Comment, analysis and other offerings from Monday’s FT,
US bail-out plan (1) Editorial comment – Backing Paulson’s bail-out
The good news is that, after much brinkmanship, agreement has arrived on the outlines of a bail-out plan for the troubled US financial system. The bad news remains the need for such a rescue. Self-evidently, big lessons have to be learnt from the scale of the calamity.
US bail-out plan (2) Analysis – Washington’s waning way
Alan Beattie argues that massive bail-out schemes poison a free market recipe for the world
View from the Markets, video: Jim Chanos – in defence of short-selling
Jim Chanos, president of hedge fund Kynikos, one of the largest short-sellers, defends short selling and says politicians should have heeded warnings about the viability of key banks; he also queries the $700bn US financial rescue package.
Online Q&A: Mark Mobius
Mark Mobius, executive chairman of Templeton Asset Management, which oversees more than $34bn in emerging market equities, will answers readers’ queries about where – now, and in the near future – the opportunities lie for investment in emerging markets. Click on the link above or send questions to ask@ft.com. Mobius will answer in an online session from London’s mid-afternoon on Monday.
Financial sector jobs (1): Tony Jackson — The crazy scramble
For a lay public baffled by the self-immolation of the Western banking system, perhaps the most bizarre single instance is the scramble to hire employees of Lehman Brothers, says Tony Jackson. Barclays is shelling out $2.5bn in bonuses to Lehmanites in New York, and Nomura up to $1bn in London. Yet those are the same people who drove their former employer into bankruptcy. Surely this is bonkers?
Financial sector jobs (2): Lina Saigol — The flight of the rainmakers
All across Wall Street and the City of London, some of the world’s biggest rainmakers are hatching plans to set up independent boutiques. The reason? They know their new employers at Nomura, Barclays and Bank of America are not going to care if they stick around or not.
Comment: William Cohan – A glimpse of a new-look Wall Street
Wall Street is undergoing its most radical transformation since the passage of the Glass-Steagal Act in 1933 forced banks to choose between investment and commercial banking, says Cohan, author of The Last Tycoons about Lazard Frères. The once-unimaginable changes of the past six months have been gut-wrenching and far-reaching. They are not over yet. But already, the market is reminding us that once there was a simpler, less risky way of doing business. It may be worth taking another look at it today.
Comment: Lawrence Summers – Taxpayers can still benefit from a bail-out
Congressional negotiators have now completed action on a $700bn authorisation for the bail-out of the financial sector, says Summers, Harvard professor and director of DE Shaw & Co. This step was as necessary as the need for it was regrettable. There are crucial tactical issues regarding the deployment of these funds that the authorities must consider in the weeks and months ahead if the chance of containing the damage is to be maximised. In the meantime, it is necessary to consider the impact of the bail-out and the conditions necessitating it on federal budget policy..
Analysis: Unravelling Lehman’s structure
In the two weeks since Lehman Brothers’ dramatic collapse, almost all of its operating businesses have been sold off and thousands of jobs have been saved. To the casual observer, Lehman’s demise no longer looks so catastrophic, write Chris Hughes and Julie Mackintosh. But the rushed sale of Lehman’s US investment banking business and the subsequent sale of most of its European and Asian businesses are a sideshow to the real task of repaying the failed bank’s thousands of creditors by liquidating its highly complex financial assets.
Lex on credit ratings agencies
Remember the credit ratings agencies? Back when the crisis was merely a squeeze, they seemed to be the root of all evil. When complex debt products began to topple, they were cast as despicable peddlers of misinformation, the architects of gigantic fraud, rather than – closer to the truth – publishing houses that got way out of their depth. The European Commission, at least, has still got it in for them with the push by Charlie McCreevy, the internal market commissioner, for tougher regulations. He may be channelling his energies in the wrong direction.