|By James Bovard, The Wall Street Journal, 12/31/2012|
MarketMinder's View: We agree this legislative shuffle is quite silly, but this particular cliff likely doesn’t go down as the article suggests. For more, see our 12/31/2012 cover story, “The Milkman Cometh.”
|By Sudeep Reddy and E.S. Browning, The Wall Street Journal, 12/31/2012|
MarketMinder's View: This strikes us as particularly hyperbolic—particularly given its biggest supporting evidence is seemingly consumer sentiment surveys, which, as we’ve said before, are at best coincident and are more likely backward looking. Not to mention they overlook entirely economic fundamentals, which for the time being remain rather robust, whether we take a “fiscal cliff” dive or not.
|By Scott Gerber, Time, 12/31/2012|
MarketMinder's View: These arguments seem based primarily on assumptions with little supporting evidence. While we wouldn’t argue there’d be no consequences for businesses (big or small) should we go over the “fiscal cliff,” at this point, it’s likely many businesses already have plans of action for 2013—meaning the fiscal cliff alone likely won’t create quite the crunch asserted here.
|By William L. Watts, MarketWatch, 12/31/2012|
MarketMinder's View: This should actually provide a measure of relief. First, the raters are hardly prescient forecasters. Second, if the cliff (a political invention that can be easily altered or moved even after the fact) is the biggest threat, the world economy must be doing just fine.
|By Staff, The Wall Street Journal, 12/31/2012|
MarketMinder's View: It seems rather ironic the French constitutional court found President Hollande’s 75% top tax rate unconstitutional on the grounds it was … unfair. Fairness aside, our biggest gripe with such measures is they frequently have the opposite of the intended effect anyway. That the court struck it down at the outset potentially saves France the pain of learning that lesson the harder way.
|By Staff, Reuters, 12/31/2012|
MarketMinder's View: While there’s no guarantee these promises actually materialize—China’s turning over most of its leadership, after all—we’re at least encouraged by the Chinese central bank’s talk of continuing freeing Chinese markets in the coming year. For more see our 11/30/2012 article on The Street, “China’s Other Transition.”
|By Mark J. Perry, AE Ideas, 12/31/2012|
MarketMinder's View: “According to the American Association of Railroads, shipments of oil by rail this year will top 540,000 carloads, which will be a 46% increase over last year’s count of about 370,000 carloads. And the number of train cars carrying oil this year will be almost double the number of carloads in 2010.” More evidence supply creates demand.
|By Nick Gillespie, Reason, 12/31/2012|
MarketMinder's View: An interesting (and largely spot-on) assessment of the perceived income inequality problem in the US. For example: “Yet it is far from clear that inequality is a bad thing when it’s the result of market forces. Think about it: Do Bill Gates’ billions take bread from your mouth, or have Microsoft products allowed you to put bread in your wallet by making you more productive and the goods and services you buy cheaper?”
|By Staff, Reuters, 12/31/2012|
MarketMinder's View: As we expected, lawmakers seem to be eying an extension of the 2008 farm bill set to expire at yearend—a largely sensible move in our view. For more on the “dairy cliff,” see our 12/31/2012 cover story, “The Milkman Cometh.”
|By Neil King, Jr., The Wall Street Journal, 12/28/2012|
MarketMinder's View: First, the suggestion politics is now “more contentious than ever” ignores going on two centuries of US political history. Second, the underlying assumption such gridlock is inherently negative is misleading—on the contrary, overall, less extreme legislation (typically the end result of gridlock) is preferable from a market perspective than the extremes generally seen when politicians agree (two of the scarier words in combination, in our view).
|By Jia Lynn Yang, The Washington Post, 12/28/2012|
MarketMinder's View: Our quibble here isn’t that milk prices will rise—they very well might. Or maybe because of other factors folks aren’t considering, they fall. Regardless, this is a great example of the inherent difficulty in legislating—and the risk we run in relegating to politicians decisions that are far more efficiently (and, in our view, equitably) made by a free market.
|By Brad DeLong, Project Syndicate, 12/28/2012|
MarketMinder's View: We find little to agree with here—in particular, we disagree with the policy prescriptions toward the end. In a nutshell, increasing government involvement in the private sector’s functioning is a recipe for (over the long run) less growth and unintended consequences, not the reverse.
|By Tom Fowler and Ben Lefebvre, The Wall Street Journal, 12/28/2012|
MarketMinder's View: An excellent illustration of how supply creates demand. In this case, as US energy production has boomed recently, that’s translated to increased demand for means of transporting that energy—including tanker trains, pipelines, water transportation, etc.—leading to accelerating growth in those downstream industries.
|By Staff, Central News Agency, 12/28/2012|
MarketMinder's View: As we’ve long said, more trade is beneficial for more than just those who directly participate. Resuming talks means the chances of more progress in this area increase.
|By Mark J. Perry, AE Ideas, 12/28/2012|
MarketMinder's View: “As a direct result of America’s large and growing reserves of natural gas, there has been a dramatic decline in greenhouse-gas emissions. The fact is, carbon emissions in the United States have fallen by 13 percent over the last five years and are now at their lowest level since 1992, around the time when many of today’s college students were born.”
|By Michelle Jamrisko and Lorraine Woellert, Bloomberg, 12/28/2012|
MarketMinder's View: US economic data continue to be relatively resilient—an overall positive sign for continued expansion ahead.
|By Damian Paletta and Janet Hook, The Wall Street Journal, 12/27/2012|
MarketMinder's View: Add to the cacophony surrounding the “fiscal cliff” more noise on the debt ceiling. As we discussed during last August’s tussle, though, the debt ceiling carries little in the way of true economic or fiscal implications and is almost entirely political. For more, see our 07/12/2011 column, “Full Faith and Credit.”
|By Staff, The New York Times, 12/27/2012|
MarketMinder's View: We don’t disagree suspending tax increases would overall be preferable to higher rates. But we quibble with the notion the failure to reach a deal by the end of the year causes the massive dislocations alluded to. For one thing, we’re unaware of any changes in marginal tax rates that have singlehandedly caused a bear market or recession. For more, see our 12/19/2012 cover story, “Cliff’s Fisca-la-la-la Follies.”
|By Brian Blackstone, The Wall Street Journal, 12/27/2012|
MarketMinder's View: To believe unemployment must fall for GDP to grow is to believe something of a fallacy. Rather, as economies continue growing (as represented rather imperfectly by a positive GDP growth rate), unemployment gradually (though usually at a decent lag) falls. The chances Italy’s the exception to this observable historical trend are slim to none.
|By Staff, EUBusiness, 12/27/2012|
MarketMinder's View: An effectively protectionist measure, preventing foreigners from buying farmland likely does more harm than good. Consider: Aiming to keep farmland prices artificially higher means fewer Hungarian farmers interested in buying land can likely afford it. A freer market in the long run benefits all participants, whether domestic or foreign.
|By Allysia Finley, The Wall Street Journal, 12/27/2012|
MarketMinder's View: Political comments aside, we essentially agree with the conclusion here: “If you build a business-friendly environment, jobs and people will come.”
|By Allysia Finley, The Wall Street Journal, 12/27/2012|
MarketMinder's View: Political comments aside, we essentially agree with the conclusion here: “If you build a business-friendly environment, jobs and people will come.”
|By Patrick McGee, The Wall Street Journal, 12/27/2012|
MarketMinder's View: As with most government policies, Fed monetary policy includes the possibility of unintended consequences—this year, exceptionally low interest rates have made junk bonds increasingly popular as investors search for yield. The side benefit of that? It’s been incredibly affordable for businesses to borrow money—which should in theory help them grow more efficiently over time.
|By Martin Feldstein, Project Syndicate, 12/27/2012|
MarketMinder's View: An interesting look at some of India’s challenges and opportunities ahead.
|By Paul Krugman, The New York Times, 12/27/2012|
MarketMinder's View: While we largely disagree with Dr. Krugman’s discussions of income inequality, we definitely agree long-term projections should be taken with a significant grain of salt.
|By Cotten Timberlake, Bloomberg, 12/26/2012|
MarketMinder's View: In our view, the data here are fine. However, the rather rampant speculation as to the dip in spending from a year ago is misguided and based mostly on speculation. What’s important is sales overall continue to grow.
|By Tennille Tracy, The Wall Street Journal, 12/26/2012|
|By Chandran Nair, Financial Times, 12/26/2012|
MarketMinder's View: In our view, this piece confuses social and cultural conditions with capitalism and free market-oriented thinking, positing they’re somehow incompatible. However, we’d argue capitalism has done more to advance Asian society (and the world as a whole) than any other system.
|By Whitney Kisling, Bloomberg, 12/26/2012|
MarketMinder's View: We don’t agree with everything here, especially in light of the many ways to interpret these data. However, what’s true is overall investor sentiment continues to be rather muted, a behavioral force that’s led many folks to buy ultra-low yielding bonds instead of stocks. As folks become more confident given strong fundamentals globally, we expect more money to begin flowing toward stocks in the near future.
|By Daniel Gilbert, The Wall Street Journal, 12/26/2012|
MarketMinder's View: One of the small ironies of the Energy industry is you need energy to extract energy. Historically, diesel fuel has powered most operating drill rigs. But now, it seems some drillers are aiming to benefit from the fruits of their own labor and employ vastly cheaper natural gas.
|By Phil Gramm, The Wall Street Journal, 12/26/2012|
MarketMinder's View: “Federal subsidies for new wind-power generation will end on Dec. 31 unless they are renewed by Congress. For the sake of our economy and the smooth operation of the energy market, Congress should let the subsidies lapse. They waste taxpayer money, subvert the allocation of capital, and generate a social cost many times the price tag of the subsidies themselves.” Yup.
|By Don Boudreaux, Café Hayek, 12/26/2012|
MarketMinder's View: Professor Boudreaux extols capitalism, innovation and Styrofoam.
|By Matt Ridley, Rational Optimist, 12/26/2012|
MarketMinder's View: We find most “peak” theories lacking historical support and dismissive of myriad innovations over time that have proved them wrong. However, here’s a peak theory we generally agree with: Thanks to advances in modern technology and innovation, we produce more agriculture today with the same or fewer crop acres—a trend that doesn’t seem to be slowing.
|By Patti Domm, CNBC, 12/24/2012|
MarketMinder's View: In our view, this vastly overdramatizes the impact of the so-called fiscal cliff. For one, it’s far from a certainty the new year would begin poorly if there’s no deal—there’s scant history of higher taxes negatively impacting markets and we’ve already seen bigger reductions in government spending in the last two years than the cliff would entail. What’s more, the cliff can be retroactively eroded.
|By Caroline Salas Gage, Jody Shenn and Heather Perlberg, Bloomberg, 12/24/2012|
MarketMinder's View: This article is basically fine, it’s more the Fed policy and policymakers’ reaction that’s a misperception. Simply, focusing exclusively on one group (in this case, borrowers) is not a good basis for designing policy. And it’s highly likely the lenders are still going to demand a profit to take the risk of extending a loan.
|By Sheldon Richman, Reason, 12/24/2012|
MarketMinder's View: Correct. Incentives matter, and if you tax something (income) you tend to get less of it (as people shift how they earn, move out of state, etc.).
|By Patrick O’Connor and Peter Nicholas, The Wall Street Journal, 12/24/2012|
MarketMinder's View: We aren’t surprised there’s been no resolution yet. And there needn’t be. The January 1 deadline is arbitrary, and since the fiscal cliff is a political invention, it can be moved after the fact. For more, see today’s cover story, “The Mayan Cliff.”
|By Matthew Dalton and Stephen Fidler, The Wall Street Journal, 12/24/2012|
MarketMinder's View: To be sure, there are many hurdles to clear before any free trade deal between the US and EU becomes a reality. And it may not materialize at all. However, the concept is economically sound and—particularly if it goes beyond tariff-level restrictions and loosens regulatory barriers—would be a solid plus for both.
|By Lori Montgomery and Rosalind S. Helderman, The Washington Post, 12/21/2012|
MarketMinder's View: Political negotiations always move in fits and starts—this latest hiccup shouldn’t lower the overall likelihood of compromise. Both parties still have a vested interest in avoiding the full brunt of the fiscal cliff.
|By Lorraine Woellert and Michelle Jamrisko, Bloomberg, 12/21/2012|
MarketMinder's View: Consumer confidence, as ever, is a backward-looking indicator—and it often doesn’t match retail sales data. Watch what people do, not what they say.
|By Samuel Brittan, Financial Times, 12/21/2012|
MarketMinder's View: We wholeheartedly agree with the larger point of this piece—free markets are overall preferable to the government controlled approach. However, we quibble with the notion free market capitalism hasn’t left most everyone, overall and on average better off—despite the economy’s ups and downs in the shorter term. While income distributions have certainly changed over time, living standards worldwide have benefitted from the free market approach.
|By Mohamed El-Erian, CNBC, 12/21/2012|
MarketMinder's View: There’s just scant evidence the fiscal cliff automatically and imminently leads to recession—our economy’s weathered public spending cuts for the past two years, and though tax hikes are a negative, the private sector has enough underlying strength to at least partly offset the impact of higher taxes. Moreover, history shows similar situations lack real punch to derail the global economy or markets. For more, see our 12/7/2012 commentary, “Ken Fisher on Falling Off a Cliff and Hitting a Ceiling.”
|By Neil Irwin, The Washington Post, 12/21/2012|
MarketMinder's View: November’s strong income, consumption and durable goods reports are the latest signs of the US private sector’s underlying strength.
|By Staff, The Telegraph, 12/21/2012|
MarketMinder's View: We rather agree with the UK’s Business Secretary—reintroducing the possibility of even stricter restrictions on banks’ business models would fuel regulatory uncertainty, likely exacerbating existing headwinds against lending. This ongoing debate bears watching.
|By Nick Timiraos, The Wall Street Journal, 12/21/2012|
MarketMinder's View: Existing home sales’ rising to their highest level in three years reflects the housing sector’s considerable recent strength. Though the economy has come this far without a robust housing recovery, from here, even minor housing improvements can be a nice tailwind—but not absolutely necessary for broader economic growth.
|By Fisher Investments Editorial Staff, The Street, 12/21/2012|
MarketMinder's View: Our latest for The Street, on why the UK’s recession isn’t a blueprint for a post-fiscal cliff US.
|By Paul R. LaMonica, CNN Money, 12/20/2012|
MarketMinder's View: Instead of calling our slow but steady expansion a “Crock-Pot® recovery” needing a consumer-spending boost, we’d rather look at underlying corporate and private sector strength and the (slim) likelihood of (too much) economic headwind from concerns like the fiscal cliff when considering how 2013 may fare. As for concerns over the asserted “impact of the Fed’s quantitative easing programs is diminishing,” we’d suggest this fundamentally misunderstands the contractionary nature of QE.
|By Ellen Brown, Seeking Alpha, 12/20/2012|
MarketMinder's View: This is a tour de force in overstatement, in our view. Even if we went off the fiscal cliff in full, which is highly unlikely, the effects aren’t likely to be nearly as dire as discussed here. Second, these so-called “more effective solutions” are actually still trying to find a problem. With interest rates at less than 2% on 10-year government borrowings, it’s fairly apparent a debt crisis isn’t exactly in the immediate offing.
|By Neil Gough, The New York Times, 12/20/2012|
MarketMinder's View: We generally agree with this sentiment: “The threat of retaliatory actions by regulators, on both sides of the Pacific, may create a regulatory protectionism that will harm both economies.” This is a tiff in need of a diplomatic resolution. But at least for the moment, it seems US auditors and some smaller Chinese publicly traded firms are being caught in a bit of regulatory limbo—likely costing Chinese firms probably needed capital and potentially driving myriad other unintended consequences.
|By Staff, Reuters, 12/20/2012|
MarketMinder's View: Despite (fairly wonky) calculations, an upward revision of Q3 GDP shows that by at least one measure, the overall trend of US economic growth continued last quarter—in fact, growth accelerated relatively sharply based on Q3’s figures.
|By Neil Irwin, Washington Post, 12/20/2012|
MarketMinder's View: There are aspects of this we quibble with, such as the suggestion the US should take advantage of low interest rates to implement stimulus spending. Fact is we just don’t think that suggestion is remotely timely in a period when we’ve had three years of economic growth. But the central point—that ultra-low interest rates signify the fact US debt and deficits aren’t a looming crisis—is sound. Therefore, it seems more sensible to make macroeconomic decisions based on those economic realities—not often overstated debt fears.
|By Angeline Benoit, Manuel Baigorri and Emma Ross-Thomas, Bloomberg, 12/20/2012|
MarketMinder's View: Spain’s reforms have no doubt been trying for those affected, but it seems there are nascent signs of a payoff. Increasing foreign corporate investment in Spain, reduced labor costs and other competiveness-oriented reforms could serve as an incremental tailwind for Spain’s economy looking forward.
|By Christopher Martin and Mark Chediak, Bloomberg, 12/19/2012|
MarketMinder's View: In case there was any lingering doubt, the fact power companies and their customers will now have to subsidize those with solar panels (who already receive government subsidies!) pretty clearly illustrates the industry’s lack of economic viability. When any industry’s survival depends on a whole lot of political drive, chances are it’s not economical. Markets, not politics, should drive developments in energy markets.
|By Sudeep Reddy, The Wall Street Journal, 12/19/2012|
MarketMinder's View: Possibly—budget cuts may weigh on headline growth, and incrementally higher taxes do pose headwinds. But fiscal cliff deal or no, the US private sector’s underlying strength—as demonstrated by corporate profits and business investment—should help pull the US economy through. As it has since 2010, when falling government spending began detracting from GDP.
|By Michael Sivy, Time, 12/19/2012|
MarketMinder's View: We aren’t sure if it’s accurate to state we have one bubble—never mind three. Yes, at some juncture it’s likely Treasury yields rise, which could hurt bond owners. But there’s not much evidence this would have severe economic repercussions—and even if yields rise a good deal, US borrowing costs would remain manageable. As for the other two supposed bubbles, overall and on average, muni debt markets are healthier than this suggests, and there’s not much evidence the amount of student loans in forbearance—much of which is on the books of GSEs rather than commercial lenders—is much of an economic drag.
|By Mark Thompson, CNN Money, 12/19/2012|
MarketMinder's View: As we saw when S&P downgraded the US last year, ratings agencies’ decisions are typically reactionary, backward-looking and needn’t automatically send yields higher. In fact, S&P’s occurred at the beginning of a sharp drop in yields. Capital markets—a much better indicator of reality and the ultimate arbiter of borrowing costs—likely understand the US debt markets remain the world’s deepest, most liquid and most stable. That’s true whether or not politicians dither over the fiscal cliff.
|By Philip Stevens, The Wall Street Journal, 12/19/2012|
MarketMinder's View: In our view, the title says it all. History shows “there have been few more powerful forces for improving health in the history of humanity” than free trade, and it’s highly unlikely the US’s recent trade agreements with Asian and Latin American countries—or a potential Trans-Pacific Partnership—will prove that wrong.
|By Staff, The Wall Street Journal, 12/19/2012|
MarketMinder's View: Allowing foreign investors to trade in Chinese futures markets should boost foreign investment in capital markets overall, as it allows investors to hedge and manage risk. This would be another positive step toward opening up their economy—if the expectation becomes a reality. As ever, China’s slow financial liberalization bears watching.
