John Mauldin’s blog "Thoughts from the Frontline" is one of the best financial and economic commentaries around, not least because Mauldin is an avid and skilled collector and presenter of good analysis culled from wherever he can find it, with credit always duly bestowed. His latest book Endgame: The End of the Debt SuperCycle and How It Changes Everything, written with Jonathan Tepper, is an absolute must read.
Can investors be relied upon to police corporate behavior (governance) and guide the companies in which they invest to take decisions likely to create enduring value, and bring wider benefits over and above short-term profitability gains?
The latest Chinese five-year plan recognises that the way the Chinese economy has developed so far, with a massive emphasis on exports, is unsustainable and that things need to change. In a report on China just before the new plan was revealed in mid-March, Deutsche Bank Research restated the point that many western economists have been making, namely that revaluation of the yuan, higher minimum wages and state investment in the healthcare system would be very beneficial in reshaping the Chinese economy.
At a recent speech to delegates at a conference on Risk and Return in South Africa, José Manuel González-Páramo, Member of the Executive Board of the ECB, talked about the lessons learned from the crisis as far as risk management is concerned, and about the way thinking about risk management has changed. The ECB, he told his audience, has always placed a great importance on the design, development and implementation of sound risk management policies.
US President Barak Obama’s most ambitious legislative venture, the reform of the US healthcare system, is facing legal action from 22 states and from several private individuals or organizations. The Healthcare Bill was passed a year ago, as the Affordable Care Act, on March 23 2010. It introduces a nationwide, universal system of health care.
There can be few people who do not grasp that the UK is facing a huge deficit as a result of the stimulus measures undertaken to help the economy recover from the global crash of 2008. Nor is the UK alone. The US, like the UK, is facing the biggest budget deficit in history. And on a like for like scale, so are Ireland and Greece, with Portugal, Spain, Belgium and Italy not far behind.
The extractive industries are one of the biggest sources of foreign direct investment for many emerging economies - often accounting for over half of total government revenues - but frequently the money does not end up in the right hands.
The broad hint given by Jean-Claude Trichet, President of the European Central Bank, during the ECB’s monthly press conference on March 3, that the Bank was actively considering a rate hike in the short term, has prompted astonishment from fund managers and economists. There is no doubt that the ECB’s comments will also be very unhelpful to the Governor of the Bank of England, Mervyn King, who is trying to contain the hawks on the Monetary Policy Committee who are also pushing for a UK rate rise to contain inflation, currently nudging 5%.
With the damage caused by the fifth largest earthquake ever recorded (magnitude 9.0) still being assessed, the expectation is that the impact on Japan’s economy will follow a similar path to that seen after the somewhat smaller (magnitude 7.2), but still devastating Kobe earthquake of 1995. The human loss, however, will be far in excess of that experienced at Kobe. Initial estimates put the likely death toll at in excess of 10,000. It would be surprising, given the scale of the devastation, if that figure is not revised upwards in the days to come.
Bringing to you the top finance and business news stories of the week. This week, oil prices rise sharply due to unrest in Libya, Barclays bonuses are frowned upon, and a devastating earthquake and tsunami in Japan rock the markets.