TIME finance

Morgan Stanley Paying $275M to Settle SEC Charges

(WASHINGTON) — Morgan Stanley has agreed to pay $275 million to settle U.S. civil charges that it misled investors about risky mortgage bonds it sold ahead of the 2008 financial crisis.

The Securities and Exchange Commission announced the settlement Thursday with the Wall Street bank. The SEC said Morgan Stanley failed to accurately disclose the delinquency status of home mortgages backing two securities deals that it financed and sold in 2007.

New York-based Morgan Stanley neither admitted nor denied the allegations.

The $275 million Morgan Stanley is paying will be returned to investors in the deals who were harmed, the SEC said.

When the housing bubble burst in 2007, millions of home borrowers defaulted on their loans and bundles of mortgages sold by big banks left investors with billions in losses.

MONEY alternative assets

New York Proposes Bitcoin Regulations

Bitcoin (virtual currency) coins
Benoit Tessier—Reuters

New regulations may make Bitcoin safer. But some people think they will also ruin what made virtual currencies attractive.

Bitcoin may have just taken a huge step toward entering the financial mainstream.

On Thursday, Benjamin Lawsky, superintendent for New York’s Department of Financial Services, proposed new rules for virtual currency businesses. The “BitLicense” plan, which if approved would apply to all companies that store, control, buy, sell, transfer, or exchange Bitcoins (or other cryptocurrency), makes New York the first state to attempt virtual currency regulation.

“In developing this regulatory framework, we have sought to strike an appropriate balance that helps protect consumers and root out illegal activity—without stifling beneficial innovation,” wrote Lawsky in a post on Reddit.com’s Bitcoin discussion board, a popular gathering places for the currency’s advocates.

“These regulations include provisions to help safeguard customer assets, protect against cyber hacking, and prevent the abuse of virtual currencies for illegal activity, such as money laundering.”

The proposed rules won’t take effect yet. First is a public comment period of 45 days, starting on July 23rd. After that, the department will revise the proposal and release it for another round of review.

Regulation represents a turning point in Bitcoin’s history. The currency is perhaps best known for not being subject to government oversight and has been championed (and vilified) for its freedom from official scrutiny. Bitcoin transactions are anonymous, providing a new level of privacy to online commerce. Unfortunately, this feature has also proven attractive to criminals. Detractors frequently cite the currency’s widely publicized use as a means to sell drugs, launder money, and allegedly fund murder-for-hire.

The failure of Mt. Gox, one of Bitcoin’s largest exchanges, following the theft of more than $450 million in virtual currency, also drew attention to Bitcoin’s lack of consumer protections. In his Reddit post, Lawsky specifically referenced Mt. Gox as a reason why “setting up common sense rules of the road is vital to the long-term future of the virtual currency industry, as well as the safety and soundness of customer assets.”

New York’s proposed regulations require digital currency companies operating within the state to record the identity of their customers, including their name and physical address. All Bitcoin transactions must be recorded, and companies would be required to inform regulators if they observe any activity involving Bitcoins worth $10,000 or more.

The proposal also places a strong emphasis on protecting legitimate users of virtual currency. New York is seeking to require that Bitcoin businesses explain “all material risks” associated with Bitcoin use to their customers, as well as provide strong cybersecurity to shield their virtual vaults from hackers. In order to ensure companies remain solvent, Bitcoin licensees would have to hold as much Bitcoin as they owe in some combination of virtual currency and actual dollars.

Cameron and Tyler Winklevoss, two of Bitcoin’s largest investors, endorsed the new proposal. “We are pleased that Superintendent Lawsky and the Department of Financial Services have embraced bitcoin and digital assets and created a regulatory framework that protects consumers,” Cameron Winklevoss said in an email to the Wall Street Journal. “We look forward to New York State becoming the hub of this exciting new technology.”

Gil Luria, an analyst at Wedbush Securities, also saw the regulations as beneficial for companies built around virtual currency. “Bitcoin businesses in the U.S. have been looking forward to being regulated,” Luria told the New York Times. “This is a very big important first step, but it’s not the ultimate step.”

However, this excitement was not universally shared by the internet Bitcoin community. Soon after posting a statement on Reddit, Lawsky was inundated with comments calling his proposal everything from misguided to fascist. “These rules and regulations are so totalitarian it’s almost hilarious,” wrote one user. Others suggested New York’s proposal would increase the value of Bitcoins not tied to a known identity or push major Bitcoin operations outside the United States.