|By Janet Hook, Carol E. Lee and Corey Boles, The Wall Street Journal, 12/19/2012|
MarketMinder's View: As fiscal cliff negotiations progress, both sides appear incrementally more willing to compromise on supposedly untouchable items. With both parties having a vested interest in reaching a deal, more compromises are likely on the horizon. For more, see our 12/19/2012 cover story, Cliff’s Fisca-la-la-la Follies.
|By Novrida Manurung and Yudith Ho, Bloomberg, 12/19/2012|
MarketMinder's View: In developing countries like Indonesia, public infrastructure investment is an important source of economic growth. Hence, Indonesia’s initiative to build out infrastructure on its eastern islands seems a sensible move. Over time, a more complete infrastructure should attract foreign investment and support domestic production—in essence, building infrastructure paves the way (pun intended) for the private sector to grow and thrive.
|By Rich Miller and Simon Kennedy, Bloomberg, 12/18/2012|
MarketMinder's View: The world is never free of geopolitical strife, but for decades, markets have proven resilient. That goes for Middle East tensions, territorial disputes and saber rattling as well as armed conflict. For more, revisit our research analysis, “Geopolitics and Markets – Israel and Iran.”
|By Kate Linebaugh, The Wall Street Journal, 12/18/2012|
MarketMinder's View: By being rather dour on higher stock buybacks, this piece misses that they can be a bullish feature for stocks as they reduce overall stock supply. Moreover, there’s no reason stock buybacks and capital expenditures can’t continue in tandem, as they have this year.
|By Zoltan Simon, Bloomberg, 12/18/2012|
MarketMinder's View: The reporting here is fine, but the news is concerning: While Hungarian Prime Minister Viktor Orban supposedly amended recent legislation that threatened the central bank’s independence, it seems his undue influence at the bank remains intact. Four “non-executive members” he appointed in 2011 continue overruling bank President Andras Simor and forcing Orban’s monetary policy aims—contrary to what Simor and his deputies believe is in Hungary’s best interest.
|By Angeline Benoit and Emma Ross-Thomas, Bloomberg, 12/18/2012|
MarketMinder's View: With 2012’s final auction in the books, Spain’s met all its funding targets and then some. Not all the auctions went great, and yields spiked at times, but the year overall went ok—exactly what Spain needed to stay afloat.
|By Carol E. Lee, Janet Hook and Damian Paletta, The Wall Street Journal, 12/18/2012|
MarketMinder's View: It appears both sides are inching toward compromise on extending the 2001/2003 tax cuts, which would ease one big piece of the so-called fiscal cliff. With politicians moderating, it remains highly unlikely the US goes off the cliff. For more, see our recent column on Equities.com.
|By Denise Roland, The Telegraph, 12/18/2012|
MarketMinder's View: Ireland continues hitting deficit targets, and it still appears on track for full-scale return to primary debt markets. But with growth forecasts dimming a bit, we agree Ireland—like Portugal and Spain—would likely benefit from a bit more troika flexibility over its tax policies.
|By Youkyung Lee, Associated Press, 12/18/2012|
MarketMinder's View: An in-depth look at one of the key issues in Wednesday’s South Korean presidential election, chaebol reform. How Korea’s next government addresses corporate corruption and the ownership structure of these mega-conglomerates will be key to the nation’s economic emergence and continued growth. For more, see our recent column on Equities.com.
|By Liam Halligan, The Telegraph, 12/17/2012|
MarketMinder's View: This largely misinterprets enthusiasm for shale gas developments, in our view. Rather than holding onto them as the only positive in a world of negatives, we’d suggest such developments are rather a hallmark of free-market, capitalist societies, wherein individuals’ creativity and innovation help spark the next big idea that changes the way we do business in some form for the foreseeable future. Until the next innovation comes along—and that is a process that is a perpetual force for societal good.
|By Steven Mufson, The Washington Post, 12/17/2012|
MarketMinder's View: The tongue-in-cheek recommendation here starts from the presumption US federal debt levels are either problematic now or soon will be. Yet the multi-generational low yields on Treasurys suggest that isn’t the case. Oh, and the central theme here does highlight an interesting, but oft-overlooked point: The asset side of the US balance sheet easily outweighs the liability side. Taken together, this alludes to the fact our debt levels are still quite affordable—not indicating we ought to consider selling off state-owned lands.
|By Shahien Nasiripour, Financial Times, 12/17/2012|
MarketMinder's View: As we’ve alluded to many times before, vaguely written regulations can often become solutions in search of problems. The reason many countries are delaying Basel III implementation is it will significantly impact their ability to lend or invest money and help further grow the economy—and the slow-go approach is preferable, in our view. For more, see our 12/11/2012 cover story, “Regulation Deliberation.”
|By John Detrixhe and Matt Robinson, Bloomberg, 12/17/2012|
MarketMinder's View: Despite global credit downgrades by ratings agencies, markets haven’t been much impacted as yields remain steady and borrowing costs for European countries continue to drop. For more on recent credit downgrades, see our 11/21/2012 cover story, “Moody’s Muddled French Markets.”
|By Staff, EUbusiness, 12/17/2012|
MarketMinder's View: It seems trade is poised to get incrementally freer, with a deal close at hand between the EU and its 13th largest trade partner, Singapore.
|By Malcolm Foster, Associated Press, 12/17/2012|
MarketMinder's View: Political events ahead will be worth watching as Japanese elections conclude and Shinzo Abe moves into position as Prime Minister (again). As he acknowledges, the road ahead is likely a challenging one for Japan.
|By Pamela Boykoff, CNN Money, 12/14/2012|
MarketMinder's View: Given we’re skeptical the fiscal cliff has much impact on the US’s economy, the assumption it will negatively affect Asian economic growth seems overly exaggerated. Never mind that if Asian countries feel any pinch from the US, they likely look elsewhere to supplement growth, mitigating the overall global impact.
|By Andy Sullivan, MSN Money, 12/14/2012|
MarketMinder's View: We’ve said it before, and we’ll say it again: Considering politicians are generally in the business of maintaining their seats, it’s in their best interest to avoid the fiscal cliff. Moreover, there’s a whole host of overstatements made here offered with little to no supporting evidence—for example, “uncertainty over the cliff has weighted on markets,” which is totally un-provable, especially considering stocks haven’t been terribly weak recently.
|By Staff, BBC, 12/14/2012|
MarketMinder's View: In our view, it doesn’t much matter which credit ratings agency has or hasn’t downgraded France—historically, agencies’ credit ratings have been political decisions and/or reactionary. What matters most is investors’ appetite for French bonds and their tolerance for perceived risk, which usually is best relayed by markets, not Moody’s, Fitch or Standard and Poor’s.
|By Timothy Noah, The New Republic, 12/14/2012|
MarketMinder's View: When considering taxes, we’d suggest focusing less on largely undefined social classes and more on tax revenue reality. Namely, when you tax something you typically get less of it, and raising taxes doesn’t guarantee some specific amount of revenue. In our view, the ideal tactic would be lower, flatter taxes for everyone.
|By Noah Barkin and Mark John, Reuters, 12/14/2012|
MarketMinder's View: We largely agree common unemployment benefits and another fund for potentially struggling eurozone countries likely do little to address the real need for more economic competitiveness. But this also speaks to the high likelihood conversations about how best to ultimately “restructure” or “resolve” the eurozone’s issues continue for some time.
|By Lorraine Woellert, Bloomberg, 12/14/2012|
MarketMinder's View: That inflation remains so tame amid record Fed expansion policies speaks, in our view, to their inefficacy—and would seemingly indicate those fearing inflation aren’t likely to see it for some time. For more, see our 12/13/2012 cover story, “Ken Fisher on the Fed’s Un-Stimulus.”
|By William Kazer, The Wall Street Journal, 12/14/2012|
MarketMinder's View: Chinese manufacturing and thus-far strong Q4 growth demonstrate continued (not recovering) economic strength in China.
|By David Wessel, The Wall Street Journal, 12/13/2012|
MarketMinder's View: While we don’t favor abrupt policy shifts one way or the other, it’s important to recall GDP growth figures aren’t directly equivalent to economic health and the focus on government spending is one reason why. The drag on headline GDP from government spending cuts is real and has happened in recent quarters, but this actually simply overshadows the health of the private sector.
|By David Crane and Robert F. Kennedy, Jr., The New York Times, 12/13/2012|
MarketMinder's View: We don’t object whatsoever to the notion of a solar panel on every home, so long as consumers choose to purchase them because they’re economical sans government subsidies. Through feed-in tariffs, direct production and installation subsidies and tax credits, that’s simply not the case today.
|By Staff, Yahoo! Finance, 12/13/2012|
MarketMinder's View: This argument is predicated on the belief there would be zero economic growth without Fed policy. But what if the reverse is the case? What if it’s possible we’d actually be experiencing faster growth if the Fed pursued different policies? For more, see today’s cover story, “Ken Fisher on the Fed’s Un-Stimulus.”
|By Christopher Matthews, Time, 12/13/2012|
MarketMinder's View: Given we don’t think the “fiscal cliff” actually much of a cliff, the answer is “doubtful.” That aside, though, we find arguments like this generally overlook the economic truism if you tax something, you most often get less of it. And with a tax like the one on estates, consider it’s a double-tax at that. The likelihood increasing it brings in the hoped-for revenues is rather dubious, in our view.
|By Staff, BBC, 12/13/2012|
MarketMinder's View: The developments here will be eminently worth watching—how the EU goes about creating its bank supervisor (if it ultimately does agree) and whether that spurs tighter integration in other aspects of broad EU governance likely play a critical role in the EU’s long-term resilience.
|By Staff, The Wall Street Journal, 12/13/2012|
MarketMinder's View: This makes a lot of sense: “Perhaps the most fundamental flaw in the emerging UK reforms is the premise, shared in Europe and the US, that there’s a class of financial firms that require bespoke resolution procedures at all. Determining in advance which institutions might need rescuing—the Basel-based Financial Stability Board even keeps a running list—is a bad starting point if the aim is to ensure that governments won’t actually be tempted to rescue them.”
|By Stanley Reed, The New York Times, 12/13/2012|
MarketMinder's View: Encouraging exploration and development of possible alternative energy sources—including natural gas—is a positive not only for the UK, but for any countries with whom it trades.
|By Don Boudreaux, Café Hayek, 12/13/2012|
MarketMinder's View: An enlightened explanation of the primary pitfall of government-planned “experiments.”
|By Shobhana Chandra, Bloomberg, 12/13/2012|
MarketMinder's View: Retail sales rebounded from a weaker October, highlighting the volatility of economic data—as well as the relative resilience and strength of American consumers, in spite of the current prevalence of political bluster.
|By Staff, BBC, 12/13/2012|
MarketMinder's View: As we expected, Greece’s next tranche of aid was approved … and the eurozone continues muddling along and finding its way through an extraordinarily challenging morass.
|By Kristina Peterson and Jon Hilsenrath, The Wall Street Journal, 12/12/2012|
MarketMinder's View: To paraphrase the Fed’s statement: The beatings will continue until morale improves. The policy direction of QE3 and Operation Twist is both deflationary and contractionary. For more, see our recent commentary at InvestorPlace, “QE3: Big Debate, Little Impact.”
|By John B. Judis, The New Republic, 12/12/2012|
MarketMinder's View: We have much to quibble with here—specifically that increasing taxes on the “rich” are likely to benefit the economy. Instead, we’d argue higher taxes would reduce incentives and productivity. Put simply, the notion that speculation by the rich drove the Great Recession lacks any real supporting evidence.
|By Sebastian Mallaby, Financial Times, 12/12/2012|
MarketMinder's View: It’s a categorical error to paint the eurozone with one broad brush, which underlies many of the assumptions here. Greece, simply, isn’t anything like Germany. Why is that important here? The specific issues driving Japan’s lost 17 years are quite different and country-specific. The eurozone, on the other hand, is 17 different nations with huge variances from one to another.
|By Staff, BBC, 12/12/2012|
MarketMinder's View: Though Greece was unable to buy back as much debt as it would’ve liked, it seems fairly likely at this point it reached a sufficient level that its next aid tranche will be released later this week—and the Greek debt saga rolls slowly on. For more, see our 11/28/2012 cover story, “Greek Debt Deal, Take 43.7.”
|By Rebecca Christie & James Neuger, Bloomberg, 12/12/2012|
MarketMinder's View: That European officials recognize a slower pace to implementing major overhauls is preferable is a good thing, in our view. The more gradual approach allows markets time to digest impending changes and affords the private sector an opportunity to pose potential alternatives. For more, see today’s cover story, “Regulation Deliberation.”
|By Todd Bliman, Equities.com, 12/12/2012|
MarketMinder's View: MarketMinder Editorial Staff member Todd Bliman’s latest contribution to Equities.com discusses some under-the-radar details regarding the ongoing fiscal cliff negotiations.
|By Editorial Board, The Wall Street Journal, 12/12/2012|
MarketMinder's View: As successful individuals and businesses find ways to avoid paying higher taxes, France is getting a practical lesson in why incentives matter.
|By Mohamed El Erian, CNBC, 12/11/2012|
MarketMinder's View: The debt-ceiling provides Congressional parties with a powerful battering ram with which to exact various demands from their counterparts—meaning politicking is unlikely to abate anytime soon. But this piece neglects to recognize political discord has been nearly ever-present, though markets and the economy continue to march upward over time. For more, see our 10/11/2011 column, “It’s (Not Really Much) Different This Time.”
|By Jonathan M. Trugman, The New York Post, 12/11/2012|
MarketMinder's View: What this piece largely misses is the nation already has built-in checks and balances on spending—the budget process. The debt ceiling is merely an arbitrary limit placed by Congress on the US Treasury from issuing debt to finance what Congress has decided to spend over and above government revenues. For more, see our 12/10/2012 column on The Street, “Debt Ceiling Worries Are Overblown.”
|By Peter Morici, CNBC, 12/11/2012|
MarketMinder's View: The interpretation of global trade here suffers, in our view, from a few fatal flaws. For example, the notion “The $500 billion annual trade deficit is a major drag on domestic demand,” is fundamentally incorrect. The trade deficit shows US consumers demand foreign goods and can actually illustrate strengthening demand. The notion the US economy lacks demand because of purchases of imports is also a misperception. And there is no linkage between the trade deficit and employment or the trade deficit and budget deficit.
|By Jeffrey Sparshott and Erik Holm, The Wall Street Journal, 12/11/2012|
MarketMinder's View: To be sure, the US hasn’t recouped its entire investment in 2008’s TARP—substantial investments in US auto manufacturers, many smaller banks and homeowner aid remain. However, a major fear of the day—that taxpayer dollars would be funneled into banks and ultimately disappear forevermore—seem unlikely to truly materialize. For more, revisit our 03/16/2012 cover story, “Pulling Back (the) TARP.”
|By Carol Matlack, Businessweek, 12/11/2012|
|By Michael Weston, Investor Place, 12/11/2012|
MarketMinder's View: Fisher Investments Research Analyst Michael Weston discusses the odd, seemingly contradictory policy direction behind the Fed’s third round of quantitative easing in this contribution to InvestorPlace.
|By Fisher Investments, The Street, 12/11/2012|
MarketMinder's View: Our latest contribution to The Street.
|By Ralph Atkins, Financial Times, 12/11/2012|
MarketMinder's View: While it seems to us this piece is a bit too strong, it does highlight the overwhelming political will to keep the euro intact—despite the numerous challenges it has faced the last three years. In the long run, it’s entirely possible (if not likely) some current members leave the euro. But the foreseeable future doesn’t seem to indicate that’s a likely outcome.
|By Chuin-Wei Yap and Wayne Ma, The Wall Street Journal, 12/11/2012|
MarketMinder's View: Overall and on average, Chinese economic indicators the last few months continue to reflect stabilization and recovery. This is one more positive sign.
|By John Cassidy, The New Yorker, 12/10/2012|
MarketMinder's View: Austerity may not be a panacea for every scenario, but this argument hinges on one key point—how “austerity” is defined. By most common definitions, it’s hard to argue the UK’s actually deployed much austerity over the past several years. For more, see our 12/06/2012 cover story, “Austerity in the UK?” and our 10/22/2012 research analysis “’Austerity’, Lending and the UK Economy.”
|By Staff, Bloomberg News, 12/10/2012|
MarketMinder's View: China’s exports may have grown less than expected, but in our view, these typically volatile data don’t necessarily warrant more stimulus to aid recovery. For example, while these data were being released, so were Chinese retail sales and industrial production, which each grew nicely. For more, see our 10/19/2012 cover story, “(Still) No Chinese Hard Landing.”
|By Antonia van de Velde, CNBC, 12/10/2012|
MarketMinder's View: Though Italy now faces some political uncertainly, the argument the eurozone crisis will now be rekindled is a bit overwrought, in our view. We’ve seen many examples of neighboring countries’ commitments to preserve the euro as well as political transitions—making it rather unlikely this is the development that alone sidetracks the progress that’s been made.
|By Editorial Staff, Investor’s Business Daily, 12/10/2012|
MarketMinder's View: This echoes a sentiment we’ve written about many times in the past—if you tax something, you’ll get less of it. Put simply, despite wildly variable marginal tax rates, the historical record shows US federal tax revenues tend to be quite stable. That said, we’re skeptical either party’s plan necessarily meets their “goal,” considering both hinge on long-range forecasts. For more, see our 10/01/2012 cover story, “Fiscal Cliff, Meet Fiscal Norm.”
|By Jose De Cordoba and Kejal Vyas, The Wall Street Journal, 12/10/2012|
MarketMinder's View: Events in Venezuela certainly warrant watching as the country likely faces important political changes in the coming months and years.
|By Nick Leiber, Bloomberg BusinessWeek, 12/10/2012|
MarketMinder's View: In an effort to help grow the Afghan economy, some US companies are allowing entrepreneurs to purchase franchises overseas. Though there’s significant room for growth in the country, steps like this would allow for more capitalism, ultimately providing the country an opportunity to achieve more of that growth.
|By Staff, The Economist, 12/10/2012|
MarketMinder's View: This piece highlights how innovative technologies like tablet computers and e-readers are changing the face of education in countries like African nations, where access to information has been limited in the past—yet another of relatively unfettered capitalism’s benefits.
|By Alan Greenblatt, NPR, 12/07/2012|
MarketMinder's View: We disagree “letting the fiscal chips fall where they may would be better than doing nothing at all to address the nation's long-term deficits.” Setting aside the cliff’s potential impact, US debt is very affordable thanks to historically low interest costs—and that’s what matters most to debt sustainability. For more on the fiscal cliff and US debt (and why neither are truly impending economic disasters), see our 12/07/2012 cover story, "Ken Fisher on Falling off A Cliff and Hitting a Ceiling."
|By Tom Fairless, The Wall Street Journal, 12/07/2012|
MarketMinder's View: We’re a touch confused by the angle here considering Germany’s still growing and projected to do so this year and next. Yes, growth is slowing, and Germany could contract, but it remains a source of relative strength in the eurozone. In Europe, the core’s strength can help the weaker periphery pull through.
