The International Economy back issues from June 2007:
The Greenspan touch.(OFF THE NEWS)
Jun 22, 2007; ... Even out of office, former Federal Reserve Chairman Alan Greenspan continues to play a serious and impressive role in backroom Washington policy discussions. In his forthcoming book, due out later this year, Greenspan is said to lavishly praise his successor Ben Bemanke as both a scholar ...
Size of the carry trade.(OFF THE NEWS)(Brief article)
Jun 22, 2007 ... Bank of Japan officials admit they are not fully aware of the size of the so-called "carry trade" (global borrowing at Japan's low interest rates) because a lot of the lending deals are struck outside of Japan and thus are hard to track. Officials say they are not exactly sure of the ...
Sarkozy's field trip.(OFF THE NEWS)(Brief article)
Jun 22, 2007; ... Less than two months in office, new French President Nicolas Sarkozy surprised the European financial policy world by inviting himself to the July meeting of Eurozone finance ministers in Brussels. To the shock of many, Sarkozy launched no less than an all-out attack against the ...
Fukui's successor.(OFF THE NEWS)
Jun 22, 2007 ... Senior Bank of Japan watchers say that if Governor Toshihiko Fnkui has his way, the central bank will try to raise short-term interest rates by up to three times before he leaves office next spring. Not surprisingly, interest rate policy lies at the heart of the search for Mr. Fukui's ...
Remembering the crash.(FROM THE FOUNDER)
Jun 22, 2007; ... As the United States approaches the 20th anniversary of the 1987 stock market crash, experts still debate tile factor, or set of factors, that led to this historic event. Perhaps the most conventional theory blames the crash on the role of portfolio insurance in worsening an initial market ...
Landing the reverse Greenspan.(The Monetary Realist)(Alan Greenspan)
Jun 22, 2007; ... Central bankers should be evaluated much like Olympic gymnasts, figure skaters, and platform divers--that is, they should get marks for landing their policy moves properly and for technical proficiency, but also for the degree of difficulty in execution. Unlike the controlled environments ...
Mr. International: Dallas Federal Reserve President Richard Fisher brings a global perspective to central banking.(Interview)
Jun 22, 2007 ... A TIE exclusive interview. TIE: How do you feel about the U.S. economy? Fisher: Of all the rich countries--notice I don't use the term "industrial" anymore because we are "postindustrial"; we're a service-driven, cyber-enhanced economy operating on the nighest rungs ...
Collateralized debt obligations: who's to blame when the market blows up?
Jun 22, 2007; ... Who is to blame? That undoubtedly will be the question we will be asking about the excesses of the current credit cycle. The events of late June show that one of those questions will be why we didn't look more closely at the financial engineering that could take a pile of CCC-grade credits ...
Europe begins to rise early: with the Germans leading the way.
Jun 22, 2007; ... Pessimism about Europe is fashionable among foreign policy circles in the United States. The West as a whole is certain to decline in relative economic strength--and quite likely in relative military power as well--as the twenty-first century wears on. This follows from the vast population ...
Taking the German recovery less seriously: a counterintuitive view.
Jun 22, 2007; ... The good news on the German economy just keeps on coming. GDP growth in 2006 and the first half of 2007 exceeded all forecasters' expectations by far. Unemployment has fallen further and faster than even the heartiest advocates of labor market reform had hoped. Germany's famed six economic ...
The transatlantic divide: how the United States and Europe differ in economic policy.
Jun 22, 2007; ... While globalization is perceived as a challenge both in the United States and in Europe, the policy debate in both regions differs widely with even the position of the fight and left sometimes reversed. Following standard stereotypes, it is clear that Americans are more pro-market than ...
The case for immigration: the secret to economic vibrancy.
Jun 22, 2007; ... There is a contradiction at the heart of our globalizing world: while goods, services, and capital move across borders ever more freely, most people cannot. No government except perhaps North Korea's would dream of banning crossborder trade in goods and services, yet it is seen as ...
