Comment, analysis and other offerings from Wednesday’s FT,
Martin Wolf: The world wakes from the wish-dream of decoupling
The US retains the capacity to disrupt the world economy which it has possessed since at least the 1920s. Accordingly, the struggle between the deleveraging of high-income countries and the growth momentum of emerging economies is ending, alas, in a decisive victory for the former.
Editorial Comment: Equality Street
Countries may be equals, but some are more equal than others. An Organisation for Economic Co-operation and Development report has revealed that UK inequality – long among the worst in Europe – fell in the past decade. The UK has a long way to go in its fight against poverty, but it has made progress.
Editorial Comment: Assuring insurers
After banks, will life assurers be the next casualties of the credit crunch? Financial regulators are right to be worried by the effect on insurers’ balance sheets of sharp falls in stock markets, commercial property and corporate bond prices. Many life assurers have sought to spread risk by investing in all three asset classes. They now face the perfect storm. But a forced recapitalisation of the industry would be a mistake. That is not warranted and could even add to uncertainty.
John Kay: Surplus capital is not for wimps after all
Can a bank have too much capital? To the person in the street, the answer is obvious. The function of a bank is to seek out profitable investment and lending opportunities. The more capital it has to hand, the more successful it will be.
Interactive graphics: Ethanol boom and bust
The rise and fall of ethanol subsidies in graphics.
Biofuels: From hope to husk
It was an American dream that has failed to become a reality. For much of the last decade, enthusiasts from President George W. Bush down have touted corn-based ethanol as something approaching a superfuel, a home-grown alternative to foreign oil that would help cut smog and bring hope to struggling farmers.
Starbucks and the rise of the city state
John Gapper’s blog on the link between the number of Starbucks outlets in a country and its risk of being enveloped in a financial crisis. The numbers do not stack up precisely he says but there is something there.
Westminster Blog: Osborne on the Oligarchs
Amid the furore over George Osborne’s meeting with Oleg Deripaska, it is worth highlighting what the shadow chancellor thinks about people who made their money in Russia during the wild 1990s. In a speech to Demos in late August, Mr Osborne said: “In the free-for-all of Russia in the immediate aftermath of the collapse of communism, instead of fair reward for effort we saw the unfair wholesale transfer of state resources to individuals.”
Comment: The Fund faces up to competition
For weeks, the headlines have been dominated by banks faltering and countries propping them up. But we have entered a new phase of this crisis in which countries themselves are starting to struggle. Where these battered countries are first turning for help illustrates that what we are witnessing is different from anything we have seen before. It also lays out a clear challenge for those who are hoping the global financial summit announced over the weekend will produce an effective Bretton Woods II, a new international system reflecting a new financial order writes David Rothkopf, visiting scholar at the Carnegie Endowment for International Peace .
Lex on the Fed’s anti-freeze moves
Did someone order another slug of anti-freeze? The US Federal Reserve, in its fight to defrost short-term debt markets, is spewing forth acronyms and vehicles as freely as the bankers that precipitated this crisis – and establishing itself as the market’s new middleman. On Tuesday, it added a money market investor funding facility (MMIFF) of up to $540bn to its asset-backed commercial paper money market mutual fund liquidity facility (AMLF) and its commercial paper funding facility (CPFF).