|By Staff, The Wall Street Journal, 12/07/2012|
MarketMinder's View: As this shows, basic supply and demand debunk the myth exporting natural gas would cause prices to rise in the US. In the short run: Yes, growing global demand would drive prices up. But those high prices would fuel more exploration and production, increasing supply and pushing prices back down. Over time, the result is more efficient pricing globally—on top of the other economic benefits the US would gain from exports.
|By George Georgiopoulos and Karolina Tagaris, MSN Money, 12/07/2012|
MarketMinder's View: With Greece’s five biggest banks participating, it appears Greece will meet the target for this week’s debt buyback—an important step in meeting new bailout terms.
|By Don Boudreaux, Café Hayek, 12/07/2012|
MarketMinder's View: We’ll translate the economic jargon here: Prices tell us how scarce a good is, allowing us to act accordingly. And for investors, price fluctuations provide information we wouldn’t otherwise have about supply and demand, helping us better navigate markets.
|By Romit Guha and Anant Vijay Kala, The Wall Street Journal, 12/07/2012|
MarketMinder's View: A (symbolic) vote by India’s upper house to let in foreign supermarkets solidifies India’s overall dedication to reform markets—an effort that, by helping boost foreign investment, should improve nutrition and quality of life throughout the country.
|By Staff, The New York Times, 12/06/2012|
MarketMinder's View: Last year’s debate over the debt ceiling went pretty much exactly like the few prior, so to call specific attention to it seems overstated. Particularly since we have averaged more than one debt ceiling increase per year since 1917. It’s a political tool, pure and simple, and we’d caution against overstating its importance. Moreover, we’d note the GAO’s estimate of $1.3 billion in increased interest costs associated with 2011’s debate, cited here, has serious calculation flaws and limitations.
|By Neil Irwin, The Telegraph, 12/06/2012|
MarketMinder's View: Perhaps, but then again, the unemployment report is always rather wonky due to its many inputs, seasonal adjustments and statistical quirks. More important than any monthly unemployment number is the longer-term trend—and in the US, employment has been steadily improving for quite a while. Given recent economic growth, tomorrow’s report likely doesn’t change that.
|By John Carney, CNBC, 12/06/2012|
MarketMinder's View: This (thankfully) low-likelihood “solution” to the US’s high debt overlooks basic economics: What happens if you stamp a certain amount of platinum as worth $1 trillion? You wreak havoc in commodities markets! Beyond that, there’s no evidence debt-monetization is even remotely necessary—US debt relative to GDP remains within historical norms, and our debt service costs remain at historic lows.
|By Keith Johnson and Tennille Tracy, The Wall Street Journal, 12/06/2012|
MarketMinder's View: There’s been much debate regarding whether the US government should permit increased LNG exports, given its abundance domestically. The conclusions of the report discussed here have been long anticipated and are widely seen as a swing factor in determining that policy. Given the findings, it seems US policy may be one major step closer to permitting greater development of LNG export infrastructure and, ultimately, shipping the product of the US shale boom abroad.
|By Joann Muller, Forbes, 12/06/2012|
MarketMinder's View: More evidence US manufacturing is alive and well: Because of high productivity and efficiency, more foreign firms are choosing to use the US as a manufacturing and export hub.
|By Bibhudatta Pradhan and Rajhkumar K. Shaaw, Bloomberg, 12/06/2012|
MarketMinder's View: Parliament’s vote to let in foreign multi-brand retailers—a proposal that seemingly died a year ago—speaks to the government’s renewed dedication to push through economic reform and politicians’ apparent realization freer markets are vital to future growth. For more, see our 9/17/2012 cover story, “India’s Foreign Retail Ping Pong.”
|By Jana Randow, Bloomberg, 12/06/2012|
MarketMinder's View: Rising manufacturing orders and exports, coupled with Germany’s positive Q3 GDP (despite its neighbors’ contraction), suggest the German economy remains a source of relative strength in the eurozone—and stronger nations can help pull the weaker areas along
|By Spencer Jakab, The Wall Street Journal, 12/05/2012|
MarketMinder's View: Perhaps, but so can normal growth-rate volatility. It’s normal for economic growth to wobble amid an ongoing expansion, hurricane or no. The larger trend is what matters more—and there, evidence points to continued growth.
|By Annalyn Kurtz, CNNMoney, 12/05/2012|
MarketMinder's View: Yes, employment may weaken in Friday’s jobs report—but employment data are backward-looking and say almost nothing about future growth or market returns. Economic growth impacts employment, not the other way around.
|By Eric Reguly, The Globe and Mail, 12/05/2012|
MarketMinder's View: While we agree Italy still has plenty of room for improvement and political risks remain, this piece misses a key point: Lower yields have allowed Italy to finance its debt more cheaply in recent months, which buys it additional time to work through its existing hurdles. Yields may very well encounter volatility, but overall, Italy’s incremental progress likely continues.
|By Editorial Staff, The Chosun Ilbo, 12/05/2012|
MarketMinder's View: The reporting here is fine—but the fact North Korea’s paternalistic dictatorship spent $100 million to boost the image of the late Kim Jong-il instead of feeding its starving people isn’t. This is yet more evidence of how badly North Korea needs an open regime, open borders and economic freedom.
|By Nirmala George, Associated Press, 12/05/2012|
MarketMinder's View: One year ago, when a similar measure failed, it seemed much-needed reforms would be few and far between. Now, it appears more and more Indian legislators understand opening their economy is the best way not only to boost growth, but to improve quality of life around the country. Letting in foreign supermarkets should vastly improve the food supply chain infrastructure, potentially helping combat India’s malnutrition problems.
|By Rowan Callick, The Australian, 12/05/2012|
MarketMinder's View: “The purpose of trade liberalization is to enhance consumer welfare and make the global supply chain more efficient—that’s what will lift people from poverty.” Hear, hear!
|By Liu Jie and Wang Zhuoqiong, China Daily, 12/05/2012|
MarketMinder's View: This is one of several pieces in China’s state-run media today touting the wonders of private enterprise. With the government promoting China’s private sector—which comprises about 60% of GDP and grows faster than state-owned firms—as key to future economic success, reforms to enable private firms to compete and secure easier financing appear likely to continue. Now, mind you, this is China’s state-run media, so whether this is really an indication of future policy direction or just window dressing remains to be seen.
|By Shobhana Chandra, Bloomberg, 12/05/2012|
MarketMinder's View: A few quibbles aside, this is a decent snapshot of US labor markets. Workers are getting more efficient, and firms are getting more productive and streamlining costs. Though this can be tough on the workers directly impacted by the latter, it does speak to firms’ nimbleness and ability to remain profitable—a key driver for stocks and private-sector strength.
|By Denise Roland, The Telegraph, 12/05/2012|
MarketMinder's View: The Autumn Statement—the blueprint for the 2013 UK budget—is a mix of tax cuts, tax increases, cuts to projected spending increases and a small rise in infrastructure investment. Overall, it likely creates winners and losers, though it’s perhaps most notable for what it didn’t include: A wealth tax, which the junior coalition partner has long argued for and some leaks suggested would be in the final package. The desire to keep the UK competitive, it seems, won out.
|By Staff, Der Spiegel, 12/05/2012|
MarketMinder's View: High corruption, long extant in Greece, only compounds its economic troubles—it’s exceedingly difficult to rein in the budget when some folks are dodging taxes or pocketing business revenue. But Transparency International’s 2012 Corruption Perception Index isn’t just another sign of how far Greece has to go—it’s also a sign of how far several former Soviet states have come, with many jumping several spots in the updated rankings.
|By Staff, EUbusiness, 12/05/2012|
MarketMinder's View: Protectionism is rearing its ugly head within the EU’s single market. And as this piece shows, it’s making air travel options scarcer, more expensive and less convenient.
|By Neil Shah, The Wall Street Journal, 12/04/2012|
MarketMinder's View: What’s more important than this one negative print is the trend of strong US manufacturing activity the last three years. For more, see today’s cover story, “Manufacturing a Connection.”
|By Nathaniel Popper and Christopher Leonard, The New York Times, 12/04/2012|
MarketMinder's View: Technologies like high-speed or high-frequency trading (HFT) tend to create both winners and losers. While HFT firms may profit and can be winners, the evidence supporting this piece’s claim it’s at the expense of retail investors seems anecdotal. In fact, HFT creates more liquidity and lowers overall volatility—thereby lowering implicit trading costs for everyday investors.
|By Tyler Cowen, The New York Times, 12/04/2012|
MarketMinder's View: In our view, this piece misses the overwhelming political will to keep the euro intact. While negotiation, posturing and politicking in the eurozone have been the norm (politicians still need to keep up appearances), officials’ actions (although often at the last minute) remain fairly uniform in supporting the currency union. Their words shouldn’t be weighted nearly as heavily as those actions.
|By Matthew Kaminski, The Wall Street Journal, 12/04/2012|
MarketMinder's View: An informative read on Germany’s balancing act between helping support the euro and keeping bailout-weary Germans content. While we don’t agree with everything here, German resolve to keep the euro intact is key.
|By Naj Srinivas, Investor’s Business Daily, 12/04/2012|
MarketMinder's View: The latest from MarketMinder Editorial Staff member, Naj Srinivas, on Catalan leader Artur Mas’s political gambit to negotiate a better tax deal with Madrid.
|By Howard Schneider, The Washington Post, 12/04/2012|
MarketMinder's View: Brazil’s recent protectionist moves likely exacerbate many of its woes today. In our view, they’d do well to follow Mexico’s recent success by promoting its open border, reducing bureaucracy and promoting foreign investment. For more see our 10/17/2012 commentary on Equities.com, “Is Mexico A New Emerging Market?”
|By Elizabeth Kolbert, The New Yorker, 12/03/2012|
MarketMinder's View: This argument proposing a carbon tax to raise revenue and cut the US budget deficit, in our view, fails to account for a key consideration—it might not work as intended. Case in point: In Australia, one of the supposed success stories cited here, the government ended up giving many families cash payments to offset the tax. Corporations might also find ways around it.
|By Bruce Bartlett, The New York Times, 12/03/2012|
MarketMinder's View: Though we agree talk of the so-called “fiscal cliff” is a bit overwrought, we disagree the debt ceiling is any more real a problem. The debt ceiling is an entirely political issue, and Congress can raise it as needed—as it’s done 105 times before. For more, see our 10/11/2012 cover story, “Scaling the Fiscal Cliff,” or our 11/15/2012 cover story, “Fiscal Cliff, Meet Fiscal Norm.”
|By Neil Irwin, The Washington Post, 12/03/2012|
MarketMinder's View: Sure, it might be—but possibility isn’t probability, and in our view, it’s highly unlikely the US economy is falling apart. The argument presented here is mainly based on manufacturing data, which are always volatile and only one piece of the overall economic picture, globally and domestically. Plus, even with a small contraction, the US was among the world’s better-performing manufacturers in November.
|By Brian X. Chen, The New York Times, 12/03/2012|
MarketMinder's View: Our quibble here is not with the reporting, rather the unintended consequences regulations can cause. In this case, innovative smartphone apps to help consumers find transportation are facing bans in certain cities due to push back from taxi and other car services.
|By Jennifer Wheary, Yahoo! Finance, 12/03/2012|
MarketMinder's View: The logic behind this argument escapes us. Low-wage jobs are not a societal ill—in many cases, the alternative could be no job at all, which likely leads to even greater hardship. There may indeed be correlation between low-wage jobs and social problems, but correlation isn’t causality. Even low-wage jobs provide valuable income to families.
|By Jonathan House and Ilan Brat, The Wall Street Journal, 12/03/2012|
MarketMinder's View: In its effort to meet 2013 deficit targets, Spain is cutting public pensions’ inflation-adjustment payments. Though this strains Spanish retirees and the €3.86 billion saved won’t have a huge impact on Spain’s deficit reduction efforts, it does signal Spain’s commitment to comply with bank bailout terms, further demonstrating the will to preserve the euro.
|By Elisabeth Dellinger, Equities, 12/03/2012|
MarketMinder's View: The latest from MarketMinder Editorial Staff member, Elisabeth Dellinger, on what Mark Carney faces as Governor of the Bank of England.
|By Fisher Investments Editorial Staff, The Street, 12/03/2012|
MarketMinder's View: The latest from MarketMinder’s Editorial Staff on China’s evolving corporate financing structure.
|By Staff, BBC News, 12/03/2012|
MarketMinder's View: Though monthly data can be volatile, continued improvement in November Chinese manufacturing data suggest more of the government’s recent stimulus is making its way to the broader economy.
|By Staff, Reuters, 12/03/2012|
MarketMinder's View: Greece’s debt-buyback—one provision of last week’s deal to release €43.7 billion in aid—is off and running. The terms appear somewhat favorable for creditors, which should increase participation by writedown-weary investors, raising the likelihood of success. For more, see our 11/28/2012 cover story, “Greek Debt Deal, Take 43.7.”
|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.
|By Steven Mufson and Katherine Shaver, The Washington Post, 10/31/2012|
MarketMinder's View: We’re not sure why it should surprise anyone that flooded subways and highways should hamper productivity somewhat—despite the Internet’s proliferation, folks still go to work, and goods must be physically transported. At the same time, this piece likely overstates the lost productivity and economic activity. People and firms are pretty nimble, and transportation alternatives exist aplenty.
|By Jim Puzzanghera, Los Angeles Times, 10/31/2012|
MarketMinder's View: Yes, the Treasury can delay the debt ceiling’s impact, as it did last time the US hit it. But it’s likely Congress simply raises the ceiling, as it’s done 106 times since 1917.
|By Geoffrey T. Smith, The Wall Street Journal, 10/31/2012|
MarketMinder's View: Our quibble isn’t with the reporting, but with the Basel Committee’s tactics. Forcing banks the world over to quickly implement tougher regulation and capital requirements strikes us as fraught with unintended consequences. The slow-go, watered-down approach to Basel III implementation taken by the US and EU, though not perfect, seems far more preferable.
|By Michael Moran, Slate, 10/31/2012|
MarketMinder's View: Probably not. It seems unlikely China’s economy continues growing at consistently gangbusters percentage rates—as the economy grows from a larger base, the incremental value added in dollar terms, though high, likely represents a smaller percentage. Moreover, even if China does represent a larger share of global GDP and the US’s share pulls back a bit, that’s more a quirk of mathematics than a sign of Chinese supremacy. For more, see our recent column on Investor’s Business Daily.
|By Staff, Reuters, 10/31/2012|
MarketMinder's View: While raising taxes might meet the IMF’s requirements and increase the likelihood Portugal continues receiving bailout money, in our view, it’s not a great plan for Portugal’s economy. Rising corporate, income and consumption taxes have weighed on the private sector, likely exacerbating Portugal’s recession. If the IMF were to ease its terms and give Portugal room to cut taxes, Portugal could likely “turn the page” more quickly.
|By Nektaria Stamouli and Philip Pangalos, The Wall Street Journal, 10/31/2012|
MarketMinder's View: Despite signs of fracturing in Greece’s governing coalition, Parliament approved measures to restart Greece’s stalled privatization drive—a welcome development as Greece approaches next week’s budget legislation, on which Greece’s next aid tranche hinges (for now). For more, see our 10/30/2012 cover story, “A Look Around the Eurozone.”
|By Zhao Xiao and Shi Guicun, Xinhua, 10/31/2012|
MarketMinder's View: While China’s broader economy appears poised for reacceleration, private firms face a difficult road ahead unless officials lighten their regulatory and tax burdens, remove barriers to market entry and widens corporate financing options. This piece outlines some sensible ways to achieve this.
|By Alistair Heath, The Telegraph, 10/31/2012|
MarketMinder's View: Though this piece is a bit hyperbolic, it makes a fair point: The UK tax code, like its US counterpart, is likely way too complex—many tax breaks simply aren’t used because individuals and business owners aren’t aware of them. Simplifying the tax code—replacing loopholes with low, flat rates—would not only likely make the overall tax burden easier, but it would help tax preparation costs stop sucking up significant capital.
|By Nirmala George, Associated Press, 10/31/2012|
MarketMinder's View: An interesting look at the issues hindering labor markets in India, where private and state-run firms offer few entry-level positions. Compounding problems: “Despite low wages, foreign companies aren’t rushing in to plug the gaps, wary of unpredictable turns in government policy …” A freer economy would likely bring far more employment opportunities.
|By Fisher Investments Editorial Staff, The Street, 10/31/2012|
MarketMinder's View: Our latest for The Street—on China’s Herculean task of reforming its 144,700 state-run businesses.
|By Staff, Central News Agency, 10/31/2012|
MarketMinder's View: Taiwan’s new incentives for expatriate business-owners to return home includes several sensible measures, like lowering tariffs on manufacturing equipment and easing restrictions on hiring foreign workers. However, a better approach would be to remove these barriers altogether, allowing for freer movement of goods, labor and capital.
|By David Larrabee, Seeking Alpha, 10/30/2012|
MarketMinder's View: The Halloween Indicator, “sell in May and go away” and other such aphorisms simply aren’t predictive. Moreover, repeated success in such short-term investing moves requires a cooperative market and consistently perfect exit and re-entry points—a near-impossibility. We suggest ignoring such seasonal sayings and instead focusing on the global fundamentals broadly affecting capital markets.
|By Andrew Main, The Australian, 10/30/2012|
MarketMinder's View: High frequency trading continues to be a favorite target for those who fear market distortions. However, there’s little evidence HFT and other algorithmic trading are the culprits responsible for high volatility. Likewise, in our view, many folks fail to acknowledge the myriad benefits of HFT, like more liquidity and more efficient pricing.
|By Leslie Hook and Jennifer Hughes, Financial Times, 10/30/2012|
MarketMinder's View: In our view, this piece likely makes mountains out of molehills. Corporate balance sheet composition frequently shifts as a product of changing market conditions, and the shifts described here seem more backward-looking than signs of things to come. Though Chinese growth has slowed, it’s still strong relative to the rest of the world, and recent stimulus measures are starting to flow through to the broader economy. That should bode well for consumers and Chinese corporations.
|By Don Boudreax, Café Hayek, 10/30/2012|
MarketMinder's View: Speculators are often decried when various commodity prices rise. However, many folks fail to realize speculation is quite useful and, as this piece points out, something we all frequently engage in.
|By Staff, Reuters, 10/30/2012|
MarketMinder's View: Though this index is just one way to gauge home prices and its construction isn’t ideal, it does provide more evidence of an ongoing housing recovery. While not necessary for continuing economic growth, it’s certainly a positive that could provide an additional economic tailwind moving forward.
|By David Roman, The Wall Street Journal, 10/30/2012|
MarketMinder's View: A Spanish “bad bank” to buy up assets from its troubled regional lenders likely helps restore confidence in Spanish financial institutions and gets credit flowing again—critical steps to Spain’s ongoing recovery. Perhaps this will diminish calls for a Spanish bailout from pan-European parties—a move we, like Spanish leaders, find unnecessary given currently manageable Spanish debt yields.
|By Angeline Benoit and Emma Charlton, Bloomberg, 10/29/2012|
MarketMinder's View: It’s no secret Spain’s had its problems over the past several years—so less–than-stellar growth is largely to be expected. However, with continued support from eurozone neighbors, Spain has time to continue reforms aimed at getting back on track and ultimately becoming a more sustainable, competitive economy.
