|By Neil Irwin, The Washington Post, 11/30/2012|
MarketMinder's View: Contrary to the assertions here, troubles in Europe are products of economic fundamentals—namely, bloated public sectors and economic un-competitiveness. The slow-go political approach to addressing this isn’t analogous to US political posturing and gridlock over the fiscal cliff. Despite ongoing brinksmanship, our squabbling parties are far more aligned than the eurozone’s 17 disparate governments.
|By Christopher Matthews, Time, 11/30/2012|
MarketMinder's View: Well, probably not—housing market woes weren’t directly responsible for 2008, and higher household debt and high home prices alone don’t equal a property bubble. Many factors contribute to overall economic health and the likelihood of a crisis—perhaps Canada’s property market does cool somewhat, but absent misapplied accounting rules and a haphazard regulatory response—and with other economic sectors doing ok—slowing real estate needn’t bring economic crisis.
|By Felix Salmon, Reuters, 11/30/2012|
MarketMinder's View: We agree manufacturing’s upswing isn’t a fix-all for US unemployment. But this analysis of manufacturing wages misses a key point: Our country no longer depends on manufacturing to provide lifelong, family-sustaining employment. We’ve evolved into a service-based economy, and the service sector now plays the role manufacturing did in the 1950s and 1960s. That’s not a problem—it’s progress and a global phenomenon.
|By Jeanne Sahadi, CNN Money, 11/30/2012|
MarketMinder's View: Everything here rests on the assumption taxes on high earners or wealthy folks have to rise—but that’s not the case. Senate Democrats have every incentive to compromise on a full extension of the 2001/2003 tax cuts—otherwise those in traditionally Republican states who face re-election in 2014 likely get the boot from voters. Hence the measures suggested here are likely solutions in search of a problem.
|By Harriet Torry and James Angelos, The Wall Street Journal, 11/30/2012|
MarketMinder's View: As expected, Germany’s parliament approved the terms of Greece’s recent bailout deal—and that 90% of parliament members voted for it, despite party affiliation, shows politicians’ overwhelming resolve to support the euro.
|By Catherine Rampell, The New York Times, 11/30/2012|
MarketMinder's View: Though brief, this snapshot of all-time high and rising corporate profits captures the US’s robust private sector—a key source of economic strength.
|By Don Boudreaux, Café Hayek, 11/30/2012|
MarketMinder's View: Hear, hear! If retailers who raise prices when items become scarcer deserve punishment for responding to market realities, so does every single consumer who purchased said scarce resource, helping push prices up. Interfering with markets’ ability to determine the right price for goods makes everybody lose.
|By Lara Hoffmans, Forbes, 11/30/2012|
MarketMinder's View: The latest from MarketMinder’s Managing Editor, Lara Hoffmans, on the realities of the fiscal cliff.
|By Mark J. Perry, AEIdeas, 11/30/2012|
MarketMinder's View: Behold the benefits of the shale revolution! Rising US oil production, falling oil imports and increasing US jobs in oil-related fields likely inspire optimism in the oil industry’s impact on the US economy.
|By Ezra Klein, Bloomberg, 11/29/2012|
MarketMinder's View: Here’s the thing: Total government spending for calendar year 2013 is only projected by the CBO to shrink some $9 billion. Not altogether insignificant, but considering total government spending is projected to be over $3.5 trillion, it’s a whopping 0.25% of the total. We’re not terribly sure how everyone defines austerity, but that wouldn’t strike us as quite it.
|By Tamara Keith, NPR, 11/29/2012|
MarketMinder's View: This misses the larger point, in our view, which is taxes, in any form, discourage whatever they tax—if it’s income, they discourage earning as much; if it’s capital gains or investment income, they discourage selling securities or potentially even owning them in the first place as opposed to other, less taxed options. At the end of the day, in our view, the best outcome would be the one that results in an overall flatter, simpler tax code. Which taxes are altered matters much less.
|By Ambrose Evans-Pritchard, The Telegraph, 11/29/2012|
MarketMinder's View: As we mostly anticipated, the rhetoric surrounding China’s “currency manipulation” has largely died down now that the election’s over. But switching the focus of the US’s “ire” from China to Germany is equally foolhardy, in our view.
|By Staff, Bloomberg, 11/29/2012|
MarketMinder's View: We’re highly skeptical of the claim it was “the vast imbalances in global trade and capital flows that helped cause the financial cataclysm of 2008.” When it comes to global trade, what’s critical to remember is it—by definition—must balance: One country’s capital account surplus is another country’s trade deficit, and vice versa.
|By Eric Morath and Sarah Portlock, The Wall Street Journal, 11/29/2012|
MarketMinder's View: “The US economy expanded at its fastest pace in nearly three years in the third quarter as stronger inventory and export gains caused the government to revise its growth reading higher.”
|By Jia Lynn Yang and Suzy Khimm, The Washington Post, 11/29/2012|
MarketMinder's View: While we won’t hold our breaths, we largely agree sweeping reform to the tax code making it overall flatter and simpler would do significant good for US businesses.
|By James Hall, The Telegraph, 11/29/2012|
MarketMinder's View: We’d caution regulators globally against the seemingly growing tendency to regulate largely for the sake of regulating. As is discussed here, such regulations have relatively minimal upside, but rather significant downside.
|By Tommy Stubbington and Emese Bartha, The Wall Street Journal, 11/29/2012|
MarketMinder's View: Rather without fanfare, eurozone rates have fallen markedly—a sign of markets’ continued confidence in what to many has seemed a frustrating approach.
|By Judith Kildow and Jason Scorse, The New York Times, 11/29/2012|
MarketMinder's View: We agree it makes much more sense for homeowners to purchase private insurance than have the government involved in providing something potentially uneconomical to start with. Which raises the question, of course, what else might the government be providing that the private sector could better, cheaper and more efficiently?
|By Dan Kadlec, Time, 11/28/2012|
MarketMinder's View: A retirement account tax-grab would be bad news—but it’s highly unlikely given how hard voters would punish legislators who voted for it. Moreover, it’s not necessary—the US isn’t Greece and doesn’t need emergency tax-grabs to shore up revenues. Our debt service costs are at historic lows, as are current yields, and our economy is growing—and over time, growth begets higher tax revenues.
|By Katy Barnato, CNBC, 11/28/2012|
MarketMinder's View: Perhaps, and political uncertainty is indeed a risk. But Italian yields have fallen steadily, and recent debt auctions have been encouraging. Provided Italy can continue financing its debt—the main issue, especially considering the nation runs a primary surplus—there’s likely no need for a full sovereign rescue. And as long as Italy stays on the reform path, yields should remain manageable.
|By Howard Schneider, The Washington Post, 11/28/2012|
MarketMinder's View: While we agree the latest Greek compromise isn’t a fix-all, we don’t believe the eurozone’s slow-go approach to working through the periphery’s issues is nearly as problematic as this piece suggests. A quick, sweeping solution in the early going could have introduced numerous unintended consequences. The incremental approach allows leaders to change only what needs changing, helping lower the risk of harmful side effects. For more, see today’s cover story, “Greek Debt Deal, Take 43.7.”
|By Staff, Reuters, 11/28/2012|
MarketMinder's View: It’s no surprise anti-China rhetoric fizzled out after the election. China’s trade policies are always a hot campaign issue in the US, but tough political talk often leads to no action—a positive for trade on both sides of the Pacific.
