Archive for March, 2016

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Fly Title: 

Regulating financial firms

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An American court sides with a big insurer against a powerful new regulator

Location: 

New York

Main image: 

20160402_fnp506.jpg

LIFE-INSURANCE companies usually go to inordinate lengths to demonstrate their dullness. That makes MetLife’s chief executive, Steven Kandarian, extraordinary. He did what the head of no other big American financial firm has dared to: challenge head-on the legitimacy of the business-shaping decisions made with increasing frequency by regulators in the wake of the financial crisis. More remarkable still, he won. On March 30th a federal court ordered the Financial Stability Oversight Council (FSOC), a new regulatory committee, to rescind its designation of MetLife as a “strategically important financial institution”—a label that required it to have a bigger, and thus more expensive, cushion of capital.
MetLife is one of only four non-banks to have been declared a SIFI. Prudential Insurance, …

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A hollow superpower

Fly Title: 

Buttonwood

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Investors may expect slower growth, but not a recession

INVESTORS have recovered some of their confidence. In the first six weeks of the year stockmarkets plummeted, but in mid-February the S&P 500 index began a rally which has regained most of the lost ground (see chart). Emerging markets are back where they were at the start of the year. Another sign that markets are less fearful is the declining yield on speculative, or junk, bonds, which dropped from 10.2% on average on February 11th to 8.5% a month later.
The two big worries in January and February were that the Chinese economy was slowing fast and that the Federal Reserve might therefore have miscalculated when it pushed up interest rates in December. Perhaps the global economy might be heading back into recession.

Those worries have not completely disappeared: forecasts for economic growth are still being revised down. The OECD, a think-tank, predicts that global growth will be 3% this year, below its previous …

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World GDP

Posted: March 17, 2016 in economy
Tags: , ,

UK Only Article: 
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Issue: 

A hollow superpower

The world economy grew by 2.5% in the last quarter of 2015 compared with a year earlier, according to our estimates. Global GDP growth has declined for five consecutive quarters and is at its lowest since the beginning of 2013. Growth in the BRIC economies (Brazil, Russia, India and China) has slowed, as it has in other emerging markets. Emerging markets’ contribution to growth has fallen from 2.6 percentage points in the third quarter of 2013 to 1.8 points. In the rich world, the annual growth rate in America, Britain and Japan slowed between the third and fourth quarters of 2015. Euro-area growth has been moderate since the recession and economists reckon it will still be subdued this year.

Article body images: 

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Published: 

20160319

Source: 

The Economist Newspaper

Version: 

9

Historic ID: 

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The future of computing

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America’s economy

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Inflation is rising, but households have yet to notice

Location: 

WASHINGTON, DC

IT IS a tough time to be a central banker. On March 8th the IMF called for more stimulus globally to see off a lack of demand in the world economy. On the same day economists at the Peterson Institute, a think-tank, issued a report that was labelled a “reality check”, arguing that fears for the world economy were overblown. (One of the report’s authors, Olivier Blanchard, was until last year the IMF’s chief economist.) The disagreement reflects conflicting signals that the Federal Reserve must untangle at its next meeting, which begins on March 15th.
When the Fed raised interest rates by a quarter-point in December, after seven years without a change, inflation was still in the doldrums. According to the central bank’s preferred measure, prices were rising by just 0.5% a year. The Fed raised rates anyway: Janet …

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The future of computing

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Greek banks

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Greece’s biggest banks may appear to be out of danger, but they are not

Location: 

ATHENS

ON THE face of things, Greece’s four big banks are in their best shape in years. In November they received their third bail-out in as many years. The extra €14.4 billion ($15.9 billion) they got then (some of it from private investors) raised their capital ratios to 18%, well above the European average of 13%. Recent legal changes make it easier for them to repossess collateral and to sell loans to third parties. Better yet, recent data suggest the economy shrank by only 0.2% last year, much less than initially feared. The Bank of Greece predicts that growth could return as early as this summer. After eight years of crisis and recession, normality at last seems within reach.
But beneath the cushion of fresh capital, cracks remain. Greek banks are still losing money. Piraeus Bank, the country’s second-largest …

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Battle lines

Fly Title: 

Free exchange

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China cannot escape the economic reckoning that a debt binge brings

HOW worrying are China’s debts? They are certainly enormous. At the end of 2015 the country’s total debt reached about 240% of GDP. Private debt, at 200% of GDP, is only slightly lower than it was in Japan at the onset of its lost decades, in 1991, and well above the level in America on the eve of the financial crisis of 2007-08 (see chart). Sooner or later China will have to reduce this pile of debt. History suggests that the process of deleveraging will be painful, and not just for the Chinese.
Explosive growth in Chinese debt is a relatively recent phenomenon. Most of it has accumulated since 2008, when the government began pumping credit through the economy to keep it growing as the rest of the world slumped. Chinese companies are responsible for most of the borrowing. The biggest debtors are large state-owned enterprises (SOEs), which responded eagerly to the government’s nudge to spend.

State sponsors …

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ARGENTINA'S debt crisis seems finally to be coming to an end. Will its deal with creditors enable it to borrow abroad again at last? Should lenders to Venezuela, on the brink of its own default, applaud or shudder?

20160301 18:27:35

Comment Expiry Date: 

Wed, 2016-03-16

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