Syrian Opportunity? Syria's only hope long-term in avoiding economic crisis is to improve its bilateral relationship with the United States.
Jun 22, 2007; ... The United States has recently begun to re-engage with Syria after a long period of virtually no contact. House Speaker Nancy Pelosi visited President Assad in early April. Secretary of State Condi Rice saw the Syrian foreign minister at a regional conference during May. Both Pelosi and ...
The cognitive domain of War: the role of science in approaching the enemy?
Jun 22, 2007; ... Why do terrorists and insurgents do the things they do? What will they try next? In the bad old days of the Cold War, we could anticipate what our opponents were thinking because we figured out the logic behind their strategy. We assumed the Russians were rational actors and constructed an ...
The Haitian curse: it may be slowly lifting.
Jun 22, 2007; ... The past decade of unrelenting political standoff in the hemisphere's poorest country sparked a crime and murder rampage at home and an exodus of boat people seeking better lives in neighboring islands and the United States. But a May commercial and diplomatic mission to Washington by a ...
Will environmentalism become the new protectionism? Twenty-three experts weigh in.(A SYMPOSIUM OF VIEWS)
Jun 22, 2007 ... In an increasingly globalized world, opponents of free trade--whether seeking to restrict wage erosion and the loss of jobs on behalf of labor or to guard markets from competition of behalf of business--are starting to see environmentalism as a valuable protectionist tooL For example, if ...
On China's stock market.(China)(Brief article)
Jun 22, 2007; ... "According to The Economist's 'Bubble guide,' China's recent share-price boom is still relatively modest compared with the giants of history. The chart plots the performance of Chinese share prices over the past five years against the three great bubbles of the 20th century: Wall Street in ...
On valuations of the yuan.(China)(Brief article)
Jun 22, 2007; ... "On June 13th ... the Treasury decided yet again not to brand China a currency 'manipulator' in its semi-annual report on exchange rates, but confidently declared that the yuan was 'undervalued.' And on June 18th the 1MF also announced a new framework for monitoring countries' ...
Folly of China bashing.(China)
Jun 22, 2007; ... "Suppose that China did capitulate and let the renminbi appreciate briskly. What would that do to America's current account deficit? The answer is: not much. Morris Goldstein, another Peterson Institute hawk on China, acknowledges in a recent working paper that the U.S. economy is running ...
On bank withdrawals by Chinese consumers.(China)(Brief article)
Jun 22, 2007; ... "China's prodigious savers pulled record amounts of money out of bank deposits in May, most of it thought to be flowing into the booming stock market, according to the People's Bank of China. Numbers issued by the bank yesterday showed net household deposits in the Chinese banking system ...
On the Chinese current account surplus.(China)(Brief article)
Jun 22, 2007; ... "China's current account surplus has exploded in recent years from a modest $46 billion in 2003 to $250 billion last year. This puts Japan's $170 billion surplus of 2006 in the shade. China's current account surplus last year was 9.5 percent of gross domestic product, more than double the ...
On U.S.-China relations.(China)(Brief article)
Jun 22, 2007; ... "About 80 percent of [U.S.] imports from China are consumer goods. China now accounts for 80 percent of the U.S. toy market by value, half of the footwear market and nearly half of the television and consumer-electronics market, according to the Business Roundtable, a trade association." ...
On Chinese stock market performance.(China)
Jun 22, 2007; ... "Over the past decade China's p/e ratio has averaged 37, much higher than elsewhere. According to Goldman Sachs, firms listed on the A-share market enjoyed an average 82 percent increase in profits in the year to the first quarter. It is also worth ...
On Chinese overseas listings.(China)(Brief article)
Jun 22, 2007; ... "The number of Chinese companies selling shares in New York and London is set for a big jump this year, in spite of tighter offshore listing regulations introduced by the communist government in Beijing. Eric Landheer, head of Asia-Pacific for ...
