomorrow, this piece rather misses the point on the ECB’s new OMT program. It’s not “another Band-Aid applied to a now gushing eurozone wound.” It’s a way to ease some market pressure on troubled nations, allowing them more time to improve their economic competitiveness. Which all appear to be doing, albeit slowly.
|By Mark J. Perry, Carpe Diem, 09/11/2012|
MarketMinder's View: While many folks lament the death of US manufacturing, looking at the industry’s profits recently reveals that it, in fact, continues to do quite well—and, considering the US remains among the world’s leading manufacturers, some might even say, thrive.
|By Andrew Ross Sorkin, DealBook, 09/11/2012|
MarketMinder's View: When TARP and some Fed actions were announced four years ago, many feared the bailouts would funnel taxpayer cash into banks that would ultimately disappear. But that hasn’t happened. In fact, it appears the government will stand to profit on many parts of the programs. Now, profitability wasn’t the program’s objective, but it is a noteworthy marker of how much has changed from those dark days of 2008. For more, revisit our 03/16/2012 cover story, “Pulling Back (the) TARP.”
|By Staff, EU Business, 09/11/2012|
MarketMinder's View: While the German constitutional court is still set to rule on hearing the objections to the ESM treaty Wednesday, their decision to not entertain this last minute legal challenge is an incremental positive. As for the main challenge, even if the court decides to hear the case, the injunction against Germany’s ESM participation is only temporary—Germany could still participate if the court ultimately declares it constitutional, as it has for all previous bailout mechanisms. In the meantime, the EFSF remains in effect until mid-2013.
|By Renee Maltezou, The Telegraph, 09/11/2012|
MarketMinder's View: If you’ve wondered why Greece has such trouble reforming its bloated public sector, wonder no more—this piece provides an entertaining peek at the mismanagement of government programs.
|By Ben Protess, The New York Times, 09/10/2012|
MarketMinder's View: In our view, regardless of his or her party affiliation, the concept of giving the US’s politician-in-chief a bigger say in rule writing to shape how laws function may be well intended, but seems fraught with peril. Why adding to the politicization of regulations would be desirable is beyond us.
|By Pete Coy, BusinessWeek, 09/10/2012|
MarketMinder's View: While we agree Friday’s unemployment report wasn’t super robust, we’d suggest this is an overly dour take considering jobs were added. But at a broader level, this also overinflates the market impact from (typically late lagging) employment figures. For more, see today’s cover story, “Employing Patience.”
|By Philipp Wittrock, Der Speigel, 09/10/2012|
MarketMinder's View: When you consider the fact the German court’s ruling is about whether to hear a constitutional challenge to the ESM and has previously supported eurozone bailout mechanisms, this article seems quite overdramatized. For more, see our 09/05/2012 cover story, “September to Remember?”
|By Mark J. Perry, Carpe Diem, 09/10/2012|
MarketMinder's View: A couple very interesting charts from Dr. Perry illustrating his point: “We should also pay some attention to the fact that one of the reasons for the disappointing monthly employment reports is the persistent weakness in the public sector employment, which is offsetting the relatively healthy increases in private sector hiring.”
|By Tom Fairless, The Wall Street Journal, 09/10/2012|
MarketMinder's View: German industrial output grew much faster than estimated in July, and June’s previously estimated decline was revised to be more moderate. We’d caution against drawing too many conclusions from a data point or two, but it does suggest conditions in the eurozone’s largest economy aren’t as dire as many fear.
|By Alkman Granitsas, The Wall Street Journal, 09/10/2012|
MarketMinder's View: Predictable politicking surrounds the latest Greek bailout tranche. This time, it seems the troika (IMF, EU and ECB) are mandating bigger spending cuts than the Greek government proposes. Which seems pretty much par for the course.
|By Simon Nixon, The Wall Street Journal, 09/10/2012|
MarketMinder's View: While aspects of this are a bit overwrought, the central point—that Europe’s supposedly barrier-free single market isn’t as open in practice as it is in theory—is a valid point that’s not often discussed.
|By Anatole Kaletsky, Reuters, 09/07/2012|
MarketMinder's View: Suggesting a “financial hurricane season” exists seems no more accurate than other adages like “Sell in May,” which also isn’t based on economic fundamentals. Though it’s true September has historically had the lowest average monthly returns, the past isn’t necessarily indicative of future performance. And all the concerns cited have been well-known for a long time—and are therefore equally known to markets. For more see our 09/05/2012 cover story, “September to Remember?”
|By Steve Hargreaves, CNN Money, 09/07/2012|
MarketMinder's View: The bottom line here is jobs were added and the unemployment rate fell—both are positive (and historically lagging) indicators of a growing economy, despite largely dour sentiment.
|By Simon Kennedy and Shamim Adam, Bloomberg, 09/07/2012|
MarketMinder's View: In our eyes, it’s unlikely the yield curve was ever such an accurate indicator of coming recessions, though it may tell you something about the current lending environment. But attempting to forecast a recession by the length of an expansion seems faulty, at best—just because an expansion has gone on longer than historically doesn’t guarantee it’s likely to end sooner than later. Also, consider that in a fully globalized market place, it’s far more likely the global yield curve that has meaning, not a single country’s, however significant a global contributor that country might be.