One particularly controversial aspect of the law appears to ban the creation of any new cryptocurrency by an unlicensed entity. This would not only put a stop to virtual currency innovation (other Bitcoin-like monies include Litecoin, Peercoin, and the mostly satirical Dogecoin) but could theoretically put Bitcoin’s anonymous creator, known by the name Satoshi Nakamoto, in danger of prosecution if he failed to apply for a BitLicense.

One major issue not yet settled is whether other states, or the federal government, will use this proposal as a model for their own regulations. Until some form of regulation is widely adopted, New York’s effort will have a limited effect on Bitcoin business. “I think ultimately, these rules are going to be good for the industry,” Lawsky told the Times. “The question is if this will spread further.”

TIME India

India’s Modi (Barely) Passes His First Big Test on Economic Reform

Indian PM Modi walks in front of a picture of former Indian PM Vajpayee after a news conference in New Delhi
Indian Prime Minister Narendra Modi walks in front of a picture of former Indian Prime Minister Atal Bihari Vajpayee after a news conference in New Delhi on July 9, 2014. Anindito Mukherjee—Reuters

The new Prime Minister indicated change will come in steps, not all at once

Narendra Modi and his Bharatiya Janata Party (BJP) rode into office in May on a tidal wave of support created by hopes he would revive India’s stumbling economy. India, once one of the world’s best-performing emerging economies, has witnessed growth shrink under 5% — too low to rescue the hundreds of millions of countrymen still trapped in desperate poverty. Business leaders have had high expectations that Modi would push ahead with the long-stalled but painful reforms necessary to restart the country’s economic miracle.

In his first major policy pronouncement, however, Modi indicated change would come — but slowly. On Thursday, Modi’s Finance Minister, Arun Jaitley, presented the new government’s budget in Parliament in New Delhi. Indian budgets are considered a bellwether for the direction of economic policy. What emerged was a very gradualist approach, with some encouraging tidbits, but no signs Modi is in a big rush to remake the Indian economy. In his speech, Jaitley said the budget was “only the beginning of a journey” to bring growth back up to 7% to 8% over the next three to four years. “It would not be wise to expect everything that can be done or must be done to be in the first budget,” he said.

Investors got some items on their wish list. The government pledged to open the defense and insurance industries wider to foreign investors, bring down the budget deficit more rapidly, press ahead with much needed tax reform, improve the country’s inadequate infrastructure and support manufacturing to create more jobs. Jaitley also promised an overhaul of costly food and fuel subsidies, which are a huge burden on the strained budget, to make them “more targeted” on the most needy.

Yet for a government that has pledged to control spending and unleash the country’s growth potential, the budget was still puffed up with plenty of populist pork. The budget reiterated Modi’s campaign pledge to provide toilets for all. Jaitley also decided to maintain the previous administration’s expensive and controversial program to guarantee jobs for rural workers, though he suggested its oversight would be strengthened to ensure funds got utilized more wisely. On other issues, Jaitley seemed to fudge a bit. Widely criticized efforts by the previous government to impose retrospective taxes scared foreign investors, and though Jaitley said the Modi administration would limit any such taxes and “provide a stable and predictable taxation regime that would be investor-friendly,” he didn’t emphatically close the door on them, either.

The most disappointing aspect of the Modi budget is that it was no bold statement that a new era of economic policy was coming. Details on many of Jaitley’s proposals were sparse. For example, he did offer many specifics on such key issues as reducing subsidies. Other important reforms weren’t addressed, such as loosening up the country’s restrictive labor laws, which hurt job creation. “Nothing that was announced today marks this government out as being significantly different from the last,” complained Mark Williams, chief Asia economist at research firm Capital Economics. “If market enthusiasm for Mr. Modi’s government is to be sustained, that will have to change.”

Ultimately, though, Modi’s incremental methods may be simply good politics. Even though Modi scored a landslide victory in the last election, many of the reforms most critical to the economy are certain to face stiff opposition. If he charges ahead too quickly, his entire reform effort could get derailed. Modi has already been forced to reverse course on one of his initial reforms. In late June, Modi partially rolled back a hike in train fares aimed at putting the strapped railway system on a stronger financial footing after protests erupted and the BJP’s political allies objected.

At the same time, Modi has to play a delicate political game. If he moves too slowly on reform, growth won’t improve, and his support could suffer. Fixing India’s economy will take a huge amount of political will. We’re still waiting to see if Modi has it.

