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Comment and analysis from Wednesday’s FT

FT Series: The Big Freeze (III): The global economy
Imagine you had fallen asleep a year ago and had just woken up, wanting to reacquaint yourself with the world economy. You would get quite a shock, writes Chris Giles in Part III of the FT’s “Big Freeze” series on the year since the start of the credit crunch. See previous parts here.

Comment: Henry Kaufman: The principles of sound regulation
Before we begin drafting new rules on financial regulation, we need to reconsider fundamental principles, writes Kaufman, president of Henry Kaufman & Co, economic and financial consultants, and author of On Money and Markets: A Wall Street Memoir. He sets out eight precepts of sound financial regulation.

Willem Buiter: Welcome to a world of diminished expectations
From a cyclical perspective, things look bad for Europe, the US and most of the global economy, writes Buiter, professor of European political economy at the London School of Economics. To add to the summer cheer, longer-term local and global economic prospects are likely to be worse than expected. Welcome, then, to boom and bust – and to subdued long-term growth prospects.

The Short View: Falling oil
The slick from the sudden fall in oil prices is spreading, warns John Authers. Cheaper oil is good for the economy but investors face a risk of accidents as traders retreat from the expectation that the oil price would continue rising.

Lex: Japanese banks
Japan, which wrote the book on banking crises in the late 1990s, still has an uncanny knack for bolting global worst practice on to a lacklustre homegrown business model. Mitsubishi UFJ Financial Group, Japan’s biggest bank by assets, is a case in point  – and rounds up a miserable reporting season for the banks.

Northern Rock (I): Lombard: So much for prospects of a rapid turnaround
Back in February, the UK government was worried that the private sector might make a fast buck out of Northern Rock if it sanctioned any of the bids for the stricken mortgage bank that were circling round the City. It need not have been, writes Chris Hughes.

Northern Rock (II): Editoral comment: Reducing the Rock
February 2008 was a bad month to buy a bank, even if the purchase price was zero and you had £27bn of loans to protect . Nevertheless, nationalisation, though far from perfect, was the only sensible option for the Rock, and progress to date bears that out.
Insight: Tony Jackson: A question of balance sheets
Balance sheets, it seems, are the latest thing to worry about, writes Jackson. Forget the banks – non-financial corporates are getting weaker too. While there is doubtless some truth in this, the scale is unclear. But it lends weight to a notion floated by Morgan Stanley that balance sheet strength will be the main determinant of stock market performance at this stage in the cycle.
View from the Top, video: John Griffith-Jones on accounting
The UK chairman of KPMG on fair value accounting, changes to the auditing industry and preparing for a recession

View of the Day: European equities
European equity valuations may have dropped to levels last seen in 1990 but the risk to earnings from the economic downturn is not being fully reflected in some sectors, says Philip Isherwood, head of equity strategy at Dresdner Kleinwort.