|By Rowena Mason and Tim Ross, The Telegraph, 11/28/2012|
MarketMinder's View: The UK’s brewing debate on press regulation bears watching—not just for its implications on journalistic freedom (imperative to any free society), but for the potential impact on the coalition government, which has shown signs of wear in recent months. A major break between the Conservatives and Liberal Democrats over this issue could call the coalition’s long-term viability into question.
|By Robert Winnett, The Telegraph, 11/28/2012|
MarketMinder's View: All together now: The more you tax something, the less you get of it! Positively, the UK’s learned its lesson, and lowering the top income tax rate from 50% to 45% appears likely to raise revenue, as thousands more people are declaring incomes over £1 million.
|By Nektaria Stamouli and Alkman Granitsas, The Wall Street Journal, 11/28/2012|
MarketMinder's View: Finance Minister Yannis Stournaras declined to elaborate on Greece’s plan B, but he did shed some light on the particulars of the pending debt buyback—notably, it will be “purely voluntary, nor would it affect the capital position of the banks.” The scheme will continue taking shape next week, when officials should announce the buyback price.
|By Michael Hiltzik, Los Angeles Times, 11/28/2012|
MarketMinder's View: One big real problem: “The California gasoline market operates as an island.” California doesn’t import fuel from other states—local drivers are at the mercy of state production, which stifles competition and heightens prices. Compounding this is California’s finicky “anti-pollution fuel formulation” requirement. Hence, we rather agree: “Instead of holding hearings every time there’s a spike, we need to address the scarcity and competitive issue.”
|By Yalman Onaran and Bradley Keoun, Bloomberg, 11/28/2012|
MarketMinder's View: This is a sensible take on a dubious plan. By forcing foreign banks to restructure their business models and raise capital in US-centered affiliates in order to comply with pending regulatory changes, US regulators risk limiting cross-border fund flows. How this proposal takes shape and whether it’s adopted bear watching.
|By Staff, EUbusiness, 11/28/2012|
MarketMinder's View: This clears the way for Spain to begin receiving previously agreed-to EU bank bailout funds, with the first tranche likely in December. It’s incremental progress, but the more Spain pushes through, the less likely a full sovereign rescue becomes. For more, see our 10/01/2012 column, “No One Expects the Spanish Inquisition.”
|By Michael Sivy, Time, 11/27/2012|
MarketMinder's View: We largely agree with the headline, but not the accompanying analysis on the fiscal cliff and US debt, which ignores important factors like debt serviceability and GDP growth. For example, although the US’s debt as a percentage of GDP is higher than many other countries’ today, the costs of servicing that debt are among the world’s lowest. Likewise, should politicians focus on streamlining regulation, lowering taxes and overall making the US more economically competitive, it’s likely GDP growth might accelerate faster than debt, negating the alleged need for future tax hikes.
|By Larry Swedroe, MoneyWatch, 11/27/2012|
MarketMinder's View: In our view, this piece fails to account for several factors. For one, when measuring the performance of small and large firms over time, it ignores the many shorter periods of varying leadership—shifts long-term growth investors can and should capitalize on. Fisher Investments research shows in the latter stages of bull markets (as we’re entering now) the very biggest companies typically perform best. For more see our 08/09/2012 cover story, “Big Takes the Stage.”
|By Gabrielle Parussini and Paul Hannon, The Wall Street Journal, 11/27/2012|
MarketMinder's View: The OECD’s report cites several risks to the world economy—but they’re all well-known and largely overstated. With the eurozone muddling through and US legislators likely to compromise on the fiscal cliff, these items’ ability to negatively impact the global economy seems limited at most. Besides, there are always areas of economic strength and weakness throughout the world, but today, the stronger parts are pulling the weaker along just fine.
|By Daniel Gros, Financial Times, 11/27/2012|
MarketMinder's View: This is a sensible repudiation of arguments for Greek debt forgiveness. In fact, Greece and the troika have many other options at their disposal—like Greek debt buybacks and maturity extensions, both of which feature in the deal for Greece’s latest aid tranche. For more, see our 11/13/2012 cover story, “Greece Is the Word.”
|By Amanda Williams, Investor Place, 11/27/2012|
MarketMinder's View: MarketMinder Editorial Staff Member Amanda Williams’s latest contribution to Investor Place.
|By L. Gordon Crotvitz, The Wall Street Journal, 11/27/2012|
MarketMinder's View: Despite what the title says, it’s not the UN trying to control the Internet. Rather, authoritarian governments are trying to utilize UN bodies to restrict the free flow of information on the currently self-regulating internet—a frightening, though unlikely, possibility. As this article points out, “Having the Internet rewired by bureaucrats would be like handing a Stradivarius to a gorilla.” Well said.
|By Yajun Zhang, The Wall Street Journal, 11/27/2012|
MarketMinder's View: Rising corporate profits and other recent data suggest the Chinese economy is beginning to feel the effects of state-driven stimulus measures. And following the leadership transition earlier this month, it’s likely efforts to boost the Chinese economy continue. For more, see our 11/12/2012 cover story, “All Eyes on China.”
|By Tess Stynes, Fox Business, 11/27/2012|
MarketMinder's View: Quibbles with the calculation of this index aside, it reflects a US housing market that’s continuing to rebound—a potential incremental tailwind to economic growth ahead.
|By Staff, EUbusiness, 11/26/2012|
MarketMinder's View: In a free market, milk prices are the product of supply and demand. Legislating higher minimum prices as proposed by the European Milk Board (EMB), would most likely dissuade consumers from purchasing dairy products (or at least encourage substitution), thus potentially overall decreasing revenue for farmers—an oft overlooked consequence of price floors.
|By Paul Krugman, The New York Times, 11/26/2012|
MarketMinder's View: We largely agree blaming a “skills shortage” for still-high unemployment misses the boat—but so does blaming employers “unwilling to pay high wages,” in our view. Employers know they need to offer competitive wages to attract skilled workers. Conversely, workers weigh the benefits and opportunity costs of receiving a certain salary for their labor. In a free market, these factors determine market wages and contribute to the rate of employment. In reality, the current unemployment rate isn’t too surprising in the wake of one of the largest financial crises we’ve seen—as the economy continues growing, unemployment likely continues shrinking.
|By Laura Tyson, Project Syndicate, 11/26/2012|
MarketMinder's View: Though we agree the US tax system is in need of reform, we disagree raising taxes, even only on higher income earners, will have no negligible effects on job creation or economic growth. As we’ve written before, increasing taxes often creates the opposite of the intended effect.
|By Catherine Boyle, CNBC, 11/26/2012|
MarketMinder's View: We’d recommend investors focus less on the possibility of a Catalonia–Spain separation than the probability. Myriad steps would need to be taken before anything comes to fruition—including a vote by the people. Then, too, this is just one political driver in one country—global markets encompass much more than that. For more, see our 8/29/2012 cover story, “Homage to Catalonia.”
|By Louisa Peacock, The Telegraph, 11/26/2012|
MarketMinder's View: While we’re generally leery of surveys, we’re far more confident of corollaries like: Tax something, and you generally get less of it. In this case, if the government decreased corporate tax liabilities, chances are pretty good they’d put that money to good use elsewhere, like increased hiring—another great example of how decreasing tax liability can spur economic development.
|By Staff, The Economist, 11/26/2012|
MarketMinder's View: Mexico is becoming an increasingly important trade partner for the US due to close proximity and low production costs. For more, see our recent commentary on Equities.com.
|By Staff, Xinhua, 11/26/2012|
MarketMinder's View: China’s continuing (and possibly growing) movement away from state-owned enterprises likely benefits economic growth as freer markets are further allowed to develop.
