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Germany’s refusal to use fiscal policy, in the form of a big and quick stimulus, to ward off recession is a serious problem for the global economy. This excessive caution is enshrined in a balanced-budget law known as the “debt brake.†Several other countries have been emulating it, or thinking about doing so. They shouldn’t. And Germany should reconsider the ...
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October, 2019
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23 October
Grab what you could in India’s bad-loan melee
Snatch-and-grab is the new hallmark of Indian finance. As a banker friend in Mumbai put it to me only half-jokingly, a unit of “grabbed” cash collateral in hand is worth more than two units of hypothetical receivables. Yet this is no laughing matter. Not only is opportunistic behaviour going to worsen India’s $200 billion-plus bad loan crisis, but now that ...
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23 October
WeWork rescue plan could backfire on SoftBank group
WeWork’s valuation keeps sliding. SoftBank Group Corp., its largest outside investor, is now targeting $8 billion through a rescue package it’s putting together, according to Bloomberg News. But Masayoshi Son ought to be careful. While the deal may set a floor under WeWork, it could also diminish his standing along with SoftBank and its $100 billion Vision Fund. Mere months ...
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23 October
‘Texodus’ bodes badly for Republican Party
“I am a classically trained engineer,” says Rep. Will Hurd, a Texas Republican, “and I firmly believe in regression to the mean.” Applying a concept from statistics to the randomness of today’s politics is problematic. In any case, Hurd, 42, is not waiting for the regression of our politics from the extreme ends of the ideological spectrum to something like ...
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23 October
US equity futures slip after Caterpillar earnings miss
Bloomberg US equity-index futures dipped and European stocks struggled for traction as investors plowed through earnings reports without finding much to justify optimism for global growth. Treasuries and European bonds advanced broadly. S&P 500 and Dow Jones Industrial Average contracts fell after Caterpillar’s results missed analysts’ forecasts, sending the stock tumbling in pre-market trading. Contracts on the Nasdaq also edged ...
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23 October
Emerging-market needs end to trade war, not ‘rate cuts’
Bloomberg Equity investors clamouring for interest-rate cuts in emerging economies are getting a wake-up call: monetary easing is failing to revive growth impaired by the trade war. Any stimulus unlocked by lower interest rates is being outweighed by weaker local currencies because trade tensions between the US and China are boosting the dollar. The underperformance of emerging-market stocks relative to ...
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23 October
UK banks survive scandal with better future ahead
Bloomberg With the costliest UK banking scandal fading into memory, a Brexit deal looking more plausible than it once did and trading likely to surprise on the upside, British lenders are going into earnings season with the wind in their sails for once. That doesn’t mean the numbers won’t have ugly spots. Third-quarter results, which kick off this week, are ...
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23 October
US House passes bill on money-laundering
Bloomberg The US House passed legislation to strengthen anti-money-laundering rules, moving closer to a victory for Wall Street banks. The bill, HR 2513, which passed 249-173, would make it harder to use anonymous shell companies to break the law. A similar bill in the Senate has yet to get a committee hearing, which would be the next step before a ...
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23 October
‘India M&A set to surge as founders face cash crunch’
Bloomberg Deal volumes in India are set to surge as embattled founders sell businesses to tide over a cash squeeze, according to Axis Capital Ltd, the investment banking unit of one of India’s largest private-sector lenders. “As the funding situation erodes, founders are selling businesses to deleverage, or are raising equity to gain an edge over the competitors,†Chirag Negandhi, ...
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23 October
India’s shadow banking crisis is far from over
Bloomberg A health check on India’s shadow banks shows the crisis in the industry is far from over. Indicators from liquidity to share performance show weakness, according to data compiled by Bloomberg as of September 30. In recent weeks, another financier defaulted, it got harder for investors to cut losses in the sector’s debt and a mortgage lender altered financing ...
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