|By Staff, Reuters, 10/29/2012|
MarketMinder's View: As has been the case recently, there seems to be some debate in France over how to increase its economic competitiveness. Our suggestion? Rather than quibbling over which taxes to cut and which to increase, decrease most of them (if not all), at least incrementally—such a move likely ultimately increases tax receipts as businesses and individuals earn more and undoubtedly helps France’s overall competitiveness.
|By Liza Jansen, CNBC, 10/29/2012|
MarketMinder's View: Though the UK economy’s been less than ideal, we very much disagree Britain’s a “submerging rather than emerging market”—particularly since preliminary data show the UK economy grew 1% in Q3. By no means is this gangbusters growth, but it’s hardly grounds for the regression noted in this piece.
|By Robert J. Samuelson, Investor’s Business Daily, 10/29/2012|
MarketMinder's View: “Job creation in the private sector is mostly a spontaneous and circular process. People buy things they need and want. Or businesses and private investors take risks by investing in new products, technologies and factories. All this spending, driven by self-interest and the profit motive, supports more jobs.” Well said. For more, see our 08/07/2012 column, “Government Chicken or Private-Sector Egg?”
|By Elisabeth Dellinger, Investor's Business Daily, 10/29/2012|
MarketMinder's View: The latest from MarketMinder editorial staff member, Elisabeth Dellinger.
|By Richard Barley, The Wall Street Journal, 10/29/2012|
MarketMinder's View: Despite likely contracting headline GDP, Portugal is gradually moving down the road to recovery, with exports increasing rather dramatically year to date and first steps toward a return to credit markets. Provided Portugal continues its progress and investors remain confident in the country, these are potential positives for Portugal itself and the eurozone as a whole.
|By James Angelos, The Wall Street Journal, 10/29/2012|
MarketMinder's View: Budget talks continue as Greece tries to secure a second round of aid from Germany and the troika. Though no deal has been made yet, it seemingly continues to be the case all parties involved are committed to finding long-term, sustainable solutions.
|By Larry Elliott, The Guardian, 10/26/2012|
MarketMinder's View: While it’s possible recent UK economic growth may not continue rapidly, fact is the UK’s experiencing some positive turnaround in GDP, consumer spending and service sector output. Headwinds remain, but not the ones described here—for more on this, see our 10/22/2012 research analysis, “‘Austerity,’ Lending and the UK Economy.”
|By Mark Thompson, CNN Money, 10/26/2012|
MarketMinder's View: Spain’s unemployment rate is indeed pretty dire, but this piece fails to draw key conclusions about the shrinking public sector. Cutting the public sector frees room for the private sector to grow. If Spain pursues economic reform as aggressively as it’s pursued spending cuts—making it easier for private firms to compete and removing barriers to growth—private firms should absorb many of these displaced government workers over time.
|By Scott Patterson, The Wall Street Journal, 10/26/2012|
MarketMinder's View: We’ve no quibble with the reporting here—our beef is with the Volcker rule itself and some politicians’ steadfast belief our financial system is somehow likely at risk without it. In our view, the rule’s likely a solution in search of a problem. The potential for conflicting standards and applications of the rule, described here, only exacerbates the rule’s inefficiencies. For more on Dodd-Frank, see our 10/12/2012 cover story, “Dodd-Frankly, That’s Dumb.”
|By Stephen Gandel, CNN Money, 10/26/2012|
MarketMinder's View: Yes, Q3 earnings thus far aren’t earthshattering. But that’s more a function of the high comparison bar set by last year’s gangbusters growth than actual corporate weakness. Earnings regularly decelerate as bull markets mature. That needn’t signal an immediate end to the bull market and economic expansion. Corporate profits can and likely do continue growing from all-time highs.
|By Howard Schneider, The Washington Post, 10/26/2012|
MarketMinder's View: This is a rather sensible take on the eurozone’s periphery. Small signs of recovery are showing across the board, particularly in rising bank deposits and falling borrowing costs—both signs of increased confidence in the euro area. Though this doesn’t guarantee it’s all smooth-sailing from here, it’s still progress and a positive.
|By Mark J. Perry, Carpe Diem, 10/26/2012|
MarketMinder's View: “Instead of complaining, we should thank China for its generous foreign aid to America through its currency policy, and thank them for all of the US jobs that are supported through the billions of dollars of annual savings from China’s ‘everyday low prices.’” The outcry against China’s currency valuation is seemingly more a political issue than an economic problem.
|By Lucia Mutikani, Reuters, 10/26/2012|
MarketMinder's View: A 2% rise in Q3 GDP is welcome news, though government spending’s high contribution perhaps takes some of the luster off. Still, some private-sector components showed underlying strength—including housing and consumer spending, which was the largest contributor to headline growth.
|By Jake Wallis Simons, The Telegraph, 10/25/2012|
MarketMinder's View: Thanks to technology and free markets, entrepreneurs have vastly expanded financing options—a particularly welcome development in the UK, where entrepreneurs’ and small businesses’ continue to have difficulty securing bank loans.
|By Philip Aldrick, The Telegraph, 10/25/2012|
MarketMinder's View: We largely agree with the headline, but the notion a “chronic lack of demand” and government cutbacks underlie weak growth is off-base. Yes, recent VAT and other tax increases pinched consumers, but public spending has increased and contributed positively to today’s report. The UK’s larger issue is on the supply side—namely, regulatory uncertainty constraining bank lending, which hinders private-sector expansion.
|By Yaneer Bar-Yam and Greg Lindsay, Reuters, 10/25/2012|
MarketMinder's View: That “more than 40% of grain futures can now be traced to financial institutions” is hardly evidence supposed speculators are driving food prices up. Nor does this prove speculators are responsible for food riots in Haiti, India and the Middle East—meddlesome governments in these nations likely play a far greater role. Speculation actually helps keep food prices—always a function of supply and demand—less volatile overall.
|By Kana Inagaki and Kosaku Narioka, The Wall Street Journal, 10/25/2012|
MarketMinder's View: As we’ve written before, we find much to dislike with Dodd-Frank regulations. Now, it seems effects of the ambiguous legislation are rippling into foreign markets as well: As this piece highlights, many Japanese banks have stopped trading with US banks while they await more clarity on whether/how they will need to register with the CFTC. For more, see our 10/12/2012 cover story, “Dodd-Frankly, That’s Dumb”.
|By Ben McLannahan, Financial Times, 10/25/2012|
MarketMinder's View: This alleged “fiscal cliff” is more akin to the US’s 2011 debt-ceiling debate and likely to prove equally benign. While Japan’s opposition party is stonewalling the yearly government borrowing bill to force an early election, politicking likely gives way to compromise when needed—as it has every year.
|By Jake Wallis Simons, The Telegraph, 10/25/2012|
MarketMinder's View: Thanks to technology and free markets, entrepreneurs have vastly expanded financing options—a particularly welcome development in the UK, where entrepreneurs’ and small businesses’ continue to have difficulty securing bank loans.
|By Jeffrey Sparshott and Eric Morath, The Wall Street Journal, 10/25/2012|
MarketMinder's View: Durables rose 9.9% m/m in September—the fastest advance in two and a half years. Now, that hot pace was driven by volatile aircraft orders, but even under the hood orders excluding transportation grew. While one shouldn’t presume orders necessarily take off from here, it does suggest August’s lackluster print was an example of data variability rather than a sign of things to come. Overall, it appears the private sector remains healthy.
|By Sam Grobart, Bloomberg BusinessWeek, 10/25/2012|
MarketMinder's View: As this piece highlights, innovation helps create efficiencies, thus lowering costs and benefiting producers and consumers alike.
|By Eduardo Porter, The New York Times, 10/24/2012|
MarketMinder's View: Yes, “trying to push China around like a bulked-up version of 1980s Japan does not fit with our national interests.” But this piece supposes the US’s trade deficit and China’s undervalued currency are somehow detrimental to the US economy—claims there’s scant evidence (at best) to support. Chinese imports bring lower prices, greater choice, and more jobs to sell and service these products. That’s a net benefit, in our view.
|By Paul Krugman, The New York Times, 10/24/2012|
MarketMinder's View: Yes, the UK economy is struggling—but not necessarily for the reasons suggested here. Certainly the tax hikes included in the alleged “turn to austerity” have dampened output. But government spending is rising. Not falling. Other “policy choices”—namely suspect regulatory changes—are likely a bigger drag on growth. For more, see our 10/22/2012 research analysis, “‘Austerity,’ Lending and the UK Economy.”
|By Brett Arends, The Wall Street Journal, 10/24/2012|
MarketMinder's View: While there are times when it makes sense to exit stocks—particularly when an extended bear market appears likely—we agree investors have little ability to time the market repeatedly with any degree of success. Short-term moves are impossible to predict and time with certainty. Which is why the advice here is off base. As is its logic: PEs simply aren’t predictive of future returns. Selling out now, based on allegedly high valuations, could lead an investor to sell high and buy low.
|By Staff, Xinhua, 10/24/2012|
MarketMinder's View: We agree the “big three” ratings agencies are rather feckless. But there’s no reason to assume a new ratings agency would be any better. It could very well make the same backward-looking, largely useless assessments as existing raters. Markets, in our view, remain the best auditors of risk.
|By Staff, EUbusiness, 10/24/2012|
MarketMinder's View: It appears Greece is nearing a deal to get two extra years to meet EU deficit targets and some flexibility on labor market reforms. Once approved by creditors, new budget must still pass Greece’s parliament, and coalition leaders are divided over some measures, but the broader compromise is an important step toward unlocking Greece’s next aid tranche—and another sign of the prevailing will to preserve the euro.
|By Jude Webber, Financial Times, 10/24/2012|
MarketMinder's View: President Cristina Fernández de Kirchner’s at it again. This time, she’s mandating Argentine insurance companies invest 10% - 25% of their portfolios in infrastructure projects. Now, we’re all for private investment in infrastructure, but only on a voluntary basis. Argentina’s essentially appropriating private capital—a treacherous path.
|By Joe McDonald, Associated Press, 10/24/2012|
MarketMinder's View: Though it’s one data point, the HSBC flash manufacturing PMI is a sign of improvement in China’s economy. Combined with the evidence of underlying strength in the Q3 GDP report, manufacturing improvement suggests a hard landing is increasingly unlikely. For more, see our 10/19/2012 cover story, “(Still) No Chinese Hard Landing.”
|By Jim Brunsden and Rebecca Christie, Bloomberg, 10/24/2012|
MarketMinder's View: A bit of regulatory relief for Spanish and Irish banks, and hopefully a sign of things to come as EU regulators determine how—and to what extent—to apply Basel III standards to Europe’s banking system. Continued flexibility would be welcome.
|By Staff, EUbusiness, 10/23/2012|
MarketMinder's View: We continue to find this a solution in search of a problem, considering it raises barriers to capital markets activity and likely increase costs since many firms likely pass this fee to customers. Furthermore, participants haven’t agreed yet on what to do with the proceeds. For more, see our 10/10/2012 cover story, “This One Goes to 11.”
|By Ambrose Evans-Pritchard, The Telegraph, 10/23/2012|
MarketMinder's View: What a “currency war” is, we’re not sure—but Japan’s already taken several steps to curb the yuan’s rise and help keep exports competitive. That said, we’d argue Japanese officials should focus more on fostering innovation, investment, new business, labor productivity and free trade—much better means of boosting competitiveness and growth over time.
|By Stephanie Bodoni, Bloomberg, 10/23/2012|
MarketMinder's View: Throughout the ESM ratification process, European officials demonstrated their overwhelming support for the euro and its primary bailout facility. In our view, it’s unlikely this latest court challenge over the ESM’s compatibility with EU treaties—no matter which way the court rules—trumps that resolve.
|By Andrew MacDowall, Financial Times, 10/23/2012|
MarketMinder's View: Although energy prices—previously capped by the Croatian government—may rise in the short term, the EU’s free market likely brings more competition, greater efficiencies and lower prices across all segments of the economy in the medium to long term, which should make accession a net benefit for all Croatians.
|By Staff, EUbusiness, 10/23/2012|
MarketMinder's View: A sensible ruling, in our view, considering monitoring imports or reintroducing tariffs on imported South Korean cars would be a step backward from 2010’s EU-South Korea free trade agreement. Freer trade creates greater competition, lower prices for consumers and greater choices—among myriad other benefits.
|By Fisher Investments Editorial Staff, The Street, 10/23/2012|
MarketMinder's View: Our latest contribution to The Street.
|By Victoria McGrane and Scott Patterson, The Wall Street Journal, 10/23/2012|
MarketMinder's View: It’s no secret we find the Dodd-Frank legislation a morass of conflicting hodge-podge with myriad still unwritten rules and potential for untended consequences. The Volcker rule appears a prime candidate for further confusion, as the agencies responsible for drafting the rule remain deadlocked. For more on this story to watch, see our 10/12/2012 cover story, “Dodd-Frankly, That’s Dumb.”
|By Jeanne Sahadi, CNN Money, 10/22/2012|
MarketMinder's View: This argument rests on a very long-term forecast and methodology that isn’t at all clear—at best it’s shaky, and most likely it’s off base. Plus, even with the “borrowed money” used to fund recent military operations, total US debt service costs are historically low. There’s just no evidence current or future debt and national security are at all linked.
|By Jeff Cox, CNBC, 10/22/2012|
MarketMinder's View: We’d argue investors aren’t at all “oblivious” to the supposed dangers of the fiscal cliff. Rather, it seems they simply don’t expect the worst case scenario—a rational stance, in our view, considering Congress’s heavy incentive to find a workaround. And should Congress not compromise, it’s far from certain the economic impact would be as heavy as this piece suggests. For more, see our 10/11/2012 cover story, “Scaling the Fiscal Cliff”.
|By John Glover and Radoslav Tomek, Bloomberg, 10/22/2012|
MarketMinder's View: It’s no secret Greece’s public sector cuts are having a tough impact on Greek citizens and the economy. However, trimming the bloated state and cutting bureaucracy gives the private sector room to compete and the ability to do so more freely. If policymakers want to give their constituents a break, in our view, cutting taxes would be a far better way than re-increasing spending. For more, see our 10/19/2012 column, “Europe’s Great Policy Mistake.”
|By Yukio Hatoyama, The Wall Street Journal, 10/22/2012|
MarketMinder's View: Though reaching a mutual agreement may not be easy, as Japan’s former prime minister notes, breaking down trade barriers between Japan and the European Union would have myriad economic benefits.
|By Ezra Klein, The Washington Post, 10/22/2012|
MarketMinder's View: An interesting look at what labeling China a “currency manipulator” would and wouldn’t do. As this piece sums up, “Branding China a ‘currency manipulator’ is popular! … But it also doesn’t make much sense.”
|By Chris Brummitt, Associated Press, 10/22/2012|
MarketMinder's View: It’s rather refreshing to see any leader admit the failures of depending on bloated, state-run firms for economic growth—and the apparently renewed push to privatize Vietnam’s state-owned firms is encouraging. The ongoing emergence and liberalization of Vietnam and other ASEAN nations is a story to watch.
|By Joseph Stiglitz, The New York Times, 10/19/2012|
MarketMinder's View: There’s a major flaw in the core assumption upon which much of this argument is based: That the “wealthy,” who allegedly save 15%–20% or more of their income, stuff it under their mattresses and withhold it from any productive economic use. Which is just a fallacy of the first order—on the contrary, practically any dollars anyone saves, regardless of income, in some form reenters the economy as an investment. Whether it’s directly in a business venture, in the stock market, in real estate or in a savings account at the local bank, those dollars are put to work—thereby allowing continued economic growth and creating a rising tide that ultimately lifts all boats. For more, see our column on Real Clear Markets.
|By Matt Clinch, CNBC, 10/19/2012|
MarketMinder's View: In the midst of France’s fiscal reform, brewers are now facing a considerable tax increase on alcohol—which could significantly increase retail prices of beer and other spirits. Hardly seems a recipe for realistically increasing France’s competitive edge.
|By Nin-Hai Tsent, Fortune, 10/19/2012|
MarketMinder's View: As this article points out, housing is indeed recovering. But the private sector has also recovered robustly. In fact, the private sector has been, by most every way you measure it, the strongest part of the US economy.
|By Floyd Norris, The New York Times, 10/19/2012|
MarketMinder's View: We rather disagree computers were solely to blame for either 1987’s Black Monday or 2008’s financial crisis—in our view, it’s akin to blaming the dog for eating one’s homework. The reality is computers and other technology have significantly improved the smooth operating of markets and can largely be credited with spurring the degree to which they’re now fully global.
|By Staff, Reuters, 10/19/2012|
MarketMinder's View: Since joining the World Trade Organization, Russia’s quickly becoming an important trade partner for the United States. Allowing more investment abroad should benefit all parties involved as companies look to expand in new markets.
|By Mathhew Dalton, William Horobin and Vanessa Mock, The Wall Street Journal, 10/19/2012|
MarketMinder's View: This will be an interesting process to watch. Leaders have “committed” to settling on a supervisory framework by the end of this year, but it’s very likely this complicated process takes considerably longer—which would probably yield better results.
|By Christopher Emsden and Ilan Brat, The Wall Street Journal, 10/19/2012|
MarketMinder's View: “Big bond auctions in Italy and Spain gave a surprising boost to the biggest countries reeling under Europe’s debt crisis, with Italy selling a record €18 billion ($24 billion) worth—enough to satisfy its borrowing needs for the rest of the year in one unexpected stroke.”
|By Rowena Mason and Bruno Waterfield, The Telegraph, 10/19/2012|
MarketMinder's View: We agree there are benefits and efficiencies to be gained in scaling back many European governments—reforms that likely ultimately benefit European countries overall as government is able to operate without consuming as large a share of private sector tax revenues.
|By Catherine Boyle, CNBC, 10/18/2012|
MarketMinder's View: If “chugging along with successful bond auctions and a bailout specific to its banks” is what’s meant by “no man’s land,” then sure, Spain’s there. But it seems this focuses on third party expectations Spain will need more outside assistance—something markets don’t seem to agree with at the moment. Spain knows what Spain needs and will act according to that, not political pressure otherwise.
|By Andra Timu and Zoltan Simon, The Washington Post, 10/18/2012|
MarketMinder's View: The conclusion “bank taxation has no impact on Hungarian activity” seems a little off-base considering the lending slowdown the Hungarian Prime Minister cites is directly related to two years of hostile tax treatment of foreign banks, among other dastardly interventions. If you hand banks an onerous tax burden and force them to accept below-market repayment on existing loans, they don’t have much incentive to lend.
|By Annlyn Censky, CNN Money, 10/18/2012|
MarketMinder's View: Sure, headline unemployment might not be the best measure of US labor markets. But the employment-population ratio isn’t necessarily better—as this piece even admits, it includes “82 million people who simply don’t want a job.” Besides, employment data are backward-looking—this says nothing about where the economy and jobs go from here.
|By Staff, EUbusiness, 10/18/2012|
MarketMinder's View: In our view, France and Germany’s differences over Eurobonds and budget oversight are welcome. Political gridlock like this can prevent rushed, rash decisions, which lowers the likelihood of unintended consequences.
|By Bettina Wassener, The New York Times, 10/18/2012|
MarketMinder's View: Though Q3 headline growth slowed a bit, strength in some underlying components suggests “growth is picking up and that China is not at risk of hard landing.”