|By Josh Noble, Financial Times, 11/23/2012|
MarketMinder's View: Our issue here isn’t the reporting, but the new restrictions preventing Indian citizens’ access to a plethora of imported items that could have otherwise positively affected their quality of life. Not to mention the fact many businesses are likely keeping an eye on Ikea’s experience as something of a litmus test. For retailers, investors and Indians, this is a development to watch.
|By Ken Parks, The Wall Street Journal, 11/23/2012|
MarketMinder's View: Though we’re all for competitiveness and variety in markets, when paired with increased regulatory power, the increased availability of investment products likely doesn’t pack quite the anticipated punch. In fact, the already heavy-handed regulation (and its ensuing unintended consequences) in Argentina’s markets probably play a significant role in dissuading investors from participating.
|By Josh Mitchell, The Wall Street Journal, 11/23/2012|
MarketMinder's View: When you tax something, you generally get less of it. And an increased gas tax likely incentivizes drivers to avoid unnecessary trips in their cars, leading to less fuel consumption and purchasing and, therefore, less tax revenue than expected.
|By Jeff Kearns, Susanna Pak and Noah Bahyar, Bloomberg, 11/23/2012|
MarketMinder's View: No matter how you slice it, wealth destruction is just that: an overall loss of business, goods, etc., not just for those directly affected but also to the economy as a whole. Arguments Superstorm Sandy could have been anything else demonstrate the broken windows fallacy at work.
|By M.J. Perry, AEIdeas, 11/23/2012|
MarketMinder's View: The ready availability of Thanksgiving turkeys illustrates the myriad benefits of free markets and their invisible hand: “Free human beings freely interact, and the result is an array of goods and services more immense than the human mind can comprehend.” Capitalism is just one of many economic items to be thankful for this holiday season.
|By Blake W. Krueger, The Wall Street Journal, 11/23/2012|
MarketMinder's View: Shoe tariffs, created under 1930’s Smoot-Hawley Act, provide an excellent example of how long-lasting tariffs and poor regulation directly hurt consumers—not to mention various other players in the US shoe industry.
|By Ilona Billington and Jason Douglas, The Wall Street Journal, 11/23/2012|
MarketMinder's View: Whether or not the result of the UK’s Funding for Lending Scheme, that lending to individuals and business across the UK has increased is a positive, which likely begins trickling through the rest of the economy and helping boost overall activity.
|By Stephen Fidler, The Wall Street Journal, 11/23/2012|
MarketMinder's View: Possibly the biggest impact of France’s recent debt-downgrade is many are restricted to purchasing top-rated debt by rules and regulations of various investment plans (401(k)s, pension plans, etc.). But other than that—which is a challenge mostly in the short term, not the long—markets mostly shrugged about the downgrade. Then, too, officials have found ways around ratings requirements in the past, so the chances this time is much different are slim. For more on the French downgrade, see our 11/21/2012 cover story, “Moody’s Muddled French Markets.”
|By Eduardo Porter, The New York Times, 11/21/2012|
MarketMinder's View: There’s little evidence income inequality is actually much of an economic problem. As it pertains to incomes, it’s probably much more important to living standards to judge absolute wealth than relative. After all, few people are likely making purchasing considerations based on how much more money the Daddy Warbucks, Tony Starks and Bruce Waynes have than they do. So if there’s an effort to morph the fiscal cliff into a debate over income gap gulch, it’s unlikely to accomplish very much economically.
|By Alan Bjerga, Bloomberg, 11/21/2012|
MarketMinder's View: In our view, those fearing higher future food prices in the short term likely neglect several factors. For one, raw commodity costs make up a small part of total retail food prices. Higher commodity prices can often lead to short-term price spikes, but these are often smoothed out by other factors in the long term. Likewise, consumers have options—the substitution effect creates incentives to find alternatives. And lastly, higher prices might promote more production, meaning suppliers’ profits are boosted and prices kept in check. For more, see our 7/20/2012 cover story, “Gotta Have My Pops!”
|By James Saft, Reuters, 11/21/2012|
MarketMinder's View: To us, it seems misleading to use Europe’s (public) debt troubles as an example supposedly showing (private) shadow banking hurts growth—whether or not its global presence is increasing. Shadow banking exists because it provides services other, more traditional service providers can’t, and increased flexibility is generally something investors and markets appreciate, even with the potential for increased risk. In our view, it’s likely unintended consequences of overregulating hurt the global economy more than shadow banking’s mere existence.
|By William Horobin and Neelabh Chaturvedi, The Wall Street Journal, 11/21/2012|
MarketMinder's View: This headline might also read, “Moody’s France Downgrade Has Little Effect on Rates.” For more, see today’s cover story, “Moody’s Muddled French Markets.”
|By Staff, Reuters, 11/21/2012|
MarketMinder's View: As we’ve written before, we agree with German Chancellor Angela Merkel: “What was neglected over years, over decades, cannot be taken care of overnight.” That said, it seems Greece is continuing to benefit from eurozone resolve to keep the monetary union intact, as the country works toward increasing its economic competitiveness and productivity.
|By Christopher S. Rugaber, Associated Press, 11/21/2012|
MarketMinder's View: The national unemployment rate rose slightly last month, but 37 states' rates fell—some a significant amount. And though a single month’s unemployment data isn’t necessarily the most accurate economic indicator, the longer trend reflects a steadily improving employment picture.
|By Clifford Winston, The New York Times, 11/21/2012|
MarketMinder's View: This sensible piece highlights the potential rewards of a freer market in US skies—lower prices and greater choice—benefits we might all wish for as the busy holiday travel season kicks off.
|By Robin Harding and James Politi, Financial Times, 11/20/2012|
MarketMinder's View: As we’ve said here and elsewhere before, the fiscal cliff is more political machination than harbinger of future economic doom. In all likelihood, politicians find a way to compromise at the 11th hour, kicking the can on this politically powerful wedge issue to mid-term elections in 2014. For more, see our 10/11/2012 cover story, “Scaling the Fiscal Cliff.”
|By William Horobin, The Wall Street Journal, 11/20/2012|
MarketMinder's View: To us, Moody’s and the other ratings agencies appear to be engaged in group-think. While many fear a French downgrade might impact funding costs, on Tuesday, the country’s 10-year yields barely ticked up from near-record lows, and those of the partly France-backed EFSF actually fell from their previous auction just a month ago.
|By Staff, The New York Times, 11/20/2012|
MarketMinder's View: To us, the government’s choosing not to implement new and broader regulation foreign exchange-related derivatives used by many non-financial businesses and industries to hedge currency volatility is a good idea, not a bad one. Especially considering the tools targeted in this segment of Dodd-Frank weren’t shown to have played much, if any, role in 2008’s financial panic. Simply, regulation often carries unintended consequences. Sidestepping those potential consequences likely outweighs the misperceived potential risks noted here.
|By Joe McDonald, Associated Press, 11/20/2012|
MarketMinder's View: We’re puzzled by the repeated use of the term “recovery” regarding China’s economy in this piece. Considering China hasn’t had a recession in more than a decade, what exactly are they recovering from? Seven percent GDP growth? Sure, Chinese GDP growth certainly isn’t near the heady double-digit quarters of the recent past, but overall growth is still just fine. And with China’s vastly increased size, even a slower growth rate can easily add more economic activity in dollar (or yuan) terms to the global economy.