TIME Business

5 Hot Jobs That Could Be Right for You Right Now

Some of the hottest jobs in the nation this year aren’t your typical “job of the future.”

This post is in partnership with The Fiscal Times. The article below was originally published on The Fiscal Times.

Sure, there’s a high demand for nurses as baby boomers age and increasingly require medical assistance, as well as for software developers as the tech boom continues.

Related: Jobs Report Confirms Economy Is on the Mend

But in some major local markets, jobs that are in high demand are more surprising, according to a report from ZipRecruiter released Monday. Here are a few:

  • Accountant/Financial Analyst: Although the accounting industry went through a significant round of layoffs after the financial crisis, accounting firms are hiring again. In Chicago and in Dallas, the hottest job for the first part of the year was accountant/financial analyst, a job that has a 2.8 percent projected growth rate in the Windy City and 4.3 percent in Dallas for the next six months. Demand for accountants is also expected to rise in Atlanta (5.2 percent), Baltimore (2.7 percent), St. Louis (2.5 percent), Houston (1.3 percent), Washington, D.C. (0.7 percent) and Philadelphia (0.2 percent).
  • Restaurant Manager: The Department of Labor barely sees growth in this field for the next eight years – but in Miami, at least, restaurant manager is the hottest job so far this year, with a projected growth rate of 7.8 percent for the rest of 2014. Restaurant manager also has high growth potential in New York (5.7 percent), Boston (3.6 percent) and Dallas (3.2 percent).
  • Machinist: Although the importance of manufacturing to the economy is declining in the U.S., machinist is the top job in the Minneapolis market; demand for machinists is projected to grow 3 percent there. Other markets where this demand will supposedly grow include Seattle (6.5 percent) and Tampa (1.5 percent).
  • Customer Service Representative: If you think customer service is now handled by computers or workers in India – think again. While it isn’t yet the top job in any major U.S. market, demand for customer service rep is expected to rise throughout the country: in New York (4.2 percent), Chicago (3.8 percent), Los Angeles (1.9 percent), Houston (1.9 percent), Miami (1.7 percent), Detroit (0.6 percent) and Philadelphia (0.3 percent).
  • Account Executive: This hot job also has growth prospects across the country for the next six months: Chicago (4.2 percent), Baltimore (3.4 percent), Boston (3.2 percent), Miami (2.2 percent), St. Louis (2.2 percent), Houston (0.8 percent) and Philadelphia (0.3 percent).

Related: Jobs Market Reaches Another Meaningless Milestone

ZipRecruiter studied job postings at more than 50 job networks to find the hottest jobs so far this year and their rate of growth for the rest of the year.

Read more from The Fiscal Times:

Top 10 Cities for Singles: Best Rents and Nightlife

Dems Keep Unemployment Insurance in Spotlight

12 Weird Uses for Drones

TIME China

The Legacy of Tiananmen Is Holding Back China’s Economy

A security guard stands next to pictures of China's former President Jiang Zemin and late paramount leader Deng Xiaoping at an exhibition in Beijing
A security guard stands next to the pictures of China's former President Jiang Zemin, right, and late paramount leader Deng Xiaoping at an exhibition to celebrate the 90th anniversary of the founding of the Chinese Communist Party in 2011 Jason Lee—Reuters

To maintain its growth miracle, the Chinese leadership can no longer separate political and economic reform

As tanks rolled through the pro-democracy protesters on Tiananmen Square on June 4, 1989, the message from the Chinese Communist Party couldn’t have been clearer: Beijing would tolerate economic change, but not political change. A decade earlier, paramount leader Deng Xiaoping had embarked on the free-market reform that would spark China’s economic miracle.

But on that fateful June day, when he crushed the Tiananmen movement, Deng also eradicated any hope that political liberalization would accompany the government’s quest for prosperity. In fact, Deng believed political reform would undermine China’s economic progress, and the primary purpose of his shift towards “capitalism with Chinese characteristics” was to strengthen the Communist Party’s grip on power.

Twenty-five years later, the attitude of China’s leadership has remained unchanged. President Xi Jinping has proposed a sweeping slate of economic reforms that would hand more influence to private companies and free up flows of capital. On the political side, however, there are no signs that Xi feels any differently than Deng had in 1989. Xi has (arguably) grasped more power in his hands than any Chinese leader since Deng himself. The government tosses critics in prison, squashes any independent social movement, and has even intensified censorship of the Internet and social media. The Communist Party insists on reigning unchallenged.

