Bloomberg Businessweek – Japan Election Landslide Puts LDP Back in Power Following the landslide victory of Shinzo Abe’s Liberal Democratic Party on Dec. 16, is it possible that Japan’s long national nightmare is finally ending? With the LDP and a coalition partner commanding a two-thirds majority in the lower house of the Diet, Abe has… Continue reading Japan To Stimulate … Again
The Wall Street Journal – GOP Poses Millionaire Tax-Rate Increase A fresh proposal from House Speaker John Boehner to raise tax rates on millionaires marked a breakthrough in stalled budget negotiations with President Barack Obama, suggesting a potential framework for avoiding year-end spending cuts and tax increases known as the fiscal cliff. The proposal, which… Continue reading Fiscal Cliff Negotiations
The Financial Times – Major change in Bernanke’s policy reaction function In the US, there has been a clear shift in the Fed’s policy reaction function, or “Taylor Rule”, increasing the weight placed on unemployment and reducing the weight on inflation. The nature and importance of the Fed’s policy shift has not yet been fully… Continue reading The FOMC’s Economic Targets
<Click on chart for larger image> The Wall Street Journal – China’s Share of Treasurys Quietly Falls “Hu’s your daddy.” We have Republican Rep. Michele Bachmann of Minnesota to thank for that bon mot—a play on the name of outgoing Chinese President Hu Jintao—about the country’s massive holdings of U.S. Treasury debt. But, while America’s… Continue reading Chinese Holdings Of U.S. Treasuries
The New York Times – The Economy and Stocks: A Big Disconnect When you buy stocks, you are ultimately buying a share in corporate profits, which are influenced by the overall economy. Nonetheless, the amount of growth in a country’s gross domestic product shouldn’t be confused with the prospects for its stock market, says Simon… Continue reading The Disconnect Between Stocks & The Economy
The Wall Street Journal – Economy Poised to Nudge Ahead in 2013 As 2012 comes to a close, the U.S. economy is also turning a page: The recovery is over. It looks like 2013 will be the start of a more normal, though hardly robust, period of growth. For Americans struggling in the still-slow economy,… Continue reading The Economy In 2013
The Financial Times – Politics undermines hope of banking union The headlines on Thursday were that the EU had agreed a banking union; by Friday the news was the fiscal union will be postponed, indefinitely. A case of good news, followed by bad news? Absolutely not. The main economic purpose of a banking union is… Continue reading European Banking Union
CNBC – Investors Fret US Losing Investment Cachet Imagine a world where the U.S. has lost its mantle as the chief draw for global capital. It’s easy if you try…Years of loose monetary policy – reinforced this week by the Federal Reserve’s decision to expand its easing program – have sent stocks surging and created… Continue reading Investing In The U.S.
The New York Times – Risk Creeps Up in Long-Term Bonds The prolonged low level of interest rates — both short-term rates that are administered by the Fed and longer-term rates that are more subject to market forces — has caused many investors to search for yield by purchasing longer-term bonds. That has provided a… Continue reading Rising Risks In The Bond Market
Bloomberg.com – Moody’s Gets No Respect as Bonds Shun 56% of Country Ratings The global bond market disagreed with Moody’s Investors Service and Standard & Poor’s more often than not this year when the companies told investors that governments were becoming safer or more risky. Yields on sovereign securities moved in the opposite direction from… Continue reading The Markets Ignore The Ratings Agencies
The Financial Times – How to fix costly and unjust US tax system Sooner or later the American tax code will be reformed. Probably sooner. Raising revenue will be the main motivation, but at a time of sharply increasing economic polarisation issues of fairness will be prominent too. There are also legitimate concerns about the… Continue reading Lawrence Summers Makes His Case For “Fairness” In US Tax Code