|By Lauren French, Politico, 11/20/2012|
MarketMinder's View: We concur tax loopholes alone can’t solve the fiscal cliff. But nor does raising overall tax rates. Rather, if the government seeks to raise revenues, we’d suggest taking more economic growth-oriented steps, like lowering trade barriers, reducing corporate taxes and incentivizing investment and capital expenditures.
|By Robin Harding, Financial Times, 11/20/2012|
MarketMinder's View: Overall, housing data continue to show broad improvements—potentially providing an incremental tailwind to economic growth ahead. While residential real estate is unlikely to be a big boost fundamentally, given its small size, its recovery could serve as a factor improving investor sentiment.
|By Nick Cawley, The Wall Street Journal, 11/20/2012|
MarketMinder's View: Despite increasing media and ratings agency rhetoric over the finances of the various major countries (like France and Germany) that back the EFSF and ESM, it appears the market overall considers those countries far safer from default today than a month ago.
|By Bill Frezza, Real Clear Markets, 11/20/2012|
MarketMinder's View: A sensible look at dairy market distortions created by byzantine federal regulations and state interventions. Au revoir, California cows.
|By Staff, BBC, 11/20/2012|
MarketMinder's View: A detailed account of the road ahead for Greece’s latest bailout. And in our view, it’s likely European officials find ways to compromise—even if only at the last minute. For more, see our 11/13/2012 cover story, “Greece Is the Word.”
|By Simon Johnson, Project Syndicate, 11/19/2012|
MarketMinder's View: We completely agree with the characterization of the so-called fiscal cliff as much more of a slope. But we disagree near completely with the prescriptions following that admission. Then, too, the suggestion the US’s economic vibrancy of the 1990s was a result of marginal tax rate differences is short-sighted at best and downright misleading at worst, given we can’t think of a single instance of marginal tax rates’ directly influencing overall economic growth or market direction. For more, see our 10/11/2012 cover story, “Scaling the Fiscal Cliff.”
|By Nouriel Roubini, Project Syndicate, 11/19/2012|
MarketMinder's View: This is a rather confused argument, in our view, citing recent market action as both a “correction” and the likely beginning of a new downturn—effectively suggesting the past couple years of growth are more of a bear market correction than what they actually have been: a bull market. But it’s important to keep in mind markets are forward looking—meaning their recent relative resilience likely points to their recognition global economic conditions aren’t so bad as widely believed.
|By Patricia Kowsmann and Ilan Brat, The Wall Street Journal, 11/19/2012|
MarketMinder's View: Though we agree austerity may bring some hardship in the short run, the long-term effects likely include more efficient markets and more competitive economies, which will ultimately benefit the individual countries, eurozone and global trade partners alike.
|By Thomas Black, Bloomberg, 11/19/2012|
MarketMinder's View: This illustrates well the varied (and sometimes unexpected) ways taxes can influence behavior—and the peril inherent in politicians’ common assumption they can reliably count on only increased revenues from higher taxes.
|By Jason Zweig, The Wall Street Journal, 11/19/2012|
MarketMinder's View: A sensible discussion of the potential costs and benefits involved in indiscriminately selling stocks in 2012 purely for the sake of avoiding potentially higher capital gains rates in 2013.
|By Alison Snider, Russell Gold and Ben Lefebvre, The Wall Street Journal, 11/19/2012|
MarketMinder's View: Oil companies are cutting costs and saving resources by reusing frack water for additional drilling—another great example of the benefits of innovative technology.
|By Youkyung Lee, Taiwan News, 11/19/2012|
MarketMinder's View: We agree: “The free trade agreement would help boost economic growth and pave the way for more stable political relationships in the region where China and Japan have been at odds over the sovereignty of islands in the East China Sea.” For more, see our 10/15/2012 cover story, “The Tariff Tango.”
|By Guillaume Desjardins, CNBC, 11/19/2012|
MarketMinder's View: Not unlike the US, France’s tax code seems to be unnecessarily complex, creating myriad unintended consequences. We’d posit simplifying the code and closing loopholes would benefit taxpayers as well as most likely increase revenues.
|By Paul Krugman, The New York Times, 11/16/2012|
MarketMinder's View: It’s true the US recovery and expansion have been quicker/stronger than most of the developed world, but it isn’t because we’ve had less austerity. Japan and the UK have hiked taxes, but government contributions to GDP have overall increased in both nations—by contrast, falling government spending has detracted from US GDP growth in 9 of the past 11 quarters. The US private sector is simply in better shape than developed-world peers.
|By Ambrose Evans-Pritchard, The Telegraph, 11/16/2012|
MarketMinder's View: Yes, the aggregate eurozone economy entered a double-dip recession by one common definition. But while this piece focuses on the larger contractions in Finland and the Netherlands, Q3’s aggregate drop was only -0.1%. Rather than heralding a “very dangerous situation,” in our view, the fact strength in some nations offset weakness in others suggests the broader region likely keeps muddling through. For more, see today’s cover story, “Unsurprising Revelations.”
|By Charles Riley, CNN Money, 11/16/2012|
MarketMinder's View: Well, a new Japanese government may indeed push through some fiscal stimulus, which might help boost Japan’s contracting economy a bit. But stimulus doesn’t address Japan’s deeper economic issues, which the election seems unlikely to resolve—regardless of who wins, political uncertainty likely persists, making much-needed economic reform difficult. For more, see our 11/14/2012 cover story, “Politics as Usual.”
|By Charlie Musick, Real Clear Markets, 11/16/2012|
MarketMinder's View: Using the example of a goat farm, this article simply (and humorously) illustrates why tax increases over the optimal revenue point (either from the Laffer curve or “the physical limit for goat herding”) hurt both government and taxpayer.
|By Deboarh Solomon, Bloomberg, 11/16/2012|
MarketMinder's View: No matter the influencing political ideology, reality is politicians can manipulate economic figures to reach their preferred conclusions. So in regard to taxes (and unemployment, economic policy and so on) we support the author’s conclusion: “It may be worth putting aside the budgetary sleights-of-hand and focusing on real numbers.”
|By Matthias Schulz, Der Spiegel, 11/16/2012|
MarketMinder's View: Here’s an excellent example of innovation and technology—the fruits of capitalist society—improving quality of life (and the local environment) by spear-heading the highly dangerous (if not otherwise impossible) cleanup of Germany’s Emscher River.
|By Sonya Dowsett, Reuters, 11/15/2012|
MarketMinder's View: While we certainly empathize with the pain Spain’s economy is going through, suggestions which largely hinder the free market’s ability to right itself—particularly in real estate, which was much of the cause of Spain’s difficulties—may provide some interim relief, but likely drag the problems out longer.
|By Larry Elliott, The Guardian, 11/15/2012|
MarketMinder's View: Given Germany and France—the EU’s biggest economies—still registered just-positive economic growth, we’re not quite sure contagion is raging just yet. To be sure, it’s hard to argue the eurozone’s in rosy shape—but that doesn’t mean the opposite scenario prevails at the moment, either.
|By Staff, The Chosun Ilbo, 11/15/2012|
MarketMinder's View: This seems a classic illustration of the postulate correlation is not causation.
|By Sudeep Reddy, The Wall Street Journal, 11/15/2012|
MarketMinder's View: With all due respect, might we suggest Bono stick to his area of expertise—entertaining? We have no problem with folks’ having an opinion, but prior to weighing in, it’s critical to understand the facts—and Bono’s discussion here clearly reveals he’s not terribly in tune with the facts or with basic economic principles. For more, see today’s highlighted sensible story and any of our previous writings on the fiscal cliff, available here, here or here.