|By Ilona Billington and Alex Brittain, The Wall Street Journal, 10/18/2012|
MarketMinder's View: Rising retail sales suggest some underappreciated strength in the UK—evidence the economy isn’t uniformly weak, despite some persistent headwinds.
|By Mark J. Perry, Carpe Diem, 10/18/2012|
MarketMinder's View: “The September surge in new construction provides more evidence that the housing recovery of 2012 is real, sustainable and gaining momentum.” Though not necessary for economic growth, improvements in housing would be a positive.
|By Mark J. Perry, Carpe Diem, 10/18/2012|
MarketMinder's View: “The September surge in new construction provides more evidence that the housing recovery of 2012 is real, sustainable and gaining momentum.” Though not necessary for economic growth, improvements in housing would be a positive.
|By Mark J. Perry, Carpe Diem, 10/18/2012|
MarketMinder's View: “The September surge in new construction provides more evidence that the housing recovery of 2012 is real, sustainable and gaining momentum.” Though not necessary for economic growth, improvements in housing would be a positive.
|By Staff, The Economist, 10/18/2012|
MarketMinder's View: An interesting discussion of the politics and likely players in Italy’s upcoming general election.
|By Staff, Agence France-Presse, 10/17/2012|
MarketMinder's View: Our issue here isn’t with the reporting, but with the OECD’s assessment (and rather perplexing James Bond metaphor). While Spain and Greece do have eye-popping unemployment, countries like the US and UK have far healthier (albeit not perfect) labor markets. And the world, on balance, is still growing—real GDP in advanced and emerging economies is at all-time highs and rising.
|By Staff, Associated Press, 10/17/2012|
MarketMinder's View: As usual, the rater’s assessment is based on widely known information—and despite what’s suggested here, Moody’s assessment likely doesn’t factor at all into Spain’s decision on whether or not to ask the ESM for more help. Markets—specifically borrowing costs—likely drive that decision.
|By Neil Irwin, The Washington Post, 10/17/2012|
MarketMinder's View: While we agree housing likely improves from here, the potential impact on headline growth seems overstated. A sustained housing recovery would be a positive, but other segments of the economy are likely more meaningful growth drivers.
|By Staff, EUbusiness, 10/17/2012|
MarketMinder's View: Only two weeks ago, we were encouraged by Hungary’s apparent decision to leave windfall taxes on foreign investors out of its 2013 budget. But now it seems leaders have changed course: Foreign-owned utilities and banks must pay extra to help reduce Hungary’s deficit. Over time, such hostile treatment likely disincentivizes foreign firms from investing in Hungary, which would be another step back for the nation. For more, see our 10/09/2012 cover story, “Welcome Changes.”
|By Zachary A. Goldfarb, The Washington Post, 10/17/2012|
MarketMinder's View: On balance, this makes a sensible point: Despite political blustering about high borrowing from China, China is becoming a less significant creditor. Because of the unmatched depth and liquidity of US capital markets, demand for US Treasurys is healthy the world over, and US households have purchased a large share of debt issued the past few years. For more, see our recent commentary on The Street.
|By Daniel Hamermesh, Freakonomics, 10/17/2012|
MarketMinder's View: Technological advancements have allowed Austin to find a creative, market-oriented solution for its traffic problems: Tolls in a new HOV lane will vary according to traffic speed, “allowing those whose value of time is high to substitute money for their time and reducing congestion on the ‘free’ lanes for the rest of us.” Just one example of how innovation can make life better for all.
|By Editorial Board, The Wall Street Journal, 10/17/2012|
MarketMinder's View: The latest twist in the ongoing saga of Dodd-Frank and its many inefficiencies. Now, the CFTC is appealing a federal judge’s ruling that CFTC shouldn’t be required to impose position limits on derivatives contracts—limits even many CFTC officials don’t deem necessary and have admitted may cause unintended consequences. We agree with the takeaway here: Officials shouldn’t “seek to enact rules regardless of their necessity or consequence.” For more, see our 10/12/2012 cover story, “Dodd Frankly, That’s Dumb.”
|By Ambrose Evans-Pritchard, The Telegraph, 10/17/2012|
MarketMinder's View: Hyperbolic tone aside, this is a concise account of the politicking likely to dominate this week’s EU summit—between Spain, Eurobonds and Germany’s proposal to give a European Commissioner veto power over national budgets, officials will have plenty to wrangle over. We’d merely add that while Germany does have substantial skin in the game, as outlined in the last couple paragraphs, this gives German officials every incentive to continue compromising as needed to support the currency union. For more, see today’s cover story, “Capitalism, the Capitol and Capitals.”
|By Annie Lowrey, The New York Times, 10/16/2012|
MarketMinder's View: We’ve said it before and we’ll say it again: Income inequality is a political problem, not an economic scourge. The evidence a widening gap may shorten expansions is scant at best. Consider: According to NBER data, median and average post-1980 US economic expansions are about twice as long as those in the seven decades preceding it.
|By Amy Su, Taipei Times, 10/16/2012|
MarketMinder's View: Our issue isn’t with the reporting here, which is nicely objective, but with the logic behind the Taiwanese government’s intervention in equity markets. Government purchases of Taiwanese equities might have helped curb short-term volatility a bit, but there’s scant evidence this was necessary—short-term swings in either direction don’t predict future returns. Markets could easily have resumed their upward trajectory without the extra meddling.
|By Benjamin Dachis, The Globe and Mail, 10/16/2012|
MarketMinder's View: Four years after its enactment, it seems Toronto’s Land Transfer Tax’s primary achievements are raising home buying costs and dissuading many Toronto residents from purchasing new homes. Granted, the government’s primary goal appears to be curbing alleged speculation rather than raising revenue, but lowering home price volatility doesn’t do anyone much good if higher administrative costs prevent people from buying houses.
|By Rebecca Clancy, The Telegraph, 10/16/2012|
MarketMinder's View: We’re rather confused by the Office for Budget Responsibility’s report, considering UK Treasury data show public spending has continued growing. In our view, the UK’s greater economic headwind is continued weakness in lending, likely tied to ongoing regulatory uncertainty. Easing regulatory pressures would likely do more for the UK economy than increasing public investment.
|By Walter Russell Mead, The Wall Street Journal, 10/16/2012|
MarketMinder's View: We rather agree: These days, bureaucratic red tape prevents infrastructure projects from bringing much immediate boost to economic growth, and recent infrastructure plans seem too focused on old technology. Rather than pump funds into “the 21st-century equivalent of a new and improved national canal network,” governments should foster the development of information superhighways—preferably by making it easier for private firms to create and implement new technologies.
|By Eric Morath and Sarah Portlock, The Wall Street Journal, 10/16/2012|
MarketMinder's View: It seems to us the Fed’s recent launch of QE3 has succeeded in stimulating inflation fears, though we wouldn’t expect much more than that to result. But despite the very accommodative Fed we’ve seen the past four years, inflation remains benign. And in September, the same held—headline CPI rose +0.6% in the month, but nearly all of this was due to food and energy costs, which are highly volatile. Core CPI, stripping out these most volatile components, rose a hugely unalarming +0.1% m/m.
|By Staff, EUbusiness, 10/16/2012|
MarketMinder's View: Quite right, in our view. As Sweden’s Prime Minister put it, “it’s better to get it right than rush it through.” Rushing likely increases the likelihood officials create a solution in search of a problem.
|By David R. Henderson, The Wall Street Journal, 10/16/2012|
MarketMinder's View: An interesting way to use market economics to solve problems when there are no prices involved—and potentially a way to save lives. But an even better solution? “Don’t ‘design’ a market; simply allow one.”
|By Editorial Board, The Wall Street Journal, 10/16/2012|
MarketMinder's View: The perils of crony capitalism, continued. When the government chooses winners and losers, the consequences are myriad, often negative and occasionally bizarre.
|By Emily Gosden, The Telegraph, 10/16/2012|
MarketMinder's View: Permitting hydraulic fracturing seems a sensible step. US energy markets have benefited tremendously from cheap, abundant shale-based gas, and it’s likely the UK—where home heating fuel prices have risen recently—would reap similar benefits.
|By Staff, Associated Press, 10/15/2012|
MarketMinder's View: Protectionist practices like this can very well hurt those they aim to help. If “Romania’s agriculture needs investment,” as noted by the country’s minister, the source shouldn’t matter. If foreigners purchase farmland, they’ll likely plow substantial resources into production—a benefit for all involved.
|By Roger Bootle, The Telegraph, 10/15/2012|
MarketMinder's View: We see scant evidence of a “shortage of aggregate demand”—consumption is up globally, despite pockets of weakness. US consumers are healthy, and developing countries are yielding ever more middle-class and luxury consumers. We’d argue a massive wave of global supply-side reform would be more useful than a wave of fiscal stimulus.
|By Stefan Ingves, The Wall Street Journal, 10/15/2012|
MarketMinder's View: Whether Basel III is simpler is debatable—forcing banks to build counter-cyclical capital buffers, for one, seems overly complicated—but it sure is stronger and could thus prove a solution in search of a problem. Complying with Basel III could force banks to tighten credit, which is one reason some countries are delaying implementation.
|By Kevin Warsh and Scott Davis, The Wall Street Journal, 10/15/2012|
MarketMinder's View: While the “fragmentation” of the global economy and corresponding risks to growth are likely overstated, we agree leaders should refocus on increasing global trade and knocking down barriers to growth— like onerous banking regulation—and champion principles that would strengthen “free markets, free people and free trade.”
|By Peter Wise, Financial Times, 10/15/2012|
MarketMinder's View: Portugal is moving ahead with a new budget to meet bailout terms—an important step forward. Though these adjustments may prove difficult in the short term, they should help Portugal become more competitive over time.
|By Abheek Bhattacharya, The Wall Street Journal, 10/15/2012|
MarketMinder's View: An interesting look at the evolution of China’s economic policy and its slow embrace of the private sector. Now, we wouldn’t suggest this evolution is set in stone, but that Mr. Zhang has been able to formulate and teach his theories deemphasizing government’s economic utility in centrally planned China is noteworthy.
|By Patrick Allen, CNBC, 10/15/2012|
MarketMinder's View: In the eurozone’s latest compromise, it appears Greece’s creditors are willing to grant Greece extra time to enact the next round of public sector cuts. This is yet more evidence of the prevailing will to prevent the eurozone’s disorderly collapse.
|By Elaine Kurtenbach, Associated Press, 10/12/2012|
MarketMinder's View: This article seemingly interchangeably uses the terms “austerity” and “contractionary”—driving too great an emphasis on government’s role in causing economic outcomes. In our view, the eurozone’s growth issues stem far more from a lack of competitiveness than a failure to spend enough government money.
|By Charles Riley, CNN Money, 10/12/2012|
MarketMinder's View: China’s boycott of Japanese cars is a prime example of protectionism likely unintentionally harming production at home—a common feature of most protectionist policies, which typically hurt all parties involved more than they help the intended beneficiary.
|By Staff, EUbusiness, 10/12/2012|
MarketMinder's View: Spending money on state-owned companies and state infrastructure may be politically popular in Poland but is likely economically a net negative in the sense it likely hinders growth and prevents private sector job growth.
|By Matthew L. Wald, The New York Times, 10/12/2012|
MarketMinder's View: A classic case study in why the government’s attempts to engineer outcomes are usually fraught with unintended consequences—and in this case, fraud. A far better means of achieving such ends is allowing the free market room enough to develop such solutions on its own—history shows it’s reliably done that since … always.
|By Mark J. Perry, Carpe Diem, 10/12/2012|
MarketMinder's View: This enlightened revision of a New York Times article on US-Chinese solar panel trade reveals a seemingly overlooked result of tariffs on Chinese solar panels: the additional (and unnecessary, in our view) cost to American consumers. Sometimes seeing the negative effects of protectionism is as simple as word substitution.
|By Simone Meier, Bloomberg, 10/12/2012|
MarketMinder's View: More proof the eurozone economy can grow in some areas, even with declines in others—and evidence “Europe has made ‘significant progress’ in overcoming the crisis,” as German Finance Minister Wolfgang Schäuble asserted earlier this week.
|By Todd Bliman, Investor’s Business Daily, 10/12/2012|
MarketMinder's View: Our latest by MarketMinder editorial staff member, Todd Bliman, on the misperceptions created by too ardently adhering to political ideology. After all, most may agree ideology is blinding … except for theirs.
|By John Engler, The Wall Street Journal, 10/12/2012|
MarketMinder's View: “Today, outdated US tax rules make it harder for US companies to succeed against international competitors”—agreed. But hopefully politicians recognize it’s not just the overall rate, but the structure of the overall corporate tax system that presents some barriers to US companies’ ability to grow and compete globally.
|By Mohamed El-Erian, Financial Times, 10/11/2012|
MarketMinder's View: While we’d agree central banks globally certainly haven’t done much (if any) harm and have largely remained appropriately accommodative in a slow growth environment, we completely disagree their actions are creating an illusion of underlying, fundamental strength. Rather, we’d argue economic fundamentals (which exist and are relatively strong) are underappreciated by investors—which helps explain the market’s overall upward trajectory despite persistent skepticism.
|By Staff, Associated Press, 10/11/2012|
MarketMinder's View: Beware headlines like this one, which make it seem as though Germany’s economy’s already shrinking—which isn’t yet the case, though it certainly could happen. As the opening line clarifies, “Europe’s economic outlook darkened further Thursday when top economists slashed their growth forecasts for Germany and warned that public support for more financial aid to struggling countries was evaporating.” (Italics added.) That’s not the same thing as actual contraction—far from it. Given the steps Germany’s taken domestically and the eurozone has taken collectively, it’s possible Europe as a whole continues muddling through.
|By Max Lawson, The Guardian, 10/11/2012|
MarketMinder's View: We’re rather befuddled by an argument which goes something like, “Well, since we’ll still be hurt by this tax even if we don’t impose it ourselves, we might as well jump on the bandwagon.” Furthermore, the tax’s origin is seemingly in an emotionally driven desire to exact “revenge” against the banks, rather than sound economic reasoning—shaky ground indeed for legislation. For more, see our 10/10/12 cover story, “This One Goes to 11.”
|By Roger Altman, Financial Times, 10/11/2012|
MarketMinder's View: We agree housing’s made some nice progress lately, and that progress provides another economic tailwind to the US economy. But in our view, it’s a stretch from there to the suggestion housing’s recovery will drive an enormous upsurge in the total US economy—the reality is it’s just not a big enough contributor to total US output for that to be terribly likely. Though combined with other factors, we do think it likely US growth continues (and possibly accelerates) moving forward.
|By Jim Brunsden, Bloomberg Businessweek, 10/11/2012|
MarketMinder's View: Banking regulations are undoubtedly a crucial component of efficiently operating capital markets. But the changes proposed in standards like Basel III have the potential to significantly alter banks’ ability to effectively meet loan demand—and regulators would be well-advised to move cautiously in implementing any new, stricter standards.
|By Staff, Reuters, 10/11/2012|
MarketMinder's View: We agree tax cuts would likely spur at least Germany’s economy—with potential spillover effects on its neighbors.
|By Staff, Central News Agency, 10/11/2012|
MarketMinder's View: Economic opening—particularly to foreign investment—no doubt benefits both local businesses and economic activity as well as foreign participants. The trend toward increased economic openness in Asia is one worth watching.
|By Fisher Investments, The Street, 10/11/2012|
MarketMinder's View: Our latest contribution to The Street on the tendency—on both sides of the aisle—to stretch the truth in political discourse. Especially debates.
|By Diana Furchtgott-Roth, The Examiner, 10/11/2012|
MarketMinder's View: While slightly hyperbolic, the overarching point is rather right on, in our view: Attempting to legislate winners and losers for politically popular reasons primarily ends up in higher prices for everyone—and doesn’t guarantee the chosen “winner” actually wins.
|By Staff, Der Spiegel, 10/11/2012|
MarketMinder's View: An interesting look at Germany’s energy industry and some of the challenges it faces as the government intervenes and attempts to dictate future direction—in that sense, it highlights effectively the perils attendant upon such government attempts.
|By Annie Lowrey, The New York Times, 10/10/2012|
MarketMinder's View: It’s true the fiscal cliff would phase in gradually—if it even happens at all—but the notion it’s an automatic recession trigger is off base, in our view. Moreover, considering all of Congress has incentive to avoid the cliff, we continue to believe politicians ultimately agree on a workaround. For more, see our recent column, “A Closer Look at the Fiscal Cliff.”
|By Keith Jurow, Global Economic Intersection, 10/10/2012|
MarketMinder's View: Actually, we’d argue these 10 charts don’t say much of anything about the current state of housing. In our view, a much simpler analysis yields a more accurate conclusion: Home prices are finally rising again, and home supply is near record lows, so even modest increases in demand should nicely boost prices from here. Not that improved housing will be a huge economic boost, but it is an underappreciated positive.
|By Staff, EUbusiness, 10/10/2012|
MarketMinder's View: It’s a nice idea, but simply increasing public investment isn’t the way to boost European industry. Manufacturing activity tends to flow where productivity is high, labor cheap and costs of doing business not burdensome. Continued reforms to make EU economies more competitive are likely a far better means of attracting manufacturers.
|By Staff, Der Spiegel, 10/10/2012|
MarketMinder's View: A rather misguided demand, in our view—rushing into a pan-eurozone banking regulatory scheme likely increases the odds of unintended consequences. If eurozone officials move forward with their banking union, we’d argue they’re better off going as slowly as needed to find the right approach.
|By Selina Williams and James Herron, The Wall Street Journal, 10/10/2012|
MarketMinder's View: As we wrote in March, though Ireland’s Barryroe field was discovered decades ago, only recently did development become economical. Now, it seems modern discovery and extraction techniques will help the field yield enough crude to not only make Ireland self-sufficient in oil, but a net oil exporter. Behold the benefits of high oil prices.
|By Guy Dinmore and Giulia Segreti, Financial Times, 10/10/2012|
MarketMinder's View: Cutting taxes and public waste and reforming labor markets seem like sensible ways to boost Italy’s productivity and overall competitiveness—the issue of primacy (to varying degrees) in all the PIIGS.
|By Tim Loh, The Christian Science Monitor, 10/10/2012|
MarketMinder's View: As this piece shows, Europe’s flexible labor markets benefit all involved. Not only can folks easily emigrate to find work, but firms in destination countries benefit from the influx of qualified workers.
|By Simon Nixon, The Wall Street Journal, 10/10/2012|
MarketMinder's View: On balance, this is a succinct synopsis of the regulatory uncertainty hampering UK lending these days. For more, see our recent column on Equities.com, “A Theory on UK Bank Lending.”
|By James Crabtree, Financial Times, 10/09/2012|
MarketMinder's View: India pinpointed the flash crash’s origin to a single brokerage error—no algorithms, high frequency or other automated systems involved—and once the error was made, the system worked largely as intended. Yet the regulatory backlash seems likely to impede the adoption of these more advanced trading practices, which could have been one way to improve liquidity and open the country’s shallow capital markets to more investment.
|By Barry Eichengreen, Financial Times, 10/09/2012|
MarketMinder's View: This argument perplexes us—yes, other economies are growing, and the US’s share of global GDP may narrow a bit over time. But that’s secondary to the depth and liquidity of US capital markets, which remains unparalleled. That likely doesn’t change any time soon.
