Comment, analysis and other offerings from Thursday’s FT:
The Short View: Markets got what they wanted
Markets got what they wanted. But it did not seem to help. The Federal Reserve did what was expected yesterday and cut the target Fed Funds rate from 1.5 to 1 per cent. The decision was almost pre-ordained: sentiment so fragile, that the markets gave the Fed no choice. More surprising was the statement, which amounted to a white flag on fighting inflation.
Editorial Comment: Fed cuts rates to historic lows
For the second time in the space of three weeks, the US Federal Reserve has cut its benchmark interest rate by half a percentage point. The Fed’s target rate is now back at 1 per cent, where it hit bottom in 2003. As stress in the real economy intensifies, the Fed was right to use much of its remaining firepower.
John Gapper: Shock: Drudge loses his grip on US media!
Last Thursday afternoon, Matt Drudge broke out the red capital letters for the lead headline on his site, the Drudge Report. “SHOCK: MCCAIN VOLUNTEER ATTACKED AND MUTILATED IN PITTSBURGH,” the headline read. It was a shocker in the tradition of Drudge’s scare stories and hyped-up trivia about Democratic candidates in US presidential campaigns, to go with past items about John Edwards’ $400 haircut and John Kerry’s windsurfing. This time, however, it was not merely tendentious but false.
The UK needs fast trains not a third Heathrow runway
Theresa Villiers, the shadow transport secretary, writes: The Conservative party’s decision to come out against a third runway at Heathrow was always going to be controversial. For David Cameron to be the man to put the brakes on Heathrow’s relentless expansion marks a remarkable change, both in the political climate and in the Conservative party.
Is it really fair to cast CDS sector as the central villain?
Robert Pickel, the CEO of the International Swaps and Derivatives Association writes: Last week saw an important milestone in the credit default swaps sector, when counterparties to CDS trades on Lehman Brothers cash-settled their transactions. Over the past 25 years, the privately negotiated derivatives industry has developed a robust framework – one that governs and guides participants through such an event, and which includes procedures and processes for valuing and unwinding trades. Recent defaults show the value of these efforts – the industry’s infrastructure clearly works.
Lex on the UK economy
The speed with which the UK chancellor is moving suggests there is little time for debate about the government’s response to the financial crisis. The British model of banking bail-outs has already been copied by others. Now Alistair Darling is lecturing other countries to increase spending as his own government shows “determination to support the wider economy”.
Lex on Chinese oil majors
Why buy a barrel of oil in the market at 60-odd dollars when you can buy it, embedded in a public company’s balance sheet, for about $15? The maths has not escaped PetroChina’s chairman, Jiang Jiemin, who mused this month that he would start buying proven reserves cheapened by the great de-leveraging