Comment, analysis and other offerings from Tuesday’s FT:
US Daily View, video: Crash averted – for now
The FT’s investment editor John Authers discusses a day of dramatic sell-offs that left the Dow below 10,000 and fuelled speculation about possible emergency interest rate cuts.
Lex on corporate borrowing
Talk about a loaded revolver. For years, the revolving credit facility was the bedrock of the relationship between a company and its lenders. A bank would commit funds on a draw-down basis, to be used only in extremis. The borrower would pay a small fee for the peace of mind. It was all very civilised. Now such facilities are a source of real friction. The irony is that what was a relationship builder in the good times could be a relationship breaker in the bad.
Economists’ Forum: Christopher Carroll, Raguram Rajan
Economists of all stripes remain puzzled about how the Tarp is supposed to fix the American financial system, writes Christopher Carroll, while Raguram Rajan discusses how inter-bank credit markets are freezing up even as central banks signal willingness to lend against all manner of collateral.
Editorial comment – How to save Europe’s banks
The European Commission should now be laying the groundwork for a state role in recapitalisation, which looks ever more likely to be necessary. One obstacle is the stability and growth pact, which forbids excessive deficits. EU rules on state aid form another hurdle. The current exceptional circumstances justify a relaxed approach to both restrictions, but not their indefinite suspension. Clarity is needed.
Analysis: AIG – the house that Hank built
As a company that made pricing risk its speciality, AIG failed spectacularly to see trouble looming in the business it did with Wall Street banks, write Andrea Felsted and Francesco Guerrera
Comment: Thaksin Shinawatra – An Asia bond could save us from the dollar
Asia has an opportunity to save itself, and the world economy, from the crushing excesses of Wall Street, says former Thai PM Thaksin. China and Japan, with other Asian countries holding substantial surplus reserves, should act now to create an Asia bond to contain the fallout from a weak dollar.
Insight: Pinning down shape of new-look financial world
The events of the last few weeks culminating in Monday’s dramatic stock market falls have changed the financial world in a way few would have thought possible, says Michael Gordon, global head of institutional investment at Fidelity International. The extent of the changes ahead cannot be underestimated What was once old may well become new again. Recent events have taught us to expect the unexpected. Here are seven things to look for on the road ahead.
Stefan Stern: On improving the quality of working life
At a time like this it takes a brave soul to argue the case for improving the quality of working life, as opposed to just holding on to as many jobs as you can. But such brave souls do exist.
Maverecon blog: Willem Buiter – put taxpayers before shareholders and creditors
A new UK special resolution regime for banks must put tax payers before shareholders and bank creditors