|By Jeremy Warner, The Telegraph, 09/07/2012|
MarketMinder's View: We agree the ECB’s most recent bond-buying proposal likely isn’t the finale that rings the curtain down on the eurozone’s woes. But we disagree it won’t (or can’t) help. Realistically, buying time to address economic weakness and fundamental competitiveness issues is likely the best option for now. For more see our 09/04/2012 cover story, “Boring Bernanke, Diligent Draghi.”
|By Raymond Colitt and Matthew Malinowski, Bloomberg, 09/07/2012|
MarketMinder's View: Brazil’s taking interesting steps aimed at boosting its economy—mostly seeking to spur production and investment, which should in turn increase overall economic activity and therefore hiring, incomes, etc. In our view, that’s largely and most often the proper tack from which to approach economic doldrums—private-sector, supply side stimulus. For more, see our 08/16/2012 cover story, “Brazil’s Unique Take on Stimulus.”
|By Devon Maylie and Alexis Flynn, The Wall Street Journal, 09/07/2012|
MarketMinder's View: Allowing exploration of shale gas reserves likely benefits South Africa’s (and the global) economy, as revamping the industry potentially leads to more creation and spread of wealth, as well as new jobs.
|By Staff, Reuters, 09/07/2012|
MarketMinder's View: As more details of France’s potential 75% “millionaire” tax are uncovered, it appears increasingly symbolic. But symbolic or not, such a tax likely drives away some of France’s most successful businesses and business owners—potentially hurting the economy and not much helping French tax revenues—because the reality is taxes always create incentives.
|By Elisabeth Dellinger, Investor’s Business Daily, 09/07/2012|
MarketMinder's View: Our latest contribution to Investor’s Business Daily, from MarketMinder editorial staff member Elisabeth Dellinger, outlines a recent example of free trade (erroneously) becoming a scapegoat for some of free trade’s (temporary) side effects.
|By Nicholas Winning and Alex Brittain, The Wall Street Journal, 09/07/2012|
MarketMinder's View: Robust industrial output is undeniably good news from the UK, likely signaling growing strength in its economy.
|By Mats Persson, The Telegraph, 09/06/2012|
MarketMinder's View: We completely agree reforms aimed at increasing Spain’s and Italy’s (among others’) competitiveness are desperately needed in Europe. But reforms are a condition of ECB aid as outlined in Draghi’s plan. And for now, it would seem preferable to us to help struggling nations muddle through than to allow complete economic devastation, which isn’t by any means imminent, but is possible if nothing is done.
|By Jonathan Stearns, Bloomberg, 09/06/2012|
MarketMinder's View: Our quibbles here lie not with the reporting, but with the recent dust-up over solar panel production. The reality is everyone gains when countries, companies, states, whatever entity with comparative advantages at producing a good do just that—and then everyone trades for the goods they don’t produce but want. And those edged out by competition are ultimately more productively and efficiently employed elsewhere within the economy. No, that’s not a seamless transition—but in the long run, it’s a beneficial and productive one. The parties quibbling over solar panel production would do well to take basic economics into consideration.
|By John Foley, Reuters, 09/06/2012|
MarketMinder's View: We agree China’s financial system has a ways to go. But this sounds much more like a case of businesses responding to incentives, taking chances and reaping the benefits—as should be the case in a well-functioning, capitalist system—than some insidious plot. And the benefits may very well outweigh the risks and costs—for both China and the participating institutions.
|By Randall Forsyth, Barron’s, 09/06/2012|
MarketMinder's View: The first rule of media consumption is: Beware strained metaphors. That applies here. Moreover, we’re not entirely convinced the gradual approach hasn’t proven rather effective over the last couple years, if at times frustrating and less instantly gratifying. While bond buying as Draghi’s thus far outlined might not prove the last effort needed, it seems another step in the right direction.
|By Geoffrey T. Smith, The Wall Street Journal, 09/06/2012|
MarketMinder's View: As rumored, ECB President Mario Draghi revealed a plan to purchase unlimited amounts of government bonds in the open market and to sterilize those purchases with the aim of keeping inflation in check. And as expected, European officials continue making every effort to ensure investors they’ll backstop the eurozone by whatever means necessary.
|By David Pilling, Financial Times, 09/06/2012|
MarketMinder's View: An interesting look at Chinese currency use—asserting ultimately the relatively low likelihood the yuan overtakes the dollar as the international currency of primacy anytime soon.
|By Simon Rabinovitch, Financial Times, 09/06/2012|
MarketMinder's View: China’s financial system is far from free, but this is an incremental step in that direction with the additional benefit of likely allowing banks more room to make more loans. Liberalization in China, as ever, merits watching.
|By Mark J. Perry, Carpe Diem, 09/06/2012|
MarketMinder's View: “This is another example of how shale prosperity is spreading down the supply chain for the many industries that support oil and gas drilling, including railroads, fracking sand, drilling equipment, housing, construction, etc.”—in other words, supply creates demand. For more, see our 11/14/2011 column, “Supply-Side Schooling From Shale.”