Looking solely at China’s economic record, the Communist Party can make the case that capitalist success is not linked to democracy, as many in the West have always believed. Since 1989, China’s authoritarian leaders have engineered one of the greatest economic achievements in history. The economy is 20 times bigger today and now ranks as the world’s second largest. Hundreds of millions have been lifted out of poverty. Chinese companies, from telecom giant Huawei to PC maker Lenovo to e-commerce behemoth Alibaba, have become world-beaters. However, that fundamental question ­— can economic and political reform be separated? —­ has not gone away.

In fact, 25 years after Tiananmen, it is more relevant than ever. After three decades of rapid economic development, the Chinese economy is a vastly different place. Its growth has been based mainly on plentiful labor, low costs, and a (restricted) opening to foreign business. But that model has run out of steam. In fact, the economy is facing its biggest challenges since the start of Deng’s reforms more than three decades ago. Wages have escalated, eating into the competitiveness of China’s export machine. Debt has risen to dangerous levels. A property boom looks about to bust. An uncontrolled shadow banking sector has sparked widespread fears of a financial crisis.

Excess capacity haunts many industries. Private businessmen remain starved of capital and opportunities. Many of these dangers are the result of incomplete market reform. The bureaucrats of China’s “state capitalism” maintain too much control over the activities of banks and companies. They protect uncompetitive state enterprises and politically connected cronies, apply regulations erratically, and influence who gets bank finance and who does not.

To get itself out of this mess, the Communist Party is going to have to do what it doesn’t do so well: let go. Banks must be allowed to allocate money based on financial fundamentals, not political guanxi or bureaucratic fiat. Companies have to become more innovative and creative, which requires greater freedom of information. Protected and subsidized state industries have to be opened to private and foreign competition. Money must be allowed to flow more freely in and out of the country. Rule of law must be ensured to convince businessmen to take risks and invest in new ideas. That demands a more independent judiciary. The Communist Party is aware of the need for further reform.

In an important party plenum in November, Xi and his policy team pledged to loosen up capital markets, reform the financial sector and the courts, and support the private sector. Yet the pace of implementation has been glacial. The party has to make uncomfortable choices between holding fast to the levers of control and fixing a broken economy.

China’s leaders can no longer have it both ways. The banks cannot be expected to both allocate money more productively and still take orders from meddlesome cadres. Entrepreneurs cannot be expected to launch the next Google in an environment where the Internet is controlled, creative thinking is discouraged and the courts can’t protect them.

The verdict of Tiananmen, then, is coming under strain. If China is to lift itself into the ranks of the most advanced economies and rejuvenate its competitiveness, its people require the freedoms Tiananmen’s protesters fought for 25 years ago. The Communist Party has to wake to the fact that Tiananmen’s legacy is holding the nation back.

TIME

80 Years of Federal Revenue in One Chart

What’s the federal government’s largest source of income? Individual American citizens.

Income taxes—including taxes that are automatically withheld from paychecks—accounted for 47 percent of all federal revenue in 2013.

Payroll taxes, which are paid by employees and employers and are earmarked mostly for Social Security and Medicare, accounted for the second largest piece of the pie, at 34 percent. Workers and employers each contribute 6.2 percent of the employee’s wages for Social Security, and 1.45 percent of the wages for Medicare.

Corporate taxes—a 15-35 percent marginal tax rate on a company’s profits—were the third largest source of federal revenue, at about 10 percent.

 

FY2013

According to the graph below, the tax landscape for individuals has stayed relatively steady as a percentage of total federal revenue since 1944, typically sitting in the mid 40’s, and sometimes dipping down into the thirties. Income taxes reached their highest percentage (50 percent) as a piece of the overall pie in 2000 and 2001.

But the tax landscape was a lot different before World War II. In 1934, the earliest year with complete data from the White House Office of Management and Budget, individual income taxes accounted for 14 percent of the tax pie, while payroll taxes accounted for 1 percent, corporate taxes 12 percent, excise taxes 46 percent, and other taxes 27 percent.

FY1934Revenue

Income taxes were a small piece of the pie in 1934, because the tax—enacted into law in 1913 by the 16th amendment—predominantly applied to high income earners, and exemptions were high.

During WWII, exemptions were reduced and tax rates were increased to help fund the war. Coupled with overall increases in income, income taxes as a percentage of government revenue sharply increased.

According to records from the IRS, the biggest increase came in 1943-1944. Personal exemptions decreased from $1,200 to $1,000 for married couples, tax rates for the lowest earning bracket (<$2,000) rose from 19 to 23 percent, and tax rates for the highest earning bracket (>200,000), rose from 88 to 94 percent.