On China's trade.(China)(Brief article)
Jun 22, 2007; ... "China has officially displaced the United States as Japan's largest trading partner, figures revealed yesterday. Trade with China soared in the fiscal year ended last month, with Japanese exports growing 21 percent to [yen] 1,300 billion ($95 billion, 70 billion [euro], 48 billion [pounds ...
On foreign investment in Japan.(Japan)(Brief article)
Jun 22, 2007; ... "Overseas investors have raised their share of corporate Japan to a record, potentially intensifying the influence of western-style capitalism in a country still resistant to shareholder activism. International investors increased their ...
On the weak yen-boosting exports.(Japan)(Brief article)
Jun 22, 2007; ... "These days, China has replaced Japan as the world's trade-surplus bogeyman of choice. Yet by some measures, Japan is just as formidable a competitor as it was in the mid-1980s, when massive intervention was considered the only means of stopping the onslaught of Japanese exporters." ...
On Japanese financial markets.(Japan)(Brief article)
Jun 22, 2007; ... "Less than 5 percent of Tokyo's financial-services employees are reckoned to be foreigners. Many of the hedge funds active in Japan's markets are based in Hong ...
On Japanese interest rates.(Japan)(Brief article)
Jun 22, 2007; ... "By most measures monetary policy [in Japan] is still incredibly loose: the rise in short-term rates over the past year has been partly ...
On S&P rating of Japanese debt.(Japan)
Jun 22, 2007; ... "Japan's sovereign debt rating was on Monday raised to AA by Standard & Poor's in the first upgrade since 1975 by the ratings agency, which cited government efforts to cut spending and normalize monetary policy ....
On Japan's use of equity capital.(Japan)(Brief article)
Jun 22, 2007; ... "Japanese companies are increasingly tapping the country's stock market for capital, a development that underscores their confidence in both their business prospects and their share prices .... So many companies sold stock or equity-linked securities in 2006 ...
On buyouts in India.(India)(Brief article)
Jun 22, 2007; ... "So far this year, just 5.1 percent of the $3.49 billion spent by private-equity firms in India has gone to buyouts, according to the Centre for Asia Private Equity Research in Hong Kong. The rest has gone to purchases of stakes in public companies and on seed capital for smaller ...
On growth in the Indian economy.(India)(Brief article)
Jun 22, 2007; ... "In case any potential investor has missed India's run of 8 percent growth and billion-person potential, the consultants at McKinsey have provided a useful jab in the fibs. In a report on India's consumer market published on May 3rd, they have added detail to the probable economic ...
On foreign takeovers by Indian companies.(India)(Brief article)
Jun 22, 2007; ... "So far this year Indian firms have announced 34 foreign takeovers worth more than $10.7 billion in all, according to Dealogic, a market-research outfit. Last year's ...
On the coming credit meltdown.(U.S. Economy)
Jun 22, 2007; ... "In recent months, lower credit bonds--vonventionally defined as BB+ and below--have traded at a smaller risk premium (as compared to U.S. Treasuries) than ever before in history. Over the past 20 years, this margin averaged 5.42 percentage points. Shortly before the Asian crisis in 1998, ...
On financing options for troubled companies.(U.S. Economy)(Brief article)
Jun 22, 2007; ... "In a world awash in investable funds, even many of the most troubled companies are finding lenders willing to offer them big money. This rescue financing, as it's sometimes called, can give companies time to clean up their balance sheets and avoid a trip to bankruptcy court. U.S. filings ...
On foreign capital flows.(U.S. Economy)(Brief article)
Jun 22, 2007; ... "The Commerce Department released statistics last week that indicate foreign capital inflows to acquire or establish a business in the United States ...
On the end of cheap debt.(U.S. Economy)
Jun 22, 2007; ... "Junk-rated corporate loan default rates are at their lowest rate ever--about 12 times less than ...
On profit growth.(U.S. Economy)(Brief article)
Jun 22, 2007; ... "The price-to-earnings multiple on the S&P 500, using the past year's earnings, comes to 17.7. At its peak during the 1990s tech bubble, it was over 30. But the things that are boosting earnings now--overseas strength, dollar weakness, and share buybacks, as well as elevated profit ...