|By Sudeep Reddy and Bob Davis, The Wall Street Journal, 10/09/2012|
MarketMinder's View: We’re rather confused over how IMF's forecast for 3.3% global GDP growth is also a forecast for global recession. Fact is the world on balance, continues growing as strength in many areas offsets weakness in some.
|By Staff, EUbusiness, 10/09/2012|
MarketMinder's View: This is likely another example of shifting lines in European sand. Greece has already had a few months to implement these reforms, and our guess is, should Greece fail to meet the latest mandate, the EU and IMF likely redraw the line in the sand a little further out. And then a little further out again. And perhaps again.
|By Staff, EUbusiness, 10/09/2012|
MarketMinder's View: “The FTT is a proposal which diminishes growth in Europe and increases financing costs for both governments and companies.... it would be better that we avoid such a tax.” So says Sweden’s finance minister, and it sounds about right to us. The proposed FTT seems designed more to stamp out “greed” than it is to enact any specific reform or benefit to consumers—making it a solution in search of a problem, in our view.
|By Brad Plumer, The Washington Post, 10/09/2012|
MarketMinder's View: On balance, this provides a fair accounting of the various state taxes, pollution requirements and limited capacity that make California gas more costly. We’d quibble with one proposed solution—allowing imports from other states with a 25-cent tax imposed—but other ideas like scrapping costly environmental regulatory requirements seem sound. And here’s another possible solution: California could scrap its onerous gas taxes—some of the highest in the country—to help give drivers some relief.
|By Staff, The Wall Street Journal, 10/09/2012|
MarketMinder's View: We weren’t holding out hope Chavez would be exorcised from power in Venezuela, but it’s troubling to see another six years of chavismo that likely continues to set the country back. Global impact may be limited, but ordinary Venezuelans will likely continue bearing a heavy burden. For more, see our 09/19/2012 cover story, “Global Elections Update.”
|By Amy Kazmin and Richard Milne, Financial Times, 10/09/2012|
MarketMinder's View: Here’s a sign recent moves to open up retail businesses to foreign ownership in India are already beginning to pay off. As multibrand retailers begin following Ikea’s lead, more positives likely come down the road in new jobs created, infrastructure built and quality of life improved for nearly all Indians.
|By Staff, EUbusiness, 10/09/2012|
MarketMinder's View: Portugal still has plenty of issues to sort through, but officials continue rewarding progress with flexibility and aid disbursements. Markets have also rewarded Portugal’s progress with lower sovereign yields, perhaps helping the nation meet its goal of returning to primary debt markets sometime next year.
|By Staff, Associated Press, 10/08/2012|
MarketMinder's View: Beware politically expedient arguments gas prices (or any others) are the nefarious work of oil companies (or whatever supplier in question). On the contrary, the reality is gas prices are equally subject to economics—namely, supply and demand.
|By Joe Light and Ben Levinsohn, The Wall Street Journal, 10/08/2012|
MarketMinder's View: We’d suggest the sound parts of this are largely outweighed by arguments based primarily on overstatement and supposition. For example, in the course of using the past to try to predict future market direction, the piece overemphasizes 10-year-old earnings data by presuming the Shiller PE is a useful forecasting tool. It also wrongly accounts for US debt (gross versus net) and overstates the connection between debt and inflation.
|By Gavyn Davies, Financial Times, 10/08/2012|
MarketMinder's View: As we’ve written before, sluggish growth is still growth and to some extent to be expected coming out of a global financial crisis of the depth and severity of 2008’s. That said, the prospects of continued growth are not as elusive as this piece would make it seem—particularly given pockets of relative strength like the US and even Germany, among others.
|By Eric Reguly, The Globe and Mail , 10/08/2012|
MarketMinder's View: This is overly dour and underestimates the resilience of both democracy and capitalism in the long run. Consider the Netherlands, where austerity measures have been enacted, yet voters seemingly chose to return a pro-euro government to power—a hopeful sign European citizens recognize the value in reforming their economies and boosting competitiveness, despite the interim dislocations and pain that may cause.
|By Chris Farrell, Kiplinger, 10/08/2012|
MarketMinder's View: “There are many different definitions of capitalism, yet in all its variations, at its core, capitalism is a system of continuous innovation. Combined with democracy, capitalism allows for what the late Herbert Stein emphasized as ‘the triumph of a society that, while retaining certain fundamental features, had adapted almost continuously, in one direction or another, to emerging problems, perceptions and theories.’” We couldn’t have said it much better.
|By Staff, The Wall Street Journal, 10/08/2012|
MarketMinder's View: While we’d caution against relying overly on measures like the VIX, among others, we do agree folks seem firmly skeptical of markets, which historically is a sign there’s room for a bull to run.
|By Patrick Wintour and Nicholas Watt, The Guardian, 10/08/2012|
MarketMinder's View: The Brits are taking some interesting steps eminently worth watching—overall, they seem relatively slanted toward business-friendly, which would likely ultimately prove helpful in restoring economic vibrancy in the UK.
|By Ariana Eunjung Cha, The Washington Post, 10/08/2012|
MarketMinder's View: This piece highlights an interesting example of how fostering innovation can lead to potentially enormous economic efficiencies.
|By Staff, BBC, 10/08/2012|
MarketMinder's View: The European Stability Mechanism was formally launched over the weekend to the tune of roughly €500 billion—which should provide European officials pretty substantial firepower to continue working through struggling nations’ economic issues.
|By Jennifer Liberto, CNN Money, 10/05/2012|
MarketMinder's View: Forecasts like these should always be taken with a grain of salt—especially since many of the budget cuts in the “fiscal cliff” aren’t dollar-for-dollar cuts, but cuts to projected future spending increases. Moreover, politicians have every incentive to find a workaround, though negotiations may go down to the wire or extend past January 1 if Congress decides to kick the can a few times. For more, see our 07/18/2012 research analysis, “A Closer Look at the Fiscal Cliff.”
|By Gurdev Singh and Ashutosh Joshi, The Wall Street Journal, 10/05/2012|
MarketMinder's View: While many may liken India’s “flash crash” Friday to the supposed dangers of high frequency trading, fact is the market recovered almost all of its losses by close of market—using it as an excuse to limit HFT seems a solution in search of a problem, especially considering the benefits of HFT, like more liquidity and more efficient pricing.
|By Francesco Bongiovanni, The Guardian, 10/05/2012|
MarketMinder's View: We pretty much only agree with this: “Implementing multiple exchange-rate mechanisms within the eurozone is no simple matter and won't cure the fundamental ills affecting Europe.” In our view, these fundamental ills—the competitiveness gaps between core and peripheral nations—need addressing more than any hypothetical question of currency.
|By Staff, Associated Press, 10/05/2012|
MarketMinder's View: Notably, the rate fell because job growth beat expectations—a welcome development after last month’s improvement was tied more to a shrinking labor force. Overall, though unemployment is a late-lagging indicator and doesn’t presage future economic health, today’s report is yet more evidence of the economy’s recent strength.
|By Staff, Bloomberg, 10/05/2012|
MarketMinder's View: Not only does WTO membership increase Laos’s global trade options, but it also forces Laos’s economy to become much more open—lowering tariffs and other trade barriers to comply with WTO rules should benefit all Laotians over time.
|By Lara Hoffmans, Forbes, 10/05/2012|
MarketMinder's View: The latest from MarketMinder’s managing editor, Lara Hoffmans, discussing the reality (and rarity) of lost decades.
|By Ambrose Evans-Pritchard, The Telegraph, 10/04/2012|
MarketMinder's View: On the other hand, isn’t it possible Spain doesn’t actually much need a bailout at the moment? After all, it’s already secured a provisional line of credit to backstop its struggling banks, its commitment to economic reform remains (for the time being, at least) fairly steady and it has several other facilities in place aimed at shoring up the financial sector and regional governments. For more, see our 10/01/2012 column, “No One Expects the Spanish Inquisition.”
|By Stelios Bouras and Philip Pangalos, The Wall Street Journal, 10/04/2012|
MarketMinder's View: Greece and the troika may very well currently disagree on terms for Greece’s next aid tranche—but that’s a movie we’ve seen several times before. And if anything, deadlines have proven eminently moveable throughout the eurozone crisis—in our view, a positive enabling decision makers to compromise and avoid moving precipitously and causing unnecessary harm. At this point, there’s little reason to believe this time proves much different.
|By David Enrich, The Wall Street Journal, 10/04/2012|
MarketMinder's View: Ensuring adequate bank capital levels is undoubtedly critical for overall financial sector health. But going too far in the opposite direction—requiring banks maintain overly high capital ratios—can have unintended adverse effects, like hampering lending and forcing banks to further deleverage. And it would seem particularly unnecessary at the moment given banks currently have overall relatively healthy balance sheets.
|By Joseph Stiglitz, Project Syndicate, 10/04/2012|
MarketMinder's View: We largely agree expansionary monetary policies globally are unlikely to spark immediate, rampant inflation given widespread slack in capacity utilization and employment. That said, we highly doubt fiscal policy is the magic cure for economies’ current ills—there’s no lack of global government spending, either. What ultimately helps most is ensuring policies and regulations are encouraging to businesses and lenders, rather than detrimental.
|By John Gapper, Financial Times, 10/04/2012|
MarketMinder's View: “I am struck by [America’s] amazing, enduring capacity to reinvent itself through technology, a tradition reaching back to Benjamin Franklin and George Washington’s science experiments.” Precisely the capacity near-guaranteeing that, despite all the perpetual uncertainties, economic and technological progress will continue and bring a rising tide, ultimately lifting all boats.
|By Abhijit Roy Chowdhury, Bloomberg, 10/04/2012|
MarketMinder's View: India’s leaders continue taking steps which, though rather politically unpopular at the moment, are likely to ultimately help open the economy, spur progress and growth and thereby benefit its many citizens. It will be interesting to see whether politicians can avoid caving to popular pressure to reverse course.
|By Staff, Xinhua, 10/04/2012|
MarketMinder's View: As we’ve discussed before, just because one part of the globe may be struggling economically doesn’t mean other areas can’t still grow just fine. And it seems Emerging Markets are to a large extent backfilling recently relatively lower demand from European nations, helping China mostly maintain its export level.
|By Staff, Reuters, 10/04/2012|
MarketMinder's View: The creation of a so-called bad bank in Spain is yet another step toward resolution of eurozone ills. If it works as planned, it could encourage lending in Spain, which would likely help grease the economic wheels. As ever, Europe’s evolution remains a story to watch.
|By Fisher Investments, The Street, 10/04/2012|
MarketMinder's View: Our latest contribution to The Street on Spain’s impending Catalan regional election.
|By Martin Wolf, Financial Times, 10/03/2012|
MarketMinder's View: In a word: No. This piece vastly underestimates the impact of recent technological innovation—and the potential for more. For example, according to Moore’s law, electronics as we know them today will do far more for a fraction of the price. Innovations we can’t yet fathom will create new industries and revenue streams—all of which support plenty of future growth.
|By Staff, Reuters, 10/03/2012|
MarketMinder's View: Considering real global GDP is at all-time highs and growing, we’re puzzled by the claim it’ll take six more years for the global economy “to get back to decent shape.” Yes, regions like Europe may take years to sort through ongoing issues, but regional issues have always existed and needn’t prevent continued global expansion.
|By Andrew Trotman, The Telegraph, 10/03/2012|
MarketMinder's View: Considering Greece is supposed to be cutting spending and privatizing state-owned interests, spending €100 million on a race track is headscratching. Perhaps Greece’s new privatization chief should auction the contract to private firms instead.
|By Stefan Kaiser, Der Spiegel, 10/03/2012|
MarketMinder's View: There’s simply no evidence big banks are inherently “dangerous”—or that splitting retail and investment banking would have prevented 2008’s financial crisis. Lehman Brothers, cited in this article, was a pure investment bank. Forcing banks to ring-fence proprietary trading operations seems a solution in search of a problem. For more, see today’s cover story, “Songs We’ve Heard Before …”
|By Staff, BBC News, 10/03/2012|
MarketMinder's View: Scrapping arcane customs rules; improving cross-border Internet commerce, energy markets and transportation; creating a pan-European online jobs portal and relaxing entrepreneurs’ credit burdens all seem sensible ways to boost competition—and ultimately, growth. If these measures can survive the debate process and take effect, the EU likely benefits over time.
|By Andrew North, BBC News, 10/03/2012|
MarketMinder's View: Though mere talk for now, financial-sector reforms would likely benefit India over time. That the government’s pursuing a reform agenda despite strong political opposition is encouraging. For more, see our 09/17/2012 cover story, “India’s Foreign Retail Ping Pong.”
|By Douglas Porter, The Globe and Mail, 10/03/2012|
MarketMinder's View: The many ways Canada has benefited from free trade with the US and Mexico should lay to rest the notion free trade somehow hurts more than it helps. For 25 years, all Canadians have enjoyed greater choice and cheaper goods, and Canada’s economy has benefited tremendously from increased capital flows and overall modernization. And, importantly, none of this has happened at the US’s expense—America has benefited, too.
|By Brad Plumer, The Washington Post, 10/03/2012|
MarketMinder's View: As this piece illustrates, markets—not government prodding and propping—will determine which industries survive and succeed. Rather than essentially spending money and saying “let there be batteries,” we’d argue the government should focus on supply-side reforms to help all US industries be more competitive.
|By Richard Evans, The Telegraph, 10/03/2012|
MarketMinder's View: Continued fund flows from equities to fixed income is just one indicator that investor sentiment remains pretty skeptical—a sign this bull market has room to run.
|By Staff, Der Spiegel, 10/02/2012|
MarketMinder's View: There’s very little evidence, if any, that separating investing banking from retail banking would have prevented 2008’s global liquidity crunch or financial crisis—making it similarly unlikely splitting up or ring-fencing banks today would prevent future crises. In fact, it could exacerbate future liquidity crunches as banks don’t have access to the deep pools of liquidity and capital integrated banks frequently do.
|By Staff, RTT News, 10/02/2012|
MarketMinder's View: Long term forecasts are rarely very reliable or accurate. Moreover, a focus on jobs alone instead of the economy as a whole seems to put the cart before the horse. We’d suggest instead focusing more on increasing economic freedom globally.
|By Roger Lowenstein, NY Times, 10/02/2012|
MarketMinder's View: High frequency trading (HFT) isn’t the evil it’s often purported to be. In our view, it’s likely the victim of skepticism most new technologies face. But as this piece admits, HFT creates greater market liquidity and, consequently, allows prices to more accurately reflect stocks’ real values, among a number of other not insignificant benefits for markets and investors alike.
|By William L. Watts, MarketWatch, 10/02/2012|
MarketMinder's View: This strikes us as yet another over-sensationalized piece, heralding a “critical week for the euro.” But if you’ve been paying attention to Europe for any part of the past three years, hardly a week goes by where someone doesn’t think as much. Further, paying such minute attention to day-by-day developments overlooks the fact European officials’ commitment to maintaining the euro has survived every such “critical week” thus far—making it pretty likely it does this time, too.
|By Jeffry Bartash, MarketWatch, 10/02/2012|
MarketMinder's View: Although there’s probably much political banter about the fiscal cliff ahead of the November election, in our view, it’s likely politicians continue kicking the can down the road, maintaining the status quo and delaying any real changes until later (perhaps much later). That said, we find little reason to fear the “fiscal cliff.” For more, see our 07/18/2012 column, “A Closer Look at the Fiscal Cliff.”
|By Staff, The Wall Street Journal, 10/02/2012|
MarketMinder's View: We agree talk of “austerity” in Europe is largely overblown and, in many cases, ill-defined. “Four years after the worst of the financial panic and two and a half years after the euro crisis began in earnest, much of Europe remains stagnant or worse. No small part of the blame lies with the Content’s intellectual consensus that the state’s books can be balanced and ‘growth’ ignited by continuing to plunder the private economy.” Well said.
|By Benjamin Bidder, Der Spiegel, 10/02/2012|
MarketMinder's View: This concludes Georgia’s first truly democratic election and is another step forward for the young country. Although power jockeying likely continues, in our view, it’s highly possible the country’s system of checks and balances protects continued steps toward democratic change. For more, see today’s cover story, “Fisher Investments Reviews Global Elections.”
|By Erika Kinetz, Taiwan News, 10/02/2012|
MarketMinder's View: After decades of stifling economic and political oppression, this marks another positive step in Myanmar’s gradual transition to capitalism and democracy. And that’s something we can all cheer for.
|By Ambrose Evans-Pritchard, The Telegraph, 10/01/2012|
MarketMinder's View: While we agree the measures in France’s 2013 budget don’t seem likely to foster much economic growth, calling it “fiscal hell” seems more than a stretch. And while France does have some economic competitiveness issues, it’s nowhere near on par with Greece, Portugal, Spain and Italy. Thus, rather than the solutions proposed here, we’d argue France should focus on making itself more business friendly. For more, see today’s cover story, “If It Ain’t Broke, Don’t Fix It.”
|By Jim Strugger, Barron’s, 10/01/2012|
MarketMinder's View: Neither the VIX nor the put/call ratio is a reliable forward-looking indicator—moreover, short-term volatility is unpredictable and timing it with any accuracy near-impossible. But timing corrections isn’t necessary to achieving investment success—remaining disciplined and capturing long-term upswings despite the volatility along the way is far more crucial.
|By Editors, Bloomberg, 10/01/2012|
MarketMinder's View: After three years of heated politicking, more disagreement among eurozone officials doesn’t surprise. But we’ve also seen three years of compromises, and it seems likely leaders find ways to compromise as needed on the issues described here. And continued compromise buys troubled nations more time to work through their underlying issues and become more competitive.
|By Christopher Matthews, Time, 10/01/2012|
MarketMinder's View: We’re unsure how, exactly, Q2’s 1.3% GDP growth and two contracting monthly data points are evidence of a US recession. Though headline growth is slow, slow growth is still growth, and most private-sector components of the economy continue showing underappreciated strength—which doesn’t square with a coming recession.
|By Annie Lowrey, The New York Times, 10/01/2012|
MarketMinder's View: This piece rather overstates the impact of the payroll tax holiday’s sunsetting. No doubt, extra cash in consumers’ pockets would be nice. But like most small, temporary tax holidays, the payroll tax’s two percentage point reduction doesn’t seem to have had a huge positive impact, and it seems difficult to argue its ending would bring the consequences described here. For more, see our 12/30/2011 column, “Calling Time Out on the Payroll Tax Debate.”
|By Ben Protess, The New York Times, 10/01/2012|
MarketMinder's View: As well-intentioned as the rule in question may be, setting arbitrary limits on commodities derivatives trading could create price distortions, ultimately exacerbating the problem the rule aims to solve. Repealing the rule would likely promote more efficient pricing.
|By Staff, Reuters, 10/01/2012|
MarketMinder's View: US manufacturing’s September expansion doesn’t necessarily presage continued factory growth from here—monthly data are volatile—but strength in the survey’s more forward-looking components suggests fears of a deepening manufacturing contraction are premature.
|By Staff, Associated Press, 10/01/2012|
MarketMinder's View: After negotiating for months, it seems Greece’s coalition leaders have finally agreed on the latest round of debt and deficit reduction measures—a key step in their efforts to continue receiving bailout funds.
|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.