|By Phillip Swagel, Bloomberg, 09/06/2012|
MarketMinder's View: A succinct explanation of some of the potential downside to breaking up “too big” banks. This strikes us as particularly astute: “Breaking up large banks imposes economic costs without corresponding benefits in terms of financial stability. It would be better to focus on making the overall system safer without handing an advantage to one part of the financial system over the other.”
|By Ambrose Evans-Pritchard, The Telegraph, 09/05/2012|
MarketMinder's View: Like its parent, peak oil, the idea of “peak cheap oil” ignores a key fact: As oil prices increase, firms have more incentive to extract more oil, which often requires developing new, more efficient ways to tap previously hard-to-access sources—and very often, these production improvements and supply increases help push prices back down.
|By Howard Schneider, The Washington Post, 09/05/2012|
MarketMinder's View: Setting aside the question over the efficacy of the US government’s intervention in financial markets in 2008 and 2009, the idea that the US’s approach then can and should be a blueprint for EU officials now seems off base. US policymakers acted swiftly because they could—the US is and has been a single, sovereign nation for well over 200 years. The EU, by contrast, is a loose association of competing national interests with varying degrees of economic competitiveness—an entirely different animal, for which an incremental march toward a solution is likely the only real option.
|By Christopher Bjork and David Enrich, The Wall Street Journal, 09/05/2012|
MarketMinder's View: This rundown of Spain’s banking woes misses two key points. First, Spain hasn’t yet received any of the previously agreed-to EU bank bailout funds—that likely happens in November and should ease much of the pressure on troubled lenders. Second, scenarios like this are exactly why programs like Target2 exist—they provide liquidity to help offset falling deposits, and thus far, it seems Target2 is working as intended in Spain. Should banks need further flexibility, the ECB has repeatedly been willing to relax its collateral requirements.
|By Jana Randow and Jeff Black, Bloomberg, 09/05/2012|
MarketMinder's View: Details are emerging on the ECB’s plans to purchase sovereign debt, and provisions like the sterilization of all purchases seem aimed at securing Germany’s support—which they got today, when Germany’s ECB board member agreed sovereign debt purchases are likely necessary. Once again, it seems officials are compromising as needed.
|By Staff, The Chosun Ilbo, 09/05/2012|
MarketMinder's View: This would be more encouraging if the businesses in question were private, not state-run, but this is North Korea we’re talking about—there is no private industry in the communist nation. Nevertheless, letting these firms keep more of their profits gives them incentive to be more productive, and improved productivity may make basic goods more easily available to impoverished North Koreans.
|By Simon Rabinovitch and Kathrin Hille, Financial Times, 09/05/2012|
MarketMinder's View: It appears China’s Communist Party will select its next generation of leadership in mid-October. Though it already seems certain Xi Jinping and Li Keqiang will be named the next President and Premier, respectively, they may use the Party Congress to announce new policy changes aimed at shoring up popular support during the transition—something worth watching.
|By Editorial Board, The Wall Street Journal, 09/05/2012|
MarketMinder's View: As this piece shows, Japan would have much to gain from joining the Trans-Pacific Partnership. Opening the service and agricultural sectors to foreign competition may not be politically popular, but it would carry huge economic benefits over time.
|By Staff, BBC News, 09/04/2012|
MarketMinder's View: We continue to question why many folks pay credence to the ratings agencies. The EU has been mired in a debt crisis for the last three years, so that the region has debt issues shouldn’t come as a shock to many folks.
|By Hedrick Smith, The New York Times, 09/04/2012|
MarketMinder's View: The late, great Milton Friedman said all we need to on this topic, and that’s “[the] social responsibility of corporations is to increase profits.”
|By Daniel Gros, Project Syndicate, 09/04/2012|
MarketMinder's View: This piece focuses too much on the macroeconomic impact of fiscal policy and too little (if at all) on the impact of the private sector. But it’s the private sector that creates the majority of economic growth. For more, revisit our 07/30/2012 cover story, “Three Views of US GDP.”
|By Jeff Black, Jana Randow and Jonathan Stearns, Bloomberg, 09/04/2012|
MarketMinder's View: There’s no silver bullet to cure all that ails the eurozone, but the ECB’s buying sovereign debt—assuming it works as intended—would likely depress debt yields somewhat and buy troubled nations additional time to continue sorting out their various economic competitiveness and productivity issues. If anything, Draghi’s comments speak to continued willingness to “do whatever it takes.” For more, see today’s cover story, “Boring Bernanke, Diligent Draghi.”
|By Thomas Donlan, Barron’s, 09/04/2012|
MarketMinder's View: An interesting look at the US’s massive build-up efforts during World War II—largely dispelling the popular notion it was centrally planned, as opposed to private sector-driven.
|By Mark J. Perry, Carpe Diem, 09/04/2012|
MarketMinder's View: History provides valuable perspective for those lamenting the state of today’s global economy.