Comment, analysis and other offerings from this morning’s FT,
Editorial Comment: Investors should block HBOS deal
Conceived in the crucible of the financial crisis eight weeks ago, the proposed takeover of Halifax Bank of Scotland by Lloyds TSBnow looks hasty, maybe even ill-judged. On competition grounds alone, there was a strong case to block a merger that would restrict choice for UK savers and borrowers. That was before the government, with its £400 bn taxpayer-funded rescue of the banking industry, undermined the logic of a private sector deal that was supposed to avoid another nationalisation. In these changed circumstances, investors are right to ask whether HBOS would be better off if it remained independent.
Editorial Comment: China needs a true change of course
After the co-ordinated rate cut in October, the Chinese cut interest rates in a show of solidarity. Now the rest of the world is talking about fiscal stimulus, and China is charging ahead. The State Council has announced a vast fiscal stimulus programme to pull China through the coming grim years. The stimulus, however, is taking the wrong form. Rather than trying to prop up the Chinese economy as it was, this is an opportunity to turn it into the economy China wants — one where consumption at home has more than a cameo role. The government must seize it
Gideon Rachman: The Bretton Woods sequel will flop
I blame it all on Dean Acheson. The long-dead American statesman was a big figure at the original Bretton Woods conference in 1944 and later helped invent Nato. Acheson gave his memoirs the modest title Present at the Creation and, in so doing, he inadvertently fed the grandiose fantasies of the leaders of the Group of 20 leading economies who will assemble in Washington next weekend. Perhaps they too can achieve near God-like status by reordering the institutions of the world?
Comment: What lower oil prices mean for the world
Daniel Yergin, chairman of Cambridge Energy Research Associates, writes: Oil prices are a barometer of the world economy. Rising prices between 2003 and 2007 reflected the best global economic growth in a generation. This high economic growth was brought to an end not only by underpricing of risk, excess liquidity and over-confidence but also by an increasingly unsustainable commodity boom — of which oil was a crucial part. Now, as the world has dropped into recession, oil prices have fallen by more than half.
In depth: Oligarchs’ practices raise investor concerns
When a Siberian court issued an injunction at the end of last month to freeze Mikhail Fridman’s 44 per cent stake in Vimpelcom, the Russian mobile phone operator, just as western creditors were moving in, some investors feared it could be a repeat of practices honed in the August 1998 financial crash.
Analysis: No more easy money
Late on Monday October 13, Canary Wharf played host to one of the most unusual parties London’s financial district has ever witnessed. There was no champagne. The UK’s financial sector had been humiliated that same morning, as the government committed itself to a £37bn ($58bn, €45bn) part-nationalisation of several leading banks, and the mood was subdued. The entertainment consisted of a Japanese drum dance designed to ward off evil spirits.
Lex on US defence spending
Picking out examples of wasteful military spending is too easy, like telling someone who lives in a rubbish dump that his home needs a tidy. Trying to cut the defence budget, however, tends to be as fruitful as handing that same man a broom. The effect of government money flowing through towns and industries across the US has created a political inertia that is hard to challenge. Aside from a short period after the Soviet Union dissolved, absolute levels of defence spending have trended persistently upwards
View from the top
John Authers interviews the chairman of the Korean financial services commission asking why KDB halted its bid for Lehman