|By Paul Wiseman, MSN Money, 08/31/2012|
MarketMinder's View: While this does nicely shatter the myth that the Fed is somehow out of ammo, we rather disagree more Fed action is needed. Unemployment is a late-lagging indicator, and a growing economy likely brings improved employment over time—and with plenty of underappreciated strength in the private sector, in our view, the economy seems likely to continue growing, more Fed action or no.
|By Wayne Ma, Wall Street Journal, 08/31/2012|
MarketMinder's View: Apparently market forces are affecting the Chinese solar industry more than their government can prop it up. Perhaps if these solar companies were allowed to succeed or fail on their own merits (anywhere, not just in China), those that survive would likely be more innovative, more productive and, likely, more profitable.
|By Simon Johnson, The New York Times, 08/31/2012|
MarketMinder's View: Politics aside, there are many items here we disagree with. Not least of which is the call to put a cap on the size of big banks. Realistically, limiting bank size can limit economic growth—wealth isn’t and shouldn’t be finite. Furthermore, bank size likely provides more benefits (large loans, hedging, etc.) than the opposition would have you believe.
|By Ciaran Giles, Associated Press, 08/31/2012|
MarketMinder's View: Complying with EU officials’ conditions for helping rescue troubled banks, Spain announced its banking sector reform plans. While the efficacy of creating a “bad bank” to help unwind nonperforming assets, giving the central bank more regulatory control and raising capital requirements remains to be seen, the plan itself shows Spain’s dedication to reform and recovery.
|By Mark J. Perry, Carpe Diem, 08/31/2012|
MarketMinder's View: No one enjoys paying higher gas prices, but this piece does help put rising prices in perspective—US gas prices are among the world’s most affordable. And we’d add that there’s one big reason why: Other nations, especially in Europe, levy huge taxes on gasoline—taxes, not market forces, are the primary reason why Norwegians pay over $10 per gallon. Once again, America’s freer markets benefit society. For more on oil prices, see our 03/19/2012 cover story, “Oil Prices Other Signal.’
|By Jim Brunsden and Rebecca Christie, Bloomberg, 08/31/2012|
MarketMinder's View: If adopted as the European Commission envisions, “the proposals would be a major step toward creating an EU-wide financial services framework that can override national self-interest.” Expect heavy debate—particularly over how non-eurozone nations like the UK and Sweden would be involved, and how much sovereignty nations will be expected to cede. These issues, and the ultimate plan, bear watching in the month ahead.
|By Sarika Gangar, Bloomberg, 08/31/2012|
MarketMinder's View: Record corporate bond sales illustrate credit markets are quite a bit healthier than many assume—even in Europe. Just one of the many underappreciated positives at work today.
|By Staff, The Economist, 08/30/2012|
MarketMinder's View: The global markets aren’t without risk, but the potential disruptors described here have been widely discussed for quite some time—going on three years, in fact, in the eurozone’s case. Such broadly known issues typically don’t have much influence on stocks over time—surprises move markets.
|By Matthew Yglesias, Slate, 08/30/2012|
MarketMinder's View: Yes, “when a hurricane wrecks a bunch of houses somewhere, that leads to a surge in residential investment because there’s a localized shortage in habitable housing.” But this piece fails to mention that this investment comes at some other investment’s expense. Disaster recovery efforts don’t create economic growth—they just shift investment from other, potentially more productive areas.
|By Staff, BBC News, 08/30/2012|
MarketMinder's View: While not great news for Valencia, that the region needs €1 billion more than initially anticipated likely doesn’t change things much for Spain. Between the Regional Liquidity Fund and Instituto de Credito Oficial, it appears Spain has plenty of money to help its indebted regions. For more, see our 08/29/2011 cover story, “Homage to Catalonia.”
|By Zachary A. Goldfarb, The Washington Post, 08/30/2012|
MarketMinder's View: This rather overstates the importance of the Jackson Hole summit and the need for Fed action. Headline GDP growth may remain slow, but private sector components—the main engine of our economy—are healthier than most appreciate. With corporations cash-rich and banks flush with excess reserves, additional QE likely wouldn’t have the impact many assume.
|By Staff, Der Spiegel, 08/30/2012|
MarketMinder's View: Though the eurozone still has a tough road ahead, by some measures it does appear three years of economic reforms in the periphery are starting to take effect. Lower unit-labor costs, in particular, suggest these nations are regaining competitiveness—key to returning to growth in the years ahead.
|By Staff, Xinhua, 08/30/2012|
MarketMinder's View: Another step in China’s ongoing economic liberalization—and likely part of a broader effort to attract foreign investors, who provide an important capital source.
|By John Foley, Reuters, 08/30/2012|
MarketMinder's View: An interesting look at how close economic ties can help nations move past the occasional diplomatic flare-up—just one of the benefits of our increasingly globalized economy.
|By Anne D’Innocenzio, Associated Press, 08/30/2012|
MarketMinder's View: July consumer spending jumped, too, yet consumer confidence fell. “What Americans say and do are two different things”—and what they do, in our view, is far more telling.
|By Staff, EUbusiness, 08/30/2012|
MarketMinder's View: The Dutch election in September may not have huge implications for the most troubled eurozone nations, whose bailouts are mostly written in stone at this point. But as this piece shows, it will likely provide insight into European voters’ comfort with surrendering more state sovereignty to Brussels.
|By Annie Lowrey, The New York Times, 08/29/2012|
MarketMinder's View: Beware arguments predicated on little to no actual data—this piece is long on long-range forecasts (which we think are near-impossible to make with any degree of accuracy) and short on facts backing up its thesis, which is seemingly future growth will likely come much slower than it has in recent decades. Maybe it will! But that doesn’t preclude enormous productivity, life expectancy or standard of living gains from even seemingly incremental developments. If there is one constant in life it is change—betting against that is betting against human ingenuity.
|By Hugh Carnegy, Financial Times, 08/29/2012|
MarketMinder's View: In a country aiming to cut its budget deficit by more than €30 billion next year, this is a rather odd move. While we certainly understand unemployment is incredibly challenging for individuals facing it, the reality is governments have never proven terribly reliable sources of job creation. Far better would be for the French government to extricate itself more and allow private enterprise to do what it does best: grow and, thereby, create new jobs.
|By Saurabh Chaturvedi, The Wall Street Journal, 08/29/2012|
MarketMinder's View: We’d humbly suggest the opposite plan is likely more effective—i.e., de-regulating electricity and significantly diminishing the government’s role in overseeing generation and distribution. Instead, it seems the Indian government is mulling over plans to give regulators increased oversight—a move that, if implemented, likely helps more than it hurts, even if that’s not immediately evident.
|By Ian Mulheirn, Financial Times, 08/29/2012|
MarketMinder's View: We rather agree there’s an appropriate time and place for fiscal stimulus. And given the UK’s rather sluggish growth recently, perhaps that time is now-ish. However, basing future expectations for economic growth wholesale on government-sponsored infrastructure investment takes it to the opposite extreme—one that likely crowds the private sector out to some extent, thereby limiting its ability to contribute to growth. And make no mistake: The private sector is by far the larger economic growth engine and therefore should be released to do just that as much as possible.
|By Adam Davidson, The New York Times, 08/29/2012|
MarketMinder's View: To believe eurozone leaders’ return from vacation should be approached with fear is to presume markets are just so utterly happy-go-lucky that they’re unable to discount something everyone knows. Yet the exact opposite is more often true. Volatility can happen for just about any reason. But in our view, this isn’t a great way to build economic or market forecasts.
|By Casey Mulligan, The New York Times, 08/29/2012|
MarketMinder's View: This is a sound look at some aspects of the inherent faultiness in the CBO’s outlook for the US economy—namely, its failure to account for economic incentives, which (as we’ve said before) matter enormously. For more, see our 08/23/2012 cover story, “The CBO’s Fuzzy Math.”
|By Mark J. Perry, Carpe Diem, 08/29/2012|
MarketMinder's View: “If we’re in recession, or on the edge of one, it sure isn’t being reflected in the Michigan economy, which is doing better now than at any time during the last ten years, according to Comerica Bank’s Michigan Economic Activity Index. If we were close to a recession, wouldn’t that blue line in the chart above be going down, and not sharply up?”
|By Mark Peters, The Wall Street Journal, 08/29/2012|
MarketMinder's View: An effective illustration of how prices work: As supply decreases, prices naturally rise, meaning farms are hurt less than widely bemoaned—particularly when combined with insurance contracts held for just such instances as drought. For more, see our 07/20/2012 cover story, “Gotta Have My Pops!”
|By Meghan Bahree and Deborah Ball, The Wall Street Journal, 08/29/2012|
MarketMinder's View: A perfect foil to the Journal’s story on US companies’ leaving the US for more friendly tax climes abroad—and an illustrative example of what the US (and India) could more closely resemble, given some much needed corporate tax reform.
|By John McKinnon and Scott Thurm, The Wall Street Journal, 08/29/2012|
MarketMinder's View: No matter how much politicians attempt to legislate around all possible loopholes (in this case, passing legislation in 2004 aimed at preventing companies from leaving the US), the reality is businesses will always respond to incentives. And if the benefits of domiciling outside the US continue outweighing the negatives, companies will continue the practice. Far more effective would be simplifying and lowering the overall US corporate tax structure, thereby reversing perverse incentives created by ever-increasing legislation aimed at retaining US business.
|By Richard Barley, The Wall Street Journal, 08/28/2012|
MarketMinder's View: This strikes us as another declaration of a “critical” day/week/month for the euro. But what European officials have consistently shown is a willingness to do what it takes to prevent a disorderly eurozone breakup or other worst-case scenario. This time likely proves little different. For more, see our 08/21/2012 cover story, “Another ‘Critical’ Week for the Euro.”
|By Miles Johnson and Ralph Atkins, Financial Times, 08/28/2012|
MarketMinder's View: One of the most indebted regions in Spain, Catalonia has indicated before it may need a bailout. That the region can tap Spain’s €18 billion regional bailout fund likely mutes potential negative impacts and gives European officials more time to continue addressing issues as they arise.
|By Cynthia Lin, The Wall Street Journal, 08/28/2012|
MarketMinder's View: Consumer confidence and other sentiment-based indicators are backward looking (coincident at best), and foretell little about the future direction of markets or the economy.
|By James R. Hagerty, The Wall Street Journal, 08/28/2012|
MarketMinder's View: This piece highlights many companies’ (not just in manufacturing) frustration with the arcane and unwieldy US corporate tax structure—which arguably makes it somewhat harder for US businesses to compete as efficiently and successfully in a global environment.
|By Mark J. Perry, Carpe Diem, 08/28/2012|
MarketMinder's View: “Far from being gloomy, perhaps there’s a positive story here. A story that over the last forty years there has been significant movement by income category among American adults, as would be expected in a dynamic economy, with movement going in both directions. But on net, the changing income dynamics have been positive overall, with about 150 Americans moving up for every 100 Americans who moved down.” Well said.
|By Staff, The Independent, 08/28/2012|
MarketMinder's View: Spain’s latest bond auction was successful with lower yields and ample coverage. Of course, that doesn’t mean yields can’t rise again, but it would seemingly indicate they’re far from problematic in the shorter term.
|By Brent Kendall, The Wall Street Journal, 08/27/2012|
MarketMinder's View: The US government’s recently enacted consumption taxes on US purchases of Chinese-made tires and solar cells are retroactive in nature. So in other words, five years ago you should’ve bought American, or you’ll now pay the price. Such tariffs don’t make much economic sense when they’re not retroactive—adding that twist makes them just that much worse.
|By Brad Plumer, The Washington Post, 08/27/2012|
MarketMinder's View: It doesn’t really matter much how you get there—a dollar in the government’s coffers is one that came from the private sector. In our view, the latter is far more efficient at deploying that dollar, so we’d suggest quibbling over how government gets its “revenues” largely misses the point.
|By Dean Baker, The Guardian, 08/27/2012|
MarketMinder's View: Beyond this article’s bordering-upon-conspiratorial tenor, we differ with the notion “free trade” should mean “shared property rights.” For a trade to occur, two willing parties must enter into an exchange. Without property rights, there’s no reason for that exchange to ever occur. So no, property rights and protections for patents are not protectionist measures.
|By Ambrose Evans-Pritchard, The Telegraph, 08/27/2012|
MarketMinder's View: Prices—here for oil—are not some scourge presenting insurmountable problems. They are a transmission mechanism for matching supply and demand. Should prices stay elevated, it’s highly likely increased exploration, production and ultimately, innovation, eventually follow. The fact that doesn’t happen overnight doesn’t mean it won’t. For more, see our 03/19/2012 cover story, “Oil Prices’ Other Signal.”
|By Erik Holm, Serena Ng and Al Yoon, The Wall Street Journal, 08/27/2012|
MarketMinder's View: The New York Fed has unwound it’s 2008-era holdings of AIG debt acquired via its Maiden Lane vehicles. And it seems the story here is, once again, “toxic” assets don’t really seem very death-inducing at all. For more, see our 03/16/2012 cover story, “Pulling Back the TARP.”
|By Rainier Buergin, Bloomberg, 08/27/2012|
MarketMinder's View: This is mostly just talk, but it does help illustrate extant political will to find a cooperative solution to keep the eurozone intact.
|By Jason Zweig, The Wall Street Journal, 08/27/2012|
MarketMinder's View: Most of all, we agree with this: “When you see 9% yields in a 1% world, don’t let the word ’Royalty’ fool you into thinking you have just found the king of all income investments.” Repeat after us: There is no holy grail in investing—seeking high returns necessitates risk taking.
|By John Steele Gordon, Barron’s, 08/27/2012|
MarketMinder's View: An interesting read highlighting the fact that recent, highly publicized snafus involving trading aren’t at all new or unique.
|By Ben Chu, The Independent, 08/24/2012|
MarketMinder's View: This piece seems to confuse the justifications for pursuing QE and likely overstates its effect (ignoring the impact of a global economic expansion over that period). But even if you accept the data and theory here, we’re not sure you need a study to figure out that increasing the assets of both the wealthy and poor by 28% is going to result in a bigger absolute gain for the wealthy. That’s not being cutesy—it’s just doing math.
|By Shih Hsiu-chuan, Taipei Times, 08/24/2012|
MarketMinder's View: Unfortunately, the plan outlined here follows demand-side thinking. It seems to us, though demand-side policy may give a boost in the short term, Taiwan would be better off focusing on stimulating private spending and reducing public spending for lasting economic growth.
|By R. Scott Asen, The New York Times, 08/24/2012|
MarketMinder's View: Griping about a product from a private business costing too little seems a little silly to us—even if the product is education and the business is a private school. Realistically, prices are set by the market (read, supply and demand) and, therefore, are probably correct—and if they aren’t, market forces will likely fix the imbalance.
|By Staff, The New York Times, 08/24/2012|
MarketMinder's View: We agree with practically none of this. Claiming the economy won’t recover until housing does misses a fundamental point: The economy is at all-time high levels of output (real and nominal GDP) now. And housing comprises about 2-3% of that output. Moreover, while we agree unemployment is high and problematic for individuals, it’s is a late-lagging economic indicator—so it’s not surprising it’s still elevated. All this makes the calls here for more government involvement untimely at best.
|By Staff, BBC, 08/24/2012|
MarketMinder's View: Turns out, the UK economy contracted 0.5% in Q2, better than the initially reported 0.7% figure and signaling the UK—while still rather sluggish—is doing better than is popularly portrayed in areas like production and construction.
|By Melissa Eddy, The New York Times, 08/24/2012|
MarketMinder's View: Now, we don’t know about “must remain,” and frankly, a Grexit seems unlikely to really be disastrous at this point. But this is interesting in the sense Merkel seems to be very upfront about her intent in this latest debate over amending Greek bailouts. For more, see today’s cover story, “Ich Will Europa.”
|By Mark J. Perry, Carpe Diem, 08/24/2012|
MarketMinder's View: Signs of strength in the US manufacturing sector further illustrate the ongoing US economic expansion, despite dour sentiment elsewhere.
|By Neal Lipschutz, The Wall Street Journal, 08/23/2012|
MarketMinder's View: We’d caution against lending much credence to CBO forecasts, which have historically proven rather off-base. Furthermore, suggestions like this: “With fiscal policy, at best, only capable of avoiding being a severe drag, the Fed remains the only economic policy player around,” ignore an enormous player—the private sector. History has shown the private sector’s ability to grow its way out of sluggishness time after time, and we doubt this time turns out radically different. For more, see today’s cover story, “The CBO’s Fuzzy Math.”
|By Anatole Kaletsky, Reuters, 08/23/2012|
MarketMinder's View: This is entirely too melodramatic and conspiratorial, in our view. Not to mention it entirely ignores the benefits “peripheral” countries received in joining the euro—including a near-immediate reduction in interest rates, which in part allowed them to continue financing bloated, socialist-leaning governments. Rather than force Germany out or simply complain at the end result of generations of socialism, we’d suggest struggling eurozone nations take more steps to compete with their European brethren and instead move toward more capitalist, free market-based systems.
|By Staff, EUbusiness, 08/23/2012|
MarketMinder's View: It’s true new free trade agreements may initially require some shifting and adjustments from the participants—and may create some interim losers at the individual level. But subsidizing the companies suffering short-term difficulties likely only prolongs the transition time. A better route would be to help facilitate transitions in an effort to speed them along, thereby maximizing the country’s ability to capture as much benefit from free trade as possible.
|By Richard Barley, The Wall Street Journal, 08/23/2012|
MarketMinder's View: We disagree with several aspects of this. For one thing, volumes, whether high or low, aren’t predictive of stocks’ future direction. Nor are fund flows—far from it—particularly when the data don’t include ETFs or individual securities. But even if they did, it would mostly tell you what already happened, not what’s about to. Economic data are similarly backward looking—while stocks always look forward. There’s just nothing here that actually tells you anything forward-looking about markets.
|By Lee Hopley, The Telegraph, 08/23/2012|
MarketMinder's View: We largely agree measures aimed at goosing private-sector growth are far more likely successful (and sustainable in the long term) than those directed toward boosting consumption. Rather, as businesses grow, they’ll hire more folks, pay higher wages and thereby fairly naturally increase demand. Not to mention likely attract greater investment, potentially kicking off a strong, virtuous cycle.
|By William Harrison, Jr., The New York Times, 08/23/2012|
MarketMinder's View: While we aren’t ones to suggest megabanks are an absolute economic necessity, we’d note this is a cogent and well thought-out argument for big banks and their importance to both the global and US economies. We especially agree with this: “Large banks invest billions of dollars to deliver the products and services consumers want—investments that only a company that has achieved scale can make. Scale allows them to deliver, like big-box stores, more innovation, greater convenience and consistent, reliable service.”
|By Jamie Smyth, Financial Times, 08/23/2012|
MarketMinder's View: Ireland continues taking strongly positive steps toward returning to markets and regaining investor confidence.
|By Pierre Desrochers and Hiroko Shimizu, National Post, 08/23/2012|
MarketMinder's View: An insightful look at the benefits of innovation. “But we contend that modern practices are but the latest in a long line of innovations, the ultimate goal of which has always been to increase the accessibility, quality, reliability and affordability of humanity’s food supply.” Exactly.