|By David Weidner, The Wall Street Journal, 11/15/2012|
MarketMinder's View: Well, we agree with just about all of this. Here’s a preview: “Really, though, Jan. 1 is simply a deadline set by the Budget Act of 2011. Washington has a way of fudging deadlines. This particular one is an extension itself. Moreover, it is a deadline we have been aware of since a deal to lift the debt ceiling was struck near the end of 2011. Malleable deadline and budget sequestration don’t have that same sexy ring as fiscal cliff and don’t fit nicely in most headlines.” For more, see our 10/11/2012 cover story, “Scaling the Fiscal Cliff.”
|By Steven Mufson, The Washington Post, 11/15/2012|
MarketMinder's View: This explores an aspect of the shale gas boom oft overlooked: the downstream effects such a boon can have on productivity, innovation and entrepreneurship in myriad seemingly unrelated industries as one significant input cost (natural gas) falls significantly. As the chairman of US Steel put it, “‘It has become clear to me that the responsible development of our nation’s extensive recoverable oil and natural gas resources has the potential to be the once-in-a-lifetime economic engine that coal was nearly 200 years ago.’”
|By Elisabeth Dellinger, Equities.com, 11/15/2012|
MarketMinder's View: MarketMinder Editorial Staff member Elisabeth Dellinger’s latest is a look at South Korea’s election-year politics, with a focus on ongoing free trade efforts.
|By Todd Bliman, Investors’ Business Daily, 11/15/2012|
MarketMinder's View: The latest from MarketMinder Editorial Staff member Todd Bliman discusses the perils an exclusive focus on higher yields can create for investors.
|By Julian Morris, Real Clear Markets, 11/15/2012|
MarketMinder's View: “Price gouging” is often just another way to refer to the (ostensibly higher) price some are willing to pay for a good undergoing a shortage for whatever reason—in other words, the market price. There’s not so much something insidious in that price as there is a practical realization there’s not enough of the good to satisfy everyone’s demand. Allowing the price to rise ensures those who value the good most have access to it. For more, see our 11/06/2012 cover story, “Political Profiteering.”
|By Competitive Enterprise Institute, 11/15/2012|
MarketMinder's View: A short, enlightening video about the elegance and complexity of global economies and production.
|By Jeanne Sahadi, CNNMoney, 11/14/2012|
MarketMinder's View: Well, yes, it’s a headache, but it’s the headache Congress is most keen to resolve. Both houses have passed an AMT patch—they’ve just tied it to the 2001/2003 tax cut extensions, where the bills still differ a bit. Politicians likely do what’s needed to ensure an AMT patch before Americans start filing in 2013.
|By Paul Sullivan, The New York Times, 11/14/2012|
MarketMinder's View: Fact: Gold is, always has been and always shall be just a commodity. It’s not an inflation hedge or stable store of value—it’s volatile and subject to supply and demand forces, like all commodities.
|By Neil Irwin, The Washington Post, 11/14/2012|
MarketMinder's View: The logic here escapes us. Why is it bad that corporations have based business plans on the assumption Congress will compromise on the fiscal cliff—isn’t it prudent to plan for the likeliest outcome? Moreover, why would a month or two’s delay in compromising fuel extreme market volatility and a recession? Any compromise would be applied retroactively, and investors likely expect Congress to dither. Maybe volatility heightens while brinksmanship persists, but Congress has every incentive to compromise, and the bull market should march on.
|By Ambrose Evans-Pritchard, The Telegraph, 11/14/2012|
MarketMinder's View: There’s simply no evidence the next 10 years will end up anything like the Conference Board predicts. For one, Emerging Markets are much stronger than the report suggests and actually have offset weak growth (and some recessions) in the developed world—how else would global GDP still be growing? Moreover, the next decade could see any number of unforeseen political or technological changes that could accelerate growth.
|By Allister Heath, The Telegraph, 11/14/2012|
MarketMinder's View: We rather agree: Simplifying the tax code—replacing the unnavigable maze of high rates and loopholes with transparent, low, flat rates—would benefit businesses, individuals and government coffers alike. Sadly, “revolutionary” changes like the one suggested here are likely a pipedream at the moment given politicians’ reluctance to change (and lose a powerful campaigning and fundraising wedge issue).
|By Danielle Douglas, The Washington Post, 11/14/2012|
MarketMinder's View: More unintended consequences of Basel III: Though it aims to crack down on “too big to fail” financial firms, many provisions endanger smaller firms and would thus make big firms’ market share even bigger—rather the opposite of what’s intended. This is yet more evidence sweeping regulatory packages like Basel and Dodd-Frank are solutions in search of problems. Thankfully, the US and EU appear to be delaying implementation.
|By Staff, China Daily, 11/14/2012|
MarketMinder's View: China’s financial liberalization continues with expanded corporate financing options, derivatives platforms and an easier path for foreign investors—all welcome developments.
|By Staff, Taiwan News, 11/14/2012|
MarketMinder's View: Though this bill was watered down from its original form, it’s still an important step toward modernizing Mexican labor markets. Its passage also suggests incoming President Enrique Peña Nieto’s Institutional Revolutionary Party and outgoing President Felipe Calderón’s National Action Party can partner on economic reforms in Mexico’s congress, perhaps paving the way for further market-oriented change. For more, see our recent commentary on Equities.com.
|By Staff, Der Spiegel, 11/14/2012|
MarketMinder's View: An insightful look at Germany’s current stance on Greece: While Chancellor Angela Merkel opposes taking writedowns on Germany’s Greek debt holdings, she seems willing to give Greece extra time to meet debt targets and any profits Germany makes on its Greek debt. It seems likely EU officials overcome the current bout of brinksmanship and compromise on a solution to keep Greece afloat. For more, see our 11/13/2012 cover story, “Greece Is the Word.”
|By Staff, EUbusiness, 11/14/2012|
MarketMinder's View: And demand was robust with yields far below July’s levels—10-year yields fell from 5.89% to 4.81%, giving Italy additional breathing room as Prime Minister Mario Monti continues implementing economic reforms.
|By Michael Sivy, Time, 11/13/2012|
MarketMinder's View: While we agree global investing is often the way to go—particularly when investors are nervous about any single country—we disagree political events in the US are likely to cause an imminent bear market. Especially if Congress enacts sensible reforms—like trimming government spending and increasing economic competitiveness by lowering corporate income taxes—or even kicks the can down the road for a while. In that environment, markets have proved they can do just fine—look no further than last summer’s debt ceiling debate for an example. For more, see our 11/08/2012 cover story, “Obama, Take Two.”
|By Keith Johnson, The Wall Street Journal, 11/13/2012|
MarketMinder's View: The EU’s recent experiment with carbon emissions taxes on foreign airlines and Australia’s tax on extracted minerals serve as cautions against such measures—especially considering the EU’s recently had to back down on its tax because of its extreme unpopularity, which in turn decreased the likelihood it had the intended impact. The case would likely prove similar here. For more, revisit our 02/21/2012 cover story, “All Over the Map on Taxes” and 10/26/2012 cover story, “The Dingo Ate Yo’ Tax Revenues.”
|By Joshua Chaffin and Andrew Parker, Financial Times, 11/13/2012|
MarketMinder's View: The EU’s decision, despite its posturing for a global solution, sidesteps escalating a recent trade spat between the EU and foreign countries—for now. For more, revisit our 09/26/2012 cover story, “Boomers, Korean Agriculture and Airlines.”
