Local governments have over-borrowed and are having cash flow problems. Beijing has allowed them to raise new money, via bonds (which previously were banned). This will help with short term cash flow issues, and buy time to get their borrowing in order. But the trend is that the situation is worsening. Much of the local …
Category archives: Political/Economic
Penalties for future bank bailouts
Distressed banks that needed aid from European governments or the region’s rescue fund would be subject to restructuring or wind-down. Those, at least, are the draft guidelines being discussed this weekend. http://www.ft.com/cms/s/0/b013215e-fb02-11e0-bebe-00144feab49a.html
New rules for ratings agencies?
European regulators are seeking to introduce new rules for ratings agencies. Ratings would be suspended for countries undergoing bailouts. (But what counts as a ‘bailout’, and how would the EU prevents ratings being applied by entities outside the EU?) The issuers of financial products would be forced to change the ratings agency they use, possibly …
China’s economic growth slows
China’s economy grew by 9.1% in the year to 30 September, down from 9.5% in the year to 31 July. Inflation is just over 6% and the slowdown in growth is seen as beneficial in helping to slow this inflation and achieve a ‘soft landing’ for the economy. China is a strong focus for global …
China’s economy set to pass US by end of decade
America’s political power and influence will likely decline in parallel, although more slowly. This article argues that it is better to embrace this as a reality, rather than to seek ways to reestablish America’s dominance. http://www.ft.com/cms/s/0/0c73f10e-f8aa-11e0-ad8f-00144feab49a.html
US debate on rich/poor divide continues
Temporary measures to raise States’ top levels of income tax, introduced in response to the recession, are expiring. But support for extending them is widespread, even among some high earners. http://www.ft.com/cms/s/0/e80d6b60-f6a1-11e0-9381-00144feab49a.html
US mortgage delinquencies increase
Banks’ third quarter results were hit by expected declines in investment banking, reflecting turbulence in global markets, and also by increasing failures to meet repayments of consumer debt, including mortgages and credit cards. http://www.ft.com/cms/s/0/c1865438-f8d2-11e0-a5f7-00144feab49a.html
Dividends of FTSE 100 rise dramatically
How can it be that, at a time when the economy is struggling, economic forecasts are gloomy, the government is cutting back its spending significantly, “shareholders in UK companies enjoyed strong growth in dividends”? Growth in commodity prices helped mining companies in particular. Vodafone, in a sector reported to be “struggling”, posted the largest total …
“Ever closer union”
Support is growing in Germany for greater fiscal (and hence political) union amongst the euro countries, as the way to solve the euro zone crisis. Germany is the largest net contributor to the EU budget. Other countries are currently less keen. http://www.ft.com/cms/s/0/873e4b14-f7f1-11e0-a419-00144feab49a.html
European recession “likely” or “already here”
Several major European car manufacturers have scheduled days with zero production, on the expectation that the market will shrink again in 2012, “a further indication that the debt crisis is beginning to hit the real economy.” And in this article the head of one of the US’s biggest manufacturers warns that the US and …
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