Comment, analysis and other offerings from FT Alphaville on Tuesday,
Short View: This is worse than anything since 1982
How to reconcile the following three statements? First, the US economy is in its worst shape since the recession of the late 1970s. Second, the market is almost certain that Democrats will take control of both Congress and the presidency for the first time since 1994. But, third, the dollar is rising. None of these statements is deniable. Yesterday’s ISM survey of manufacturing purchasing managers dropped far below bearish forecasts to 38.9 from 43.5. Anything below 50 signals a contraction. This is worse than anything since 1982.
Interactive: Sovereign debt hit by default fears
Sovereign credit default swaps are a form of insurance against a government defaulting on its debt. Their prices are usually steady in normal circumstances because the risk of a government’s debt is considered stable. But in recent months sovereign CDS spreads widened sharply, particularly in emerging markets, reflecting growing fears as government rescues of financial institutions became commonplace; several countries sought bail-outs from the International Monetary Fund, and many countries showed signs of economic slowdown.
Interactive graphics: States to watch
US presidential candidates must win at least 270 electoral college votes to be elected. Our map shows the latest poll results, with a close-up look at six key states: Colorado, Florida, North Carolina, Ohio, Pennsylvania and Virginia.
Editorial Comment: Preparing for the first blue president
Gideon Rachman writes: We are on the brink of history. On Tuesday the US could elect its first ever blue president. The fact that Barack Obama would also be the first black president has obscured the significance of his political colouring. If he wins, he will be the first northern, urban liberal to win the presidency since the culture wars broke out in the US in the 1960s.
Editorial Comment: Barclays’ choice
As part of its effort to avoid taking the King’s shilling and being part-nationalised by the UK government, Barclays bank has announced it is raising money by selling stakes in itself to governments and royals from abroad. Not exactly a private solution. Indeed, even if Barclays is not owned in some part by the UK government, it will still be guaranteed by it – and that matters.
Comment: A dose of austerity for a pampered generation
Michael Skapinker writes: A British chief executive told me that she recently watched a client company talking to its staff. The employees, mostly young, listened to the cutbacks that were coming. They were incredulous and petulant. The watching chief executive thought to herself: “You guys don’t know what’s going to hit you.”
Comment: Banks need to think locally to prosper
Wolfgang Gerke, president of the Bavarian Finance Centre in Munich, writes: America’s financial and budgetary policies were the wellspring of the crisis gripping the world’s financial markets. Their failures have caused many of my fellow Germans to cast nostalgic glances at the “glorious era” of state ownership of banks and manufacturers.
Lex on Brazilian Banks
Like feijoada, Brazil’s national dish, a deal simmering in the banking sector could turn cut-price ingredients into mouthwatering fare. A merger between recently battered Banco Itau, the country’s second largest lender, and Unibanco in third place, was warmly received by investors who figured a combined institution would be better able to weather the financial storm that has now reached their shores.