|By Don Boudreaux, Café Hayek, 11/13/2012|
MarketMinder's View: For those who may still think rationing schemes the best means for dealing with shortages such as those currently in the Northeast, an illuminating illustration.
|By Bruce Einhorn and Shikhar Balwani, Bloomberg Businessweek, 11/13/2012|
MarketMinder's View: A sensible look at India’s positive economic reforms. Although, we’d add the country likely has much more to do, too.
|By Staff, EUbusiness, 11/13/2012|
MarketMinder's View: A concise summary of the various issues and proposals the EU faces ahead. For more, see our latest cover story, “Greece Is the Word.”
|By Benoit Faucon and Keith Johnson, The Wall Street Journal, 11/13/2012|
MarketMinder's View: We’re quite skeptical of long range forecasts, and this particular instance is no different. However, this is an interesting discussion of laws governing US oil exports and outlines the potential debates ahead.
|By Mark Buchanan, Bloomberg, 11/12/2012|
MarketMinder's View: Well, probably not—in fact, growth helps extend life, as it brings more resources to some of the world’s poorest regions. Contrary to the Malthusian ideas espoused here, there’s really no limit to how long this can last. Humans are darn good at finding ways to be more efficient with limited resources, and they’ll likely find ways to tackle the (very, very long-term) challenges this piece outlines.
|By Staff, EUbusiness, 11/12/2012|
MarketMinder's View: The latest supposedly critical week for the euro likely goes like all its predecessors—lots of politicking, lots of brinksmanship, a bit of compromise and no disorderly Greek bankruptcy or eurozone exit. Importantly, Greece has passed tough cuts, and creditors seem willing to be flexible with deficit targets. Other lines in the sand likely get shifted as needed to help Greece keep muddling through.
|By Wolfgang Münchau, Financial Times, 11/12/2012|
MarketMinder's View: No one thing will save the euro, competitiveness included. But fact is, troubled eurozone nations need more robust private sectors to drive future growth, and measures that improve labor flexibility, remove red tape and make doing business less costly—all of which increase competitiveness—should help firms be more productive and profitable.
|By Staff, The Economist, 11/12/2012|
MarketMinder's View: As this piece highlights, even well-intended regulation can come with unintended consequences. In this case, building height limits aimed at preserving Washington DC’s architectural beauty have driven commercial and residential rents skyward, placing undue burden on renters.
|By Elaine Kurtenbach, Associated Press, 11/12/2012|
MarketMinder's View: A fair accounting of the economic challenges Japan faces. Near term, overcoming the territorial dispute with China is likely key for exports and tourism revenue. Longer-term, Japan will have to address the structural issues hindering growth, like weak demographics, rampant protectionism and political revolving doors that forestall much-needed reform.
|By Staff, BBC News, 11/12/2012|
MarketMinder's View: More evidence of financial liberalization in China, and a positive for all involved—Chinese companies gets more foreign capital, and global investors get more opportunities to capitalize on the country’s ongoing emergence.
|By Staff, Reuters, 11/12/2012|
MarketMinder's View: While we always suggest taking longer-term forecasts like these with a grain of salt, the IEA makes a key point: “The recent rebound in the US oil and gas production, driven by upstream technologies that are unlocking light tight oil and shale gas resources, is spurring economic activity—with less expensive gas and electricity prices giving industry a competitive edge.”
|By David Callahan, Reuters, 11/09/2012|
MarketMinder's View: We highly doubt expiring the so-called Bush tax cuts would “radically decrease the deficit while preserving a strong government” for a couple of reasons. Foremost, the assumption higher tax rates automatically lead to higher revenues is fraught with misperception. On the contrary, higher rates overall can incrementally discourage economic activity and are therefore likelier to decrease revenues, if anything—evidenced by the fact that over the course of US history, regardless of marginal rates, tax revenues have held at a fairly consistent 18% of GDP. Second, it relies on the assumption politicians will restrain their tendency to increase spending and actually display some discipline—we shan’t hold our breaths.
|By Annika Breidthardt and Rene Wagner, Reuters, 11/09/2012|
MarketMinder's View: We agree France isn’t the best example of economic competitiveness. But the dour sentiment here seems somewhat overwrought. France, Europe’s second largest economy, is largely doing fine for the time being. Though it could definitely benefit from labor market (and tax) reform, France likely won’t bring down the eurozone anytime soon—especially if none of the PIIGS in arguably worse economic conditions have managed to thus far.
|By Staff, The New York Times, 11/09/2012|
MarketMinder's View: Though painful in the short term, the latest austerity measures passed ideally reduce Greece’s historically extensive public sector spending (the main cause of Greece’s deficit) and realistically put the country on track for (much-needed) economic reform in the long term—freeing up potential for private-sector growth. Greece’s economic woes won’t be solved overnight—or probably even within the next few years—and expectations solutions could be quick and easy are highly unrealistic.
|By Scott Hamilton and Svenja O’Donnell, Bloomberg, 11/09/2012|
MarketMinder's View: It seems there’s a common misperception worldwide that quantitative easing is the best solution for slow economic growth. However, if current gilt (or bond) purchases aren’t having much of an effect, it seems odd to suggest their continuance is necessary to uphold growth—plus, there’s no guarantee unintended consequences wouldn’t ensue if QE were continued.
|By Victoria McGrane and Jean Eaglesham, The Wall Street Journal, 11/09/2012|
MarketMinder's View: The ongoing back-and-forth over whether Dodd-Frank’s new (and forming) rules are good for the overall economy, in our view, is a positive. Though fewer restrictions would be our preference, the ability to challenge (and possibly change) potentially inhibiting rules is a decent second.
|By Mark J. Perry, AEIdeas, 11/09/2012|
MarketMinder's View: Hurricane Sandy’s aftereffects certainly highlight economic reality in energy: When it comes down to it, energy sources like gas and oil are more reliable, efficient and overall economical than green alternatives—at least for now. Over time, there seems little reason to doubt human ingenuity won’t develop infinitely more efficient energy sources. But for now, economics largely argue against it.
|By Staff, Bloomberg, 11/09/2012|
MarketMinder's View: “As [China] grows richer and the challenges of development become more complex, public access to wider sources of information is even more essential” for economic growth. The bottom line is freedom of information would bring new ideas, innovation and openness to China, potentially increasing government transparency and boosting its economy. How China’s leadership deals with this evolution in years to come will be interesting and certainly merits watching.
|By Staff, Central News Agency, 11/09/2012|
MarketMinder's View: Loosening regulation on certain foreign investment projects likely helps both Taiwan’s economy and foreign investors—and benefits the global economy.
|By David Wessel, The Wall Street Journal, 11/08/2012|
MarketMinder's View: We disagree the items on the list are entirely (or really at all) the job of the federal government. If government truly wants to “do something” about any of the included agenda items, it should do its best to stand aside and allow the free market and the private sector to fix them—it’s likely to do so much, much faster and at a significantly lower cost to taxpayers.
|By Robert Reich, The New York Times, 11/08/2012|
MarketMinder's View: We respectfully yet entirely disagree the government’s central economic challenge is to “create more good jobs, grow the economy and widen the circle of prosperity.” That’s the job of the private sector, by and large—one it happens to be quite good at. The government’s job is ensuring the rule of law, protecting property rights and hiring Marines (not necessarily in that order).