On protectionism.(U.S. Economy)(Brief article)
Jun 22, 2007; ... "According to the Bureau of Economic Analysis, which is part of the Department of Commerce, annual foreign direct investment in the United States peaked in 2000 at $321.3 billion. Representing money that foreign companies invest in U.S. business operations, the number tumbled to $167 ...
On corporate dividend payments.(U.S. Economy)
Jun 22, 2007; ... "Overall, Corporate America remains stingy with dividends. Companies in the Standard & Poor's 500 index are expected to dole out just 30 percent of their earnings in dividends in 2007, a record-low profit payout. The dividend yield on the S&P 500 is only 1.8 percent, while the Dow Jones ...
On private placements vs. IPOs.(U.S. Economy)(initial public offerings)(Brief article)
Jun 22, 2007; ... "Companies in the United States raised more money through deals involving private placements than initial public offerings last year, demonstrating how issuers are increasingly shying away from the scrutiny and expense of the U.S. public market. Straight public equity offerings on the ...
On the global character of S&P 500 companies.(U.S. Economy)(Standard & Poor)(Brief article)
Jun 22, 2007; ... "American companies have been doing business abroad for a long time, but never before has it been so important. This year, for the first time, Standard & ...
On trade and employment.(U.S. Economy)(Brief article)
Jun 22, 2007; ... "To see the irrelevance of trade to total employment, we need only observe that, between 1965 and 2006, the share of imports in the U.S. economy nearly quadrupled, from 4.4 percent of GDP to 16.8 percent. Yet, reflecting growth in the labor force, employment more than doubled ...
On the value of the dollar.(U.S. Economy)(Brief article)
Jun 22, 2007; ... "With the rest of the world growing faster relative to the United States, the rest of the world has become a more attractive place to invest--one reason the dollar is weak. On a trade-weighted ...
On the rise of the Dow.(U.S. Economy)(Brief article)
Jun 22, 2007; ... "It is worth noting that even with the recent rally, stocks remain far cheaper than they were during the technology-fueled boom of the late 1990s. The price-to-earnings ratio, a commonly used measure of how expensive ...
On reduced investment in U.S. markets.(U.S. Economy)(Brief article)
Jun 22, 2007; ... "Investor disenchantment with the United States continues to deepen. Cross-border flows from institutional investors into U.S. equities relative to other assets are almost at their lowest point in more than a decade, according to State Street ....
On Globalization's Gains.(Globalization)(Brief article)
Jun 22, 2007; ... "Between 1984 and 2004, China's income inequality as measured by the Gini index--zero is perfect equality and 100 is perfect inequality-increased to 47 from 29, according to World Bank researchers Martin Ravallion and Shaohua Chen. From 2000 to 2005, per-capita income of the bottom 10 ...
On foreign asset ownership.(Globalization)(Brief article)
Jun 22, 2007; ... "Foreign investors already own significant shares of some asset classes. They have $2,800 billion of direct investment in the United States as well as large holdings of liquid securities. They own 43.9 percent of the Treasury debt market ($2,600 billion), 33.6 percent of the corporate debt ...
On emerging market debt.(Emerging Markets)(Brief article)
Jun 22, 2007; ... "Who says sovereign debt is king? Firms in emerging markets have raised more than twice as much in international markets as have sovereign borrowers this year, a complete turnaround from just five years ago." "With all the liquidity have come laxer lending standards. According ...
On investments in emerging markets.(Emerging Markets)(Brief article)
Jun 22, 2007; ... "Investment flowing into emerging markets touched a fresh high last year, according to a new report from the World Bank, but concerns persist about the stability of banks in certain developing countries. A series of mergers and acquisitions in 2006 helped push foreign direct investment in ...