|By Staff, Reuters, 08/22/2012|
MarketMinder's View: Though German rules regarding Basel implementation timeframes are still not final, this is a somewhat disappointing development. Maintaining strong capital buffers is all well and good, but giving banks time to adjust slowly while EU institutions find consensus on how to implement the new rules seems more sensible than rushing. Though, given broad improvement in banks’ balance sheets in recent years, this needn’t necessarily prompt a wave of deleveraging.
|By Brian Blackstone, The Wall Street Journal, 08/22/2012|
MarketMinder's View: Why August PMI—or any monthly datapoint—would be a tipping point for Europe is beyond us. Especially when, as this piece even points out, “output hasn’t fallen as badly as purchasing-managers’ surveys suggested it would.” Moreover, a contraction is broadly expected—continuing eurozone weakness isn’t sneaking up on anyone.
|By Mari Iwata and Takashi Mochizuki, The Wall Street Journal, 08/22/2012|
MarketMinder's View: This appears politically motivated—the government’s desperate to regain voters’ favor after last month’s sales tax hike, and Japan’s people are staunchly anti-nuclear since Fukushima. But going nuke-free is likely not the best move for Japan, considering the stiff economic headwinds presented by expensive energy imports.
|By Lori Montgomery, The Washington Post, 08/22/2012|
MarketMinder's View: It’s highly unlikely Congress does nothing to prevent the so-called fiscal cliff—and extending or modifying even some of the tax increases and spending cuts involved could materially dampen its impact. Which wouldn’t necessarily be nearly as bad as the CBO anticipates, considering its lackluster track record for projecting such things. For more, see our 07/18/2012 research analysis, “A Closer Look at the Fiscal Cliff.”
|By Staff, The Telegraph, 08/22/2012|
MarketMinder's View: The drop in exports isn’t great news for Japan, but monthly trade data are notoriously volatile—that Japan should continue recovering from last year’s earthquake in fits and starts isn’t terribly surprising.
|By Danny Gabay, The Telegraph, 08/22/2012|
MarketMinder's View: We agree heavy fiscal stimulus probably isn’t the best course of action for the UK at the moment, but we’re skeptical of the alternate solution presented here—mainly because the UK’s household debt burden isn’t as onerous as this piece suggests. Household debt service payments as a percentage of personal disposable income are at their lowest point in decades as UK consumers repaid a significant amount of debt following the 2008-2009 recession.
|By Andrew P. Morriss and Donald J. Boudreaux, The Wall Street Journal, 08/22/2012|
MarketMinder's View: “From the 1920s to the 1950s, competitive markets successfully drove improvements in transportation fuels while reducing prices. We need to unleash those forces again.” Yes.
|By Abigail Moses, Bloomberg, 08/22/2012|
MarketMinder's View: While credit default swap costs aren’t necessarily the be-all-end-all indicator of investors’ risk aversion, falling costs globally could be a sign investors are gaining confidence some of the more widely discussed risks—disorderly eurozone collapse, Chinese hard landing and the like—are less likely than feared. Improved sentiment could provide a measure of relief for equities.
|By Laura Mills, Bloomberg Businessweek, 08/22/2012|
MarketMinder's View: A big milestone in the global free-trade push—and, over time, a net benefit for all of Russian society as lower tariffs provide consumers more and cheaper choices and the gradual reduction of state subsidies forces Russian producers to become more competitive.
|By Shobhana Chandra, Bloomberg, 08/22/2012|
MarketMinder's View: Another sign of incremental improvement in US housing—not a huge economic driver, granted, but an underappreciated positive nevertheless.
|By Staff, Associated Press, 08/22/2012|
MarketMinder's View: Efforts to develop the Rason special economic zone are maddeningly slow, but it appears they’re already beginning to bear some fruit. Over time, should Rason continue demonstrating the benefits of foreign investment and freer commerce, North Korean officials may have an interesting economic policy dilemma on their hands.
|By Joe McDonald, Associated Press, 08/22/2012|
MarketMinder's View: This piece abounds with evidence demonstrating the futility of subsidies and other governmental means of supporting inefficient industries. Allowing the market to pick winners and losers is likely far more productive.
|By Richard Rahn, The Washington Times, 08/21/2012|
MarketMinder's View: While we agree higher tax rates don’t automatically increase tax revenue, we’re puzzled by the assertion US government spending as a percentage of GDP is rising rapidly—throughout this expansion, GDP has grown as government spending has fallen. Moreover, the global economy appears in far better health than described here, and as long as debt service remains relatively affordable, growing deficits aren’t necessarily an economic ill.
|By Staff, Bloomberg, 08/21/2012|
MarketMinder's View: There’s no arguing Beijing doesn’t have a traffic problem, and the government’s no doubt counting on taxing driving to bring less of it. But with fewer cars on the road, it’s likely industries relying on motorists’ purchasing and maintaining vehicles also take a hit. No matter a cause’s nobility, overlooking directly or indirectly involved parties plausibly risks unintended consequences.
|By Ben Casselman, The Wall Street Journal, 08/21/2012|
MarketMinder's View: Sure, US economic growth isn’t exactly gangbusters—but slower growth is, nevertheless, growth. GDP is at all-time highs in the US—as well as developed nations, Emerging Markets and globally—and growth seems set to continue.
|By Michael Sivy, Time, 08/21/2012|
MarketMinder's View: The “problems” here have one big thing in common: They all rest on very long-term forecasts, which are fraught with peril. Any number of unknown variables could impact future tax revenues, economic growth and spending obligations and entitlements.
|By Liyan Qi, The Wall Street Journal, 08/21/2012|
MarketMinder's View: Yet more stimulus in China, where officials remain dedicated to goosing economic growth ahead of this autumn’s handover of power. Between significantly looser monetary policy and mounting fiscal stimulus projects, a Chinese hard landing appears increasingly unlikely.
|By Staff, Investor’s Business Daily, 08/21/2012|
MarketMinder's View: The US Energy Information Agency has announced January through April CO2 emissions are down to 1992 levels—and, as this piece shows, it’s largely due to cheaper, cleaner and more readily available natural gas, brought to you largely by fracking. It appears private-sector led innovations in natural gas have succeeded where the government’s green initiatives (cough—solar—cough) thus far haven’t.
|By Emese Bartha, The Wall Street Journal, 08/21/2012|
MarketMinder's View: Spain’s biggest debt auction since March was a success—the Treasury exceeded its planned €4.5 billion target, demand was strong and yields fell for 12- and 18-month bills. For now, it appears markets continue to believe Spain will meet its obligations.
|By Mohammed El-Erian, CNNMoney, 08/20/2012|
MarketMinder's View: This analogy seems rather ridiculously stretched and makes for a muddled line of logic. If the point we’re to take away is there are internal tensions within a currency bloc since the economies are subject to different pressures, fine. But in our view, the dramatic “fix or fail” called for at the article’s conclusion aren’t the only choices.
|By Bnyamin Appelbaum, The New York Times, 08/20/2012|
MarketMinder's View: It’s entirely possible moving more carefully on foreclosures has impacted the public’s perception of President Obama’s handling of the economy. But pursuing more “aggressive,” short-term focused and demand-focused policies, like enforced mortgage-principal reductions (cramdowns), could have severe side effects not considered here—like causing banks to greatly tighten credit availability over the long term. For a recent discussion of similar suggestions, see our 07/18/2012 contribution to Investors’ Business Daily.
|By Wayne Ma and Sarah Chen, The Wall Street Journal, 08/20/2012|
MarketMinder's View: Another rhetorical jab in the solar trade tit-for-tat—which seems quite senseless overall, considering the industry’s small size and scope. That and the fact the trade disagreements have seemingly driven up prices, which likely acts as a disincentive to broader alternative energy adoption by consumers. For more, see our commentary published at Real Clear Markets.
|By Ambrose Evans-Pritchard, The Telegraph, 08/20/2012|
MarketMinder's View: We’re sure there are unique political pressures that could incrementally help keep Finland in the euro, but we’d not be so quick to discount the economic implications of the common currency or the eurozone’s will to hold it together. This article seemingly discounts those factors—which have largely told the tale of the last three years—in favor of speculation.
|By Staff, BBC, 08/20/2012|
MarketMinder's View: This quote seems quite accurate to us: “‘I can tell you what is not expected … that strong positions will be laid out or significant decisions taken. That will not happen.’” We fully expect this round of eurozone meetings will show continued gradual movement, if any.
|By Staff, Central News Agency, 08/20/2012|
MarketMinder's View: Still just talk at this point, but a deal’s resulting would be a plus—and it’s a story worth watching.
|By Mark J. Perry, Carpe Diem, 08/20/2012|
MarketMinder's View: “According to the broadest and most comprehensive measure of US economic conditions, we're nowhere near a recession.…”
|By Nin-Hai Tseng, CNN Money, 08/17/2012|
MarketMinder's View: We entirely agree employment figures and their calculation are rather wonky. However, this discusses unemployment as a problem that, if solved, would spur economic recovery in struggling nations—but realistically, lower unemployment is usually a result of recovery, not a cause.
|By David Leonhardt, The New York Times, 08/17/2012|
MarketMinder's View: Fact is, demographic changes take place over long, long time horizons—meaning their abilities to negatively impact economies is lessened because markets have plenty of time to adjust in advance. Thanks to cheaper and advancing technology, it’s far more probable the US economy evolves and finds new comparative advantages than experiences much of a hang up.
|By Tennille Tracy, The Wall Street Journal, 08/17/2012|
MarketMinder's View: Fears surrounding oil prices likely never end. But the reality is prices aren’t ever really an emergency—they’re a means of sending signals to the marketplace. For more, see our 02/27/2012 cover story, “As Oil Prices Rise, So Do Theories.”
|By Mark J. Perry, Carpe Diem, 08/17/2012|
MarketMinder's View: We completely agree: “‘Ultimately people [will] follow their wallets’ on global warming.” Without government intervention, market forces and cheap technology have arguably reduced carbon emissions more effectively than their subsidized renewable energy counterparts.
|By Jack Gerard, The Wall Street Journal, 08/17/2012|
MarketMinder's View: We’re all for transparency and its benefits to businesses and shareholders. But not its implementation at the expense of American businesses’ competitiveness, as aspects of Dodd-Frank threaten. This sums it up well: “Hamstringing the energy sector with costly and intrusive new disclosure rules will reduce jobs and investment.”
|By Staff, EUbusiness, 08/17/2012|
MarketMinder's View: Another step toward more free trade—something we like to see!
|By Michelle Jamrisko and Alex Kowalski, Bloomberg, 08/17/2012|
MarketMinder's View: More signs of a strong (and still strengthening) US economy, including rising retail sales, a healthier housing market and increased payrolls.
|By Stefan Kaiser, Der Spiegel, 08/16/2012|
MarketMinder's View: Let’s be clear: For all intents and purposes, Greece has already “gone broke.” But that has yet to prevent its European partners from extending it further aid as necessary. This time doesn’t seem likely to prove much different, and we’re curious what proof the author has “Greece’s eurozone partners are unwilling to provide any more help.”
|By Mike Moffatt, The Globe and Mail, 08/16/2012|
MarketMinder's View: Sure, increases in food prices might ding consumers a touch. But the likelihood the impact is outsized seems fairly small—particularly given consumers’ ability to substitute goods. What’s most confusing, though, is the assessment of US Fed monetary policy, which is deemed “excessively tight.” Forgive us, but since when are near-zero interest rates considered “tight?” On the contrary—if the Fed sees inflation increasing faster than it would like, it undoubtedly has policy tools at its disposal to address it. Like, say, raising interest rates. For more, see our 07/20/2012 cover story, “Gotta Have My Pops!”
|By Philip Aldrick and Rosa Prince, The Telegraph, 08/16/2012|
MarketMinder's View: So, they’re actually urging Osborne to … start austerity, right? Because the truth is the UK has yet to really implement austerity to speak of—in fact, government spending has continued increasing since the UK economy began slowing. For more, see our 07/26/2012 cover story, “Dousing the Flame?”
|By Tom Orlik, The Wall Street Journal, 08/16/2012|
MarketMinder's View: This is a rather dramatic depiction of what’s actually an entirely normal economic phenomenon: When production prices rise in one country, that means they’re relatively cheaper in another. Which ultimately leads economies to shift accordingly and produce according to their comparative advantages. Not to mention an appreciating yuan, while it might make it more challenging for Chinese exports to compete globally, makes Chinese domestic consumers relatively better off. The moral of the story: There are always two sides to economic stories like this, so beware melodramatic storylines that pontificate otherwise.
|By Abigail Moses and Maria Tadeo, Bloomberg, 08/16/2012|
MarketMinder's View: That investors are decreasingly betting on a Portugal default is a positive sign that speaks volumes about the progress the country’s made since its debt yields reached a euro-era high of 18.29% at just the beginning of the year.
|By Staff, The Wall Street Journal, 08/16/2012|
MarketMinder's View: “The lesson is that taxes influence behavior, and punitive taxation hurts everyone, not least the punitive nation.” We couldn’t have said it better ourselves.
|By Staff, The Wall Street Journal, 08/16/2012|
MarketMinder's View: Here’s an educating look at why to use extreme caution when reading the results of “studies”—and a perfect illustration of why correlation is not necessarily causation.
|By Staff, The Telegraph, 08/16/2012|
MarketMinder's View: The mood surrounding the UK’s been rather gloomy lately—and relatively understandably. But data continue surprising to the upside—they’re still overall sluggish, but better than expected. Which speaks to a couple points—among them, that sentiment (even analysts’ sentiment) isn’t the most reliable forward-looking indicator.
|By Nouriel Roubini, Project Syndicate, 08/15/2012|
MarketMinder's View: Yes, the eurozone has problems, but we’d argue the notion disintegration is the only possible endgame is misguided. Some peripheral nations, like Ireland and Portugal, are already demonstrating the positive impact economic reforms (so-called austerity) can have—as more nations improve competitiveness and resume growing over time, it seems entirely possible the eurozone can emerge from present troubles. For more, see our 08/07/2012 cover story, “P Is for Politicking, Progress and Portugal.”
|By Editors, Bloomberg, 08/15/2012|
MarketMinder's View: Do they, now? We don’t see much evidence supporting the claim, here or elsewhere. Assuming carbon emissions will have a set climate impact in a century, a new carbon tax will automatically raise tax revenues, or that the US even needs more tax revenue all seem quite a stretch, in our view. There are too many unaccounted for variables to draw any of these conclusions.
|By Stephen Joseph, The Guardian, 08/15/2012|
MarketMinder's View: Higher rail fares aren’t great news—especially for those who depend on the UK’s trains to fill their daily transportation needs. But we rather doubt more public funding is the right prescription for lowering prices. Full privatization, rather than the current public-private partnerships, likely do more to promote healthy price competition over time.
|By Lucia Mutikani, Reuters, 08/15/2012|
MarketMinder's View: We’re rather perplexed by the widespread fixation on the possibility of more quantitative easing—and we remain skeptical over whether more QE is necessary or would have much impact, given much of the funds from the last round are still parked at the Fed as excess reserves. For more, see our recent column on Investor’s Business Daily.
|By Editorial Staff, The Wall Street Journal, 08/15/2012|
MarketMinder's View: Here’s a great rundown of just how much the US’s increasing trade with China benefits all involved. Among the highlights: “Don’t forget all the transportation, retailing marketing and other jobs dependent on those Chinese goods. Roughly 55 cents of every dollar Americans spend on ‘Made in China’ products goes to the Americans who design, ship and market those products.”
|By Andrew Peaple, The Wall Street Journal, 08/15/2012|
MarketMinder's View: The saga surrounding the sham trial of a Russian music group provides a reminder that Russia’s corrupt, authoritarian political system undermines its economy: “The shaky rule of law has been one reason—along with excessive bureaucracy and corruption—why Russia languishes at 120th in the World Bank’s index for ease of doing business.”
|By Brad Plumer, The Washington Post, 08/15/2012|
MarketMinder's View: Technological advances in farming, like those described here, are one big reason the drought shouldn’t bring materially higher food prices over time—that is, provided competition and innovation remain relatively unrestricted. Periods like this show the importance of minimal regulations against genetically modified crops and other developments.
|By Nirmala George, Associated Press, 08/15/2012|
MarketMinder's View: Encouraging words from Prime Minister Manmohan Singh, who pledged to remove India’s many barriers to foreign investment—an important source of capital that, if increased, could vastly improve India’s rickety transportation infrastructure and power grid. However, given many reform efforts have stalled due to political opposition, only time will tell whether material changes take hold.
|By Joe Leahy, Financial Times, 08/15/2012|
MarketMinder's View: The measures include raising retirement ages, which could help reduce labor costs, and partial privatizations of road and rail operations, which could help improve Brazil’s increasingly outdated infrastructure over time. That Brazil’s ruling party—which has historically opposed privatization—is embracing these changes is a noteworthy development.
|By Naj Srinivas, Investor’s Business Daily, 08/15/2012|
MarketMinder's View: The latest from our MarketMinder editorial staff member Naj Srinivas, on how slowish headline GDP growth obscures a strong private sector.
|By Kerin Hope, Financial Times, 08/15/2012|
MarketMinder's View: Greece’s bailout renegotiations are set to launch when Prime Minister Antonis Samaras visits Berlin and Paris next week, and details of the request are emerging. It appears Greece doesn’t plan to request more money—just a longer implementation timetable for budget cuts and a postponement of aid repayments. Germany’s receptiveness will bear watching.
|By Staff, Der Spiegel, 08/14/2012|
MarketMinder's View: Economies almost never move in a straight line, one way or another, and one month’s or quarter’s result has no predictive power over the next period’s. So those taking issue with slipping German growth (and it still is growth) are reading a bit much into backward looking data that, incidentally, have little impact on stocks looking forward.
|By Staff, Xinhua, 08/14/2012|
MarketMinder's View: Power consumption is widely considered one of the more reliable Chinese economic indicators and is closely watched for that reason. But like most indicators, it’s pretty backward looking—as recent stimulus measures flow more to official data, results should likely improve.
|By Nathaniel Popper, The New York Times, 08/14/2012|
MarketMinder's View: We’ve heard these arguments in the past, but most, like this one, fail to provide concrete evidence high frequency or algorithmic trading is the sole cause for market volatility or the ills cited here—while completely discounting its various benefits.
|By Quentin Peel and Jamie Smyth, Financial Times, 08/14/2012|
MarketMinder's View: We acknowledge the outcome of these cases likely adds significant short-term volatility to markets. However, we’ve seen various challenges to eurozone officials’ efforts to backstop the union in the past, and what continues to be true is they will find ways to do what’s necessary to prevent a disorderly breakup.
|By Marcus Walker, The Wall Street Journal, 08/14/2012|
MarketMinder's View: Title aside, this is a largely sensible piece outlining the facts about the European situation right now—including the stronger areas, like Germany, that help offset the weaker periphery. We’d merely add that while the eurozone’s not in great shape, its economic troubles have long been widely discussed, and the region’s Q2 contraction shouldn’t surprise anyone.
|By Don Boudreax, Café Hayek, 08/14/2012|
MarketMinder's View: A real-life lesson in the folly of price controls, 1970s style.
|By Angili Raval, Financial Times, 08/14/2012|
MarketMinder's View: July’s retail sales rebounded strongly from June, demonstrating the considerable monthly volatility in sales data.