Although U.S. income taxes have increased, they are about average as a percentage of GDP when compared to other OECD countries.

While income taxes rose as a percentage of federal revenue from 1943-1944, corporate income taxes did the opposite, shrinking from 40 percent of the overall pie, down to 34 percent.

Also unlike income taxes, which have stayed relatively steady as a percentage of federal revenue since 1944, corporate taxes have shrunk, reaching their lowest levels as a percentage of the tax pie—6 percent—in 1983.

In comparison to other OECD countries, U.S. corporate taxes as a percent of tax revenue (2.3 percent) fall below average (3 percent).

This article was written for TIME by Kiran Dhillon of FindTheBest.

TIME finance

U.S. Set to Bring Criminal Charges Against Banking Giants

Federal prosecutors are reportedly preparing to file charges against Credit Suisse and BNP Paribas, defying the notion that Wall Street giants are "too big to jail"

Federal prosecutors are reportedly close to bringing criminal charges against two of the world’s biggest biggest banks, Credit Suisse and BNP Paribas, preparing the way for what could be the first guilty plea from a major bank in decades.

The New York Times, citing anonymous sources, reported that prosecutors have outlined plans to charge French bank BNP Paribas for doing business with countries that are on the United States’ sanctions list, such as Sudan. A federal investigation into Credit Suisse for offering tax shelters to Americans could also yield a guilty plea.

The new focus on bringing criminal charges against major banks bucks a regulatory trend in Wall Street, whose largest institutions have been largely immune to criminal prosecutions over wrongdoing for two decades. The planned prosecutions against BNP Paribas and Credit Suisse could help mollify public outrage over banks’ apparent immunity to criminal charges.

BNP Paribas said Wednesday that it may end up paying much more than the $1.1 billion it has set aside for alleged U.S. sanctions violations in the face of planned criminal charges, the Wall Street Journal reported. The French bank, which has a huge investment arm in the United States, allegedly did business with countries including Iran, Sudan and Cuba.

In the past, prosecutors have hesitated to bring criminal charges against major banks for fear of putting them out of business and damaging the economy. But prosecutors have met with regulators to discuss strategies to criminally punish banks like BNP and Credit Suisse and at the same time make sure their charters aren’t revoked.

Past investigations into major Wall Street banks like JPMorgan for its ties with Bernie Madoff’s massive fraud scam, and HSBC, accused of “stunning failures” in preventing money laundering, have yielded multibillion-dollar fines, but no criminal charges.

In a recent speech, however, Preet Bharara, the U.S. Attorney in Manhattan warned of coming criminal prosecutions. “You can expect that before too long a significant financial institution will be charged with a felony or be made to plead guilty to a felony, where the conduct warrants it,” he said.

[NYT]

TIME Economy

Poll: Americans More Optimistic About Jobs

Job Seekers Look For Work At Career Fair In Detroit
A woman seeking employment fills out an application at a job fair at the Matrix Center April 23, 2014 in Detroit, Mich. Joshua Lott—Getty Images

30% say now is a good time to find a job, up from 8% in 2010

More Americans are optimistic about the job market this month than at any time since the 2008 financial crisis, according to a new poll, with 30% saying now is a good time to find a quality job.

That marks a significant improvement from the 8% who said they were optimistic about the job market in 2010, but it’s still a drop from the pre-2008 highs of almost 50%. And even though almost a third of Americans are optimistic, two-thirds still say the job market is lackluster; 66% of Americans say it’s not a good time to hunt for employment.

TIME finance

Bank of America Earnings Hit By Mortgage-Related Legal Fees

Bank of America posted a large loss in the first quarter of 2014 after getting hit with legal costs related to the financial crisis. Without legal expenses, however, the company would have posted earnings of roughly 35 cents per share, beating Wall Street expectations

Bank of America posted large losses in the first quarter of 2014 after doling out $6 billion in legal expenses related to the financial crisis.

The bank said early Wednesday that legal expenses were responsible for its $276 million quarterly loss in the first quarter after settling claims related to its mortgage missteps.

Bank of America paid $6 billion to settle a lawsuit with the Federal Housing Finance Agency, the bank said, a litigation expense that arose from toxic mortgage-backed securities it packaged and sold to Fannie Mae and Freddie Mac before the financial crisis.

“The cost of resolving more of our mortgage issues hurt our earnings this quarter,” said Bank of America CEO Brian Moynihan in a statement.