On emerging-market IPOs.(Emerging Markets)(initial public offerings)(Brief article)
Jun 22, 2007; ... "A dramatic increase in initial public offerings by emerging market companies this year has raised $53.7 billion (27 billion [pounds sterling]) on global markets. The level of funds raised is the highest on record for the first five months of the year, according to Dealogic, and represent ...
On net capital outflow.(Emerging Markets)(Brief article)
Jun 22, 2007; ... "According to estimates by the International Monetary Fund, the developing economies as a group had a current account surplus of $640 billion last year. Because the financial counterpart to this surplus is a deficit on the financial accounts, it represents the net capital outflow to the ...
On capital markets in emerging markets.(Emerging Markets)(Brief article)
Jun 22, 2007; ... "Reasonably well-developed capital markets are now in place in many emerging economies. Indeed, the stock of domestically issued bonds in emerging market countries amounts to about $3.9 trillion, making it an important global asset class. A striking sign of improvement, I think, is that ...
Review of the emerging markets century.(Emerging Markets)(Brief article)
Jun 22, 2007; ... "As late as 1981 ... the value of all shares on emerging-market stock exchanges was a mere $80 billion. Today it is more than $5 ...
Andy Kessler on private equity.(Private Equity)(Brief article)
Jun 22, 2007; ... "Private equity funds raised $221 billion last year, up from $33 billion 10 years ago. There are now over 170 private equity funds with more than $1 billion in assets. The value of deals done last year was $475 billion, up from $37 billion five years ago. Most of it was taking public ...
On leveraged buyouts.(Private Equity)
Jun 22, 2007; ... "Companies that have gone private in buyouts are generating cash that exceeds their debt interest payments by just 1.7 times, versus 2.4 times last year and 3.4 times in 2004, according to Standard & ...
On the growth of private equity.(Private Equity)(Brief article)
Jun 22, 2007; ... "In the past ten years, the proportion of buyouts in the figures for global mergers and acquisitions has grown steadily. In 1997, private equity deals were less than 4 percent of the value of total deals. As recently as 2005, the figure was still little more than 10 percent. But in recent ...
On the Freeing of Global Finance.(Global Market/Economic Trends)
Jun 22, 2007; ... "Much of the institutional scenery of two decades ago--distinct national business elites, stable managerial control over companies and long-term relationships with financial institutions--is disappearing into economic history. We have, instead, the triumph of the global over the local, of ...
On the growth of financial services.(Global Market/Economic Trends)(Brief article)
Jun 22, 2007; ... "In 1960, financial services accounted for about 3.5 percent of U.S. gross domestic product. By 2006, that percentage had more than doubled." "Securitized products are one important area of product and market innovation. Of the $3.6 trillion in net borrowing in U.S. credit markets in 2006, ...
On decline of U.S. IPO listings I.(Global Market/Economic Trends)(initial public offerings)(Brief article)
Jun 22, 2007; ... "The main factor in market selection for global IPOs is the country where the issuer has its headquarters. Of the ten largest global IPOs in 2005, eight were headquartered in China and Europe, so they launched in the Hong Kong and European markets. This preference for nearby markets is ...
On decline of U.S. IPO listings II.(Global Market/Economic Trends)(initial public offerings)(Brief article)
Jun 22, 2007; ... "It is not only the share of U.S. IPOs that has been dropping precipitously, but, particularly in the small cap, emerging growth sector, it is also the absolute number that has fallen off the cliff. Consider the following: Throughout the 1990s (not just during the bubble at the end of the ...
On hope and profit in Africa.(Africa)(Survey)(Brief article)
Jun 22, 2007; ... "Wireless and deregulation have connected Africans as never before. One percent of Africans had phones ten years ago. Now 20 percent, or 140 million people, have cells, and that will more than double to 280 million ...
On African economies.(Africa)(Brief article)
Jun 22, 2007; ... "A decade ago only one sub-Saharan African country had a credit rating; today more than a dozen are rated. Some African governments, including Nigeria, Ghana, and Kenya, are now considering ...