|By David Reilly, The Wall Street Journal, 11/08/2012|
MarketMinder's View: To be sure, markets may temporarily fret the impending “fiscal cliff” and debt ceiling debates—but that doesn’t mean those are significant factors likely to impact stocks’ long-term returns.
|By Alex Kowalski, Bloomberg, 11/08/2012|
MarketMinder's View: We’re less concerned here with the trade gap’s shrinking than with the nicely positive growth in US exports—which would seemingly speak to a global economy in slightly less of a malaise than generally portrayed.
|By Emese Bartha, The Wall Street Journal, 11/08/2012|
MarketMinder's View: “Spain completed its funding plans for this year with a bond sale Thursday, and with three more tenders to go could get a head start on its 2013 needs when continuing tough economic conditions may make it harder to attract investors.”
|By Staff, Der Spiegel, 11/08/2012|
MarketMinder's View: Greece did the politically difficult thing and passed its latest austerity budget—upon which its next aid tranche was contingent. Though the moves it’s making are likely in the long run to improve competitiveness, there’s no doubt Greece, currently in its sixth year of recession, is undoubtedly hurting and likely will for some time to come.
|By W. Michael Cox and Richard Alm, Bloomberg, 11/08/2012|
MarketMinder's View: It is rather head-scratching why Californians, surrounded by several much more affordable states, would choose to continue increasing tax rates—particularly when folks who relocate commonly cite those very rates as a reason for moving. Also makes you wonder how much the state’s counting on the revenue increase to rescue its budget situation—we guess quite a lot … and that it will be quite disappointed.
|By Staff, Reuters, 11/07/2012|
MarketMinder's View: There’s undoubtedly the possibility we see continued market volatility into next year as politicians debate the best course over and/or around the so-called fiscal cliff. But here’s something to consider: Markets are always volatile. Always. In both directions—up and down. And in our view, the continued gridlock likely leads ultimately to compromise and overall more moderate solutions—which markets typically prefer over one-sided legislation which can tend to the more extreme.
|By Diane Cardwell, The New York Times, 11/07/2012|
MarketMinder's View: As we’ve written before, enacting tariffs can result in unintended consequences. Rather, we agree “tariffs would actually harm the domestic industry, making it more difficult for American companies to do business abroad.” And while it’s important countries play by the rules of the game, removing tariffs would ultimately allow consumers to purchase cheaper goods manufactured by those who can produce them more efficiently.
|By Jim Slater, Financial Times, 11/07/2012|
MarketMinder's View: Moving to gold because its price may go up due to global (mostly political) fears without much evidence seems rather ungrounded, to us—particularly given gold’s historical performance, which we’d highly encourage folks tempted by such suggestions investigate before acting. Consider, too, the fears listed here are widely known and, in some cases, exaggerated—which isn’t to say no harm can come from Middle East tensions or the eurozone crisis, but awareness of these and similar situations likely mutes much negative impact on markets overall. A For more, see our 02/12/2010 cover story, “Gold’s Safety Blanket Myth.”
|By Don Boudreaux, Café Hayek, 11/07/2012|
MarketMinder's View: Yet another enlightening, if slightly sarcastic, example from Dr. Boudreaux on the inherent trouble with economic suggestions resting upon the broken windows fallacy. For more, see our 11/02/2012 cover story, “Hurricanes and Broken Windows."
|By Dara Doyle, Bloomberg, 11/07/2012|
MarketMinder's View: Amid a housing recovery on the home front, Ireland’s housing market is also showing signs of improvement—yet another indication things are not as dour abroad as headlines would have you think, even in one of the PIIGS nations.
|By Holman Jenkins, The Wall Street Journal, 11/07/2012|
MarketMinder's View: A sensible take on the fact local authorities more often provide better and more efficient assistance than federal organizations in the wake of natural disasters. With that in mind, the fact “federal emergency mitigation assistance” has apparently become more focused on “after-the-fact” protection of infrastructure precariously built where natural disasters hit hardest (like shorelines) seems to be a crutch for poor planning—not a societal windfall for protection and relief.
|By M.J. Perry, American Enterprise Institute, 11/07/2012|
MarketMinder's View: “The recovery of real output to an historically high level that is 2.2% above pre-recession levels with 2.6% fewer employees has also translated into record-level after-tax corporate profits, which are now 30% above pre-recession levels.”
|By Nick Malkoutzis, Bloomberg Businessweek, 11/06/2012|
MarketMinder's View: If it seems like you’ve heard this story before, it’s because you largely have. But Greece hasn’t yet fallen over the brink and dragged the world economy down with it—which speaks to Greek and European desire to maintain the euro and prevent a disorderly collapse or exit. For the latest on Greece, see our 10/30/2012 cover story, “A Look Around the Eurozone.”
|By Bruce Bartlett, Financial Times, 11/06/2012|
MarketMinder's View: In our view, this piece accurately highlights the fact presidents—despite the political bluster and rhetoric leading up to elections—don’t much govern on their own. But its assessment of the economy and future prospects is overly dour, in our view.
|By Richard Blackden, The Sydney Morning Herald, 11/06/2012|
MarketMinder's View: In our view, though there are potential positive or negative consequences whether the “fiscal cliff” is averted or not, overall impact on markets and the economy is likely muted—particularly global markets, which just aren’t that tied to any single country’s fiscal and monetary policy. For more, see our 10/11/2012 cover story, “Scaling the Fiscal Cliff.”
|By Staff, EUbusiness, 11/06/2012|
MarketMinder's View: We applaud any move that increases economic competitiveness, though this seems at odds with measures like a 75% tax on incomes exceeding €1 million a year—which likely to an extent offsets moves like the one discussed here. For more, see our 10/01/2012 cover story, “If It Ain’t Broke, Don’t Fix It.”
|By Don Stammer, The Australian, 11/06/2012|
MarketMinder's View: “Economic cycles exist because we’re human, and much affected by the optimism or pessimism of others: most of us tend to be upbeat together and willing to spend; or we share the pervasive gloom and are thrifty.” Exactly—beware those who warn “it’s different this time.” Truth is, it rarely is.
|By Staff, The Wall Street Journal, 11/06/2012|
MarketMinder's View: More evidence of the unintended consequences of ostensibly well-intentioned, but poorly executed (and largely unnecessary) legislation. For more, see our 10/12/2012 cover story, “Dodd-Frankly, That’s Dumb.”
|By Staff, Associated Press, 11/06/2012|
MarketMinder's View: EU efforts to stymie Prime Minister Viktor Orban’s power grab seems to have succeeded, so far. The EU already stopped Hungarian legislation that would have merged its central bank with its financial regulatory body and this decision, albeit already rejected by Hungary’s own constitutional court, ensures Hungary’s judiciary remains independent—critical in maintaining a system of checks and balances. For more, revisit our 04/19/2012 cover story, “The Tempest in Budapest.”
|By Nancy Folbre, The New York Times, 11/05/2012|
MarketMinder's View: The Durbin Amendment strikes us as mostly another solution in search of a problem. And while businesses may be saving cost with lower swipe fees, it seems most likely consumers are making up the difference through higher bank fees—making it rather a zero-sum game, in our view. For more, see our 10/12/2012 cover story, “Dodd-Frankly, That’s Dumb.”
|By Chester Yung, The Wall Street Journal, 11/05/2012|
MarketMinder's View: Hong Kong’s concerns about its real estate market’s overheating are understandable—but they’re also a byproduct of a peg to the US dollar and therefore a monetary policy that closely mirrors the US’s. Trouble is, Hong Kong and the US are two entirely separate economies, and therefore what makes policy sense here may not make as much there. It would seem more advisable for Hong Kong to gradually free its currency than continue monetary policies that are knowingly causing undesired consequences. Imposing a tax is a short-term fix that likely turns into a long-term detractor of foreign investment.