Without legal expenses, however, the quarterly loss of 5 cents a share would have totaled roughly 35 cents a share, beating Wall Street expectations of adjusted earnings of 27 cents a share, the New York Times reported.

The company’s stock was down 2.8 percent as of 10:00 a.m. ET Wednesday.

TIME Economy

We’re Much Too Obsessed With Central Bankers

Bank Of Japan Governor Haruhiko Kuroda News Conference
This man can't save the economy by himself, and neither can any other central banker. Haruhiko Kuroda, governor of the Bank of Japan, during a news conference in Tokyo on April 8, 2014 Bloomberg—Bloomberg via Getty Images

Japan's struggles make clear that global financial markets are overly focused on what central banks are doing and not enough on what really ails the world economy

Turn on CNBC any given morning and you’ll endure fund-manager after banker after stock-market-analyst attempt to decipher what the U.S. Federal Reserve might or might not do, and when it might or might not do it.

The statements of Fed Chairwoman Janet Yellen are dissected syllable by syllable for clues of direction or intention over and over and over again. Across the Atlantic, Mario Draghi, president of the European Central Bank, garners similar attention. What will — or should — Draghi do to combat the euro zone’s continuing economic woes?

The financial world is obsessed with our central bankers. And though they possess great power over economies and markets — Draghi is credited with almost single handedly quelling the euro-zone debt crisis — the focus on what they say and do has gone too far.

That’s made obvious by the efforts of Haruhiko Kuroda, governor of the Bank of Japan. A year ago, when he first took that lofty post, Kuroda instituted a radical plan to jump-start the perennially sluggish Japanese economy with a massive infusion of cash — like the Fed’s quantitative-easing (QE) programs, but even more aggressive. The plan is part of a great experiment called Abenomics, named after Japanese Prime Minister Shinzo Abe, who inspired it. Abe believes that the central bank’s largesse, combined with government spending and economic reforms, will finally shake Japan out of its two-decade funk.

Yet what Abenomics has become is a study in the limits of central-bank power. A year into Kuroda’s stimulus program, Japan is only marginally better off than it was before. Kuroda has overcome the damaging deflation that plagued the economy, at least for now. But after an initial lift, Abenomics has done little to boost Japan’s growth.

GDP expanded only an annualized 0.7% in the quarter that ended in December. A cheaper yen, engineered downward by Kuroda’s actions, may be helping Japan’s exports a bit, but not enough to close a widening trade deficit. Wages have gone nowhere. Meanwhile, in an attempt to chip away at the government’s giant budget deficit, Abe hiked the consumption tax to 8% this month, which will further drain demand out of an economy that already badly lacks demand.

So inevitably, attention has shifted back to Kuroda. Some economists are expecting the Bank of Japan to step in and increase its stimulus even further to regain momentum. Yet Kuroda can’t fix Japan on his own. The problem is that he’s not getting enough help from Abe and his policy team.

Japan’s economy requires a serious makeover to enhance its ability to grow. Yet the part of Abenomics aimed at major reform, called the third arrow, has progressed much more slowly than Kuroda’s printing presses. Only now is Abe beginning to talk about tackling the economy’s most difficult problems.

In late March, the government began unveiling details of economic zones in which policymakers plan to experiment with looser regulation on labor, health care, foreign investment and other overly controlled sectors — all reforms economists believe are long overdue. But it isn’t clear at this point how far the deregulation will go. Nor is it clear how fiercely Abe is willing to take on those special interests (old-line politicians, civil servants, farmers) that prefer the status quo. Economists believe Japan would see a big boost from joining the Trans-Pacific Partnership, a free-trade agreement orchestrated by the White House, but talks have stalled in part because of Abe’s refusal to open the country’s protected rice industry.

Such reforms would achieve what Kuroda can’t — making Japan Inc. more competitive. In the end, Japan can be saved only by fundamental change to the way the economy works. The same can be said about the rest of the industrialized world. Draghi can help fight deflation or support the banking sector, but he can’t reform the euro zone to produce more growth and better jobs. That’s up to Europe’s political leaders, but their efforts at further integration have slowed. Nor can Yellen improve American infrastructure and education, reform the tax code or take other steps that would aid U.S. competitiveness.

We’ve come to rely so much on our central bankers because politicians and corporate leaders are failing to fix what really is holding us back. Whatever their meeting minutes might tell us, central bankers can never say enough to finally get the global economy on the road to health.

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