WallStreetBlips - Latest Government News Articles

Is the Fed Creating New Bubbles?

Thu, 19 Nov 2009 22:00:00 +0000

Its easy-money policy has Asia worried. But Bernanke says fears of a speculative surge are overblown

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Vital Signs: Plenty of Support for Housing

Thu, 19 Nov 2009 16:50:52 +0000

On deck: existing home sales, GDP, home price indexes, consumer confidence, durable goods orders, personal income, consumer sentiment, new home sales, FOMC Minutes

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The pros and cons of VAT: A last resort

Thu, 19 Nov 2009 10:39:49 +0000

Its advantages are oversold, but it is gaining adherents LIBERALS oppose a value-added tax because it falls more heavily on the poor. Conservatives oppose it because it is a money machine. Larry Summers, Barack Obama’s chief economic adviser, once predicted that America would get a VAT when the two sides reversed positions. That moment may be approaching. Several prominent liberals and a handful of conservatives now see it as the most promising way to raise revenue, reduce the deficit and make the tax system more efficient. VAT is a tax on consumption rather than income. All 30 members of the OECD levy one, save America. Unlike state sales taxes, which are charged only to the final customer, VAT is levied at each stage of production. This boosts compliance because a business, to receive credit for VAT paid on its inputs, must usually collect VAT on what it sells. VAT is usually charged at the same rate on almost everything. It thus distorts economic decisions less than an income tax, which ...

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Politics this week

Thu, 19 Nov 2009 10:39:49 +0000

Barack Obama paid his first visit to China, where he held talks with his counterpart, Hu Jintao, and the prime minister, Wen Jiabao. A “town-hall meeting” in Shanghai was attended by only carefully vetted young people, and no questions were permitted at a joint press conference by Mr Obama and Mr Hu. A long joint statement promised co-operation on trade, climate change and a range of other issues. But there were no breakthroughs. See article Earlier on his tour of Asia, Mr Obama visited Japan. He stressed the importance to both America and Japan of their security alliance and indicated some flexibility in America’s position on a controversy over the relocation of a military base on the southern island of Okinawa. ... >

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Business this week

Thu, 19 Nov 2009 10:39:49 +0000

Ben Bernanke remarked that the Federal Reserve was “closely” watching currency markets, and that the central bank would “help ensure that the dollar is strong”. The weak dollar has caused commodity prices to nudge up, a potential inflationary threat. Any opinion from the chairman of the Fed regarding the value of the greenback is controversial because the Treasury handles exchange-rate policy. Dominique Strauss-Kahn, who heads the IMF, called on China to let the yuan appreciate, “the sooner the better”. China tightly controls its currency by pegging it to the dollar—benefiting domestic exports—and has so far resisted pleas to allow it to rise. See article ... >

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Schumpeter: Remembering Drucker

Thu, 19 Nov 2009 10:39:49 +0000

Four years after his death, Peter Drucker remains the king of the management gurus IN THE normal run of things the management world is divided into dozens of mutually suspicious tribes—theoreticians versus practitioners, publicity-hogging gurus versus retiring academics, supporters of “scientific” management versus advocates of the “humanistic” sort. But this month has seen unusual comity: the leaders of all the management tribes came together to celebrate the centenary of the birth of Peter Drucker, a man who is often described as “the father of modern management” and “the world’s greatest management thinker”. The celebrations took place all around the world, most notably in Vienna, where Drucker was born, in southern California, where he spent his golden years, and in China, where he is exercising growing influence. The speakers were not limited to luminaries of management: they also included Rick Warren, the spiritual guru of the moment ...

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Reforming financial regulation: A one-trick bill

Thu, 19 Nov 2009 10:39:49 +0000

An exercise in bank-bashing which may just please consumers CRACKING down on financial services was always likely to be a highlight of the Queen’s Speech, which sets out the government’s legislative priorities until the general election next year. With the cost of bailing out banks approaching GBP90 billion so far, lending to businesses still anaemic and bonuses once more rising, bank-bashing is now a national pastime. But the proposed new measures say more about the government’s determination to show it has bankers under control than they do about any bold new approach to financial reform. More detail was expected as The Economist went to press. The bill sets out to strengthen regulation, in four main ways. The most eye-catching concerns bankers’ pay. The Financial Services Authority (FSA) is to be allowed to tear up contracts if it thinks a bank’s bonus structure encourages risky behaviour. Its enforcement powers are likely to be strengthened in other respects ...

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Lending to small companies: Now, worry about the upturn

Thu, 19 Nov 2009 10:39:49 +0000

Small firms risk financial starvation just as the economy recovers JUST when you thought an upswing was around the corner it seems that smaller firms have yet to face the worst. Nick Hood, executive chairman of Begbies Global Network, an insolvency firm, predicts an increase in insolvencies in the second quarter of next year and continuing into 2011. Insolvencies, like unemployment, are a lagging economic indicator. Both rose markedly after downturns in 1974, 1980 and 1990. But other factors are exacerbating matters now. One is the lack of competition among lenders. Foreign institutions, which used to account for about 40% of company lending, have mostly gone home; domestic players have merged; and the market is dominated by four big banks. When they do find a willing lender, small firms are paying through the nose. The difference between the average interest rate on their loans and the central bank’s base rate shrank from April to July, but increased again in August to 3.5 percentage points, ...

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America's fiscal deficit: Stemming the tide

Thu, 19 Nov 2009 10:39:49 +0000

Unprecedented levels of government debt may require radical solutions STUDENTS at National Defence University in Washington, DC, were recently given a model of the economy and told to fix the budget. To get the federal debt down, they jacked up taxes and slashed spending. The economy promptly tanked, sending the debt to higher levels than before. The lesson: “You’ll never get re-elected and you may do more harm than good,” concluded Eric Bee, an air-force colonel who took part in the exercise. This is the ugly arithmetic of America’s public finances. Recession and aggressive fiscal stimulus have hugely swollen the federal deficit. Stimulus was essential to cushion a collapse in private demand. In spite of that, the economy has barely emerged from recession and unemployment is still rising, feeding speculation that more stimulus is needed. Yet at the same time voters are growing alarmed at the tide of red ink, and it may be only a matter of time before markets do, too. ... ...

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Iraq and its neighbours: A regional cockpit