|By Barrie McKenna, The Globe and Mail, 11/05/2012|
MarketMinder's View: We’d see little problem with cutting a tax credit if the government in turn cut overall corporate tax rates, thereby simplifying the code and achieving greater efficiencies for both businesses and the government (in terms of tax code enforcement in particular). But doing only one without the other is likelier to result in unintended consequences than anything else.
|By Juergen Baetz, Associated Press, 11/05/2012|
MarketMinder's View: Given Germany’s been one of the stronger eurozone economies, it can likely afford increased social spending. But we’d argue the opposite—less government spending and instead allowing the private sector to keep a larger percentage of its income—would probably be more efficient and likelier to increase economic growth over the long term.
|By Daniel Ten Kate and Karl Lester M. Yap, Bloomberg, 11/05/2012|
MarketMinder's View: For important trade partners like the EU and Asia, opening markets to freer trade and decreasing protectionist practices can increase the flow of goods and allow commerce to grow more efficiently. Keep in mind, though, it’s arguably more important to watch what leaders do than what they say—particularly as China, the US and the EU engage in something of a tiff over solar panels. For more, see our 10/15/2012 cover story, “The Tariff Tango.”
|By Amanda Williams, Investor’s Business Daily, 11/05/2012|
MarketMinder's View: The latest from MarketMinder editorial staff member Amanda Williams, discussing some of the inherent difficulties in the concept of growing inequality.
|By Clayton M. Christensen, The New York Times, 11/05/2012|
MarketMinder's View: An interesting and thought-provoking theory of innovation and some proposals to improve the prospect of future economic growth. Though we don’t necessarily agree with all aspects of the piece, it’s certainly a worthwhile read.
|By Dhara Ranasinghe, CNBC, 11/05/2012|
MarketMinder's View: As the US awaits the outcome of tomorrow’s election, China is also in the middle of an important government transition. Though the US’s transition is grabbing most headlines, developments in China are worth watching as well.
|By David Futrelle, Time, 11/02/2012|
MarketMinder's View: Individuals can undoubtedly be hurt by interim higher prices—particularly in the wake of a natural disaster. But many of those individuals also run or are employed by businesses which need to raise prices to make up for losses and stay afloat—and continue taking losses. If not allowed to raise prices, businesses may need to lay off employees or, worse, go under—both scenarios larger, long-term negatives for the overall economy than short-term price increases and something many overlook.
|By Stephen Moore, The Wall Street Journal, 11/02/2012|
MarketMinder's View: Our beef here isn’t with the reporting, which is perfectly fine, as much as it is with the idea, which we find at best incomplete and at worst rather silly. Unless the group proposing to “personalize” Americans’ share of the US debt simultaneously include a personalization of their share of US assets, we’d argue they’re giving folks an entirely incomplete picture of the state of the US economy and its debt level. For more, see our 03/12/2012 column, “US Debt Perspectives.”
|By Dhara Ranasinghe, CNBC, 11/02/2012|
MarketMinder's View: In our view, though there are potential positive or negative consequences should the fiscal cliff be avoided or transpire, overall actual impact on markets and the economy is likely muted. For more see our 10/11/2012 cover story, “Scaling the Fiscal Cliff.”
|By Deborah Ball and Ilan Brat, The Wall Street Journal, 11/02/2012|
MarketMinder's View: Liquidating foreign subsidiaries may bring short-term relief to struggling peripheral European companies, but it seems in seeking what appears to be a quick fix some companies may be overlooking long-term effects. In our view, the liquidations here seem motivated more by fear than a beneficial route to rein in deficits.
|By Mark J. Perry, American Enterprise Institute, 11/02/2012|
MarketMinder's View: “By the year 2021, the Eagle Ford shale could produce close to $62.1 billion in output …. To put $62.2 billion of economic output into perspective, that would be as much or more economic activity in 2021 in the Eagle Ford Shale area of Texas than the entire Gross State Products of states like Vermont, Alaska, Wyoming, Montana, North Dakota and South Dakota.”
|By John Dobosz, Forbes, 11/02/2012|
MarketMinder's View: Though we’d remind readers jobs data are inherently backward looking and volatile—and therefore not terribly predictive of future movement—increased non-farm payrolls indicate, to us, a relatively healthy private sector and an overall improving job market.
|By Staff, Xinhua, 11/02/2012|
MarketMinder's View: It appears China may take another step along its long path to more liberalized financial markets. Now, with that said, it remains to be seen whether they follow through on such reforms and don’t backslide, but developments like this are worth noting.
|By Jeremy Warner, The Telegraph, 11/01/2012|
MarketMinder's View: We largely disagree with the dour take here. Yes, the euro has its share of problems, and the eurozone undoubtedly faces a somewhat uphill battle in the near term to restore long-term growth and competitiveness. But that needn’t guarantee widespread, long-term depression.
|By Robert Reich, Financial Times, 11/01/2012|
MarketMinder's View: We’d argue the best solution would be decreasing taxes across the board—and simultaneously beginning to pare back the role government plays in economic activity. Over time, the private sector has proved the far bigger engine of growth and wealth creation—across all income classes. We do agree, however, there’s little relation between marginal tax rate changes and overall economic growth and health—which makes it highly unlikely, in our view, tax changes tied to the “fiscal cliff” do much long-term damage to the US economy.
|By Wayne Ma and Sarah Chen, The Wall Street Journal, 11/01/2012|
MarketMinder's View: Probably to be expected, but inadvisable and unlikely to do much good in the long run, in our view. Far more important than who manufactures any given good—solar panels or anything else—is that it’s manufactured as efficiently as possible, which allows efficient producers of other goods to trade and brings benefits to all parties involved in such trade.
|By Michael Sivy, Time, 11/01/2012|
MarketMinder's View: Before answering the question, one must generally agree inequality’s been growing. When considered in terms of consumption as opposed to income, which would likely speak better to overall qualities of life, inequality hasn’t been much increasing. Furthermore, such questions typically entirely ignore the extent to which folks move between income classes over time—and data show income mobility is indeed alive and well. Making the question, in our view, rather moot.
|By Don Boudreaux, Café Hayek, 11/01/2012|
MarketMinder's View: An erudite discussion of the misguided belief property destruction—whether from a natural disaster, like Hurricane Sandy, or war—can be an overall economic positive. Equally important to considering those parties who are visibly impacted in any economic analysis is considering those who are unseen—a concept first articulated by Frédéric Bastiat.
|By Victor Nava, Real Clear Markets, 11/01/2012|
MarketMinder's View: A classic example of potential unintended consequences tied to regulations aimed at addressing issues believed proximate causes of 2008’s financial crisis—imposing overly burdensome regulatory requirements on small, community banks hardly seems the best way to address systemic stability, particularly when folks are equally concerned about the financial industry dominance of large banks.
|By Lorraine Woellert and Elizabeth Dexheimer, Bloomberg, 11/01/2012|
MarketMinder's View: “Manufacturing in the US expanded in October at a faster pace than projected as orders and production picked up, showing the industry is stabilizing.”
|By Karen Talley and Joan E. Solsman, The Wall Street Journal, 11/01/2012|
MarketMinder's View: The US economy continues exhibiting relative strength—an indicator growth likely continues for the period ahead.