Comment, analysis and other offerings from Thursday’s FT,
Opinion: How Obama can energise the economy
Glenn Hubbard, dean and professor of finance and economics at Columbia Business School and a former chairman of President George W Bush’s Council of Economic Advisers writes: President-elect Barack Obama faces calls for a “stimulus” package to lift the flagging US economy. Recent asset price declines and job losses underscore these calls. Given the ineffective design of the most recent stimulus package, he would be wise to take a deep breath, then focus on several guidelines and four suggestions for action.
Opinion: How Darling can revive ailing businesses
Alistair Darling faces a dilemma as he works on the pre-Budget report due on Monday. Wielding tax and spend like defibrillator pads, his aim will be to reanimate the flatlining economy with a fiscal stimulus package. This must balance the need for boldness against the risk of lumbering the UK with an incapacitating legacy of higher taxes.
Editorial comment: Paulson’s billions
The Troubled Asset Relief Programme is certainly troubled. A plan to buy up $700bn of mortgage-backed securities turned into a scheme primarily aimed at recapitalising banks and supporting commercial paper markets. Now, with more money on hand than expected, every major vested interest in the US is trying to secure Tarp support. It may have been created only last month, but policymakers must remember what it is for.
The Short View: Reading the renminbi
One of the last key variables for world markets that responds to government control is the Chinese exchange rate. Many investors are now trying to read the mind of Chinese officials. For years, China had allowed the renminbi to rise steadily against the dollar. This pleased the US and made Chinese exports less competitive, while removing heat from the Chinese economy. That steady appreciation came to an abrupt halt in early July. Since then, despite all the Titanic forces moving world markets, the renminbi-dollar exchange rate has barely moved.
View of the Day: David Powell, Bank of America
David Powell, currency strategist at Bank of America, believes the dollar has lost several important sources of support. The global shortage of dollar liquidity – one of the primary reasons for the US currency’s strength as the financial crisis escalated in September – has been sharply reduced by the extraordinary measures introduced by central banks to ease money market stress, he says.
John Gapper: The perils of having a passionate helmsman
Switching jobs from Chief Yahoo to Yahoo Chief does not sound like a stretch. It was for Jerry Yang. This week, he signalled an end to his short and rocky tenure as chief executive of the company he founded. When a successor is found, he goes back to being its corporate conscience, board director, 4 per cent shareholder and resident nice guy.
Lombard: The hunt for the rumour-mongers is a thankless task
Have you heard? The government is planning to waive antitrust rules for a merger between two of the country’s biggest retail banks – and take a majority stake in a third to prevent it going to the wall. You might have dismissed that story as malicious gossip as recently as January or February. The fact that it’s come true is just one reason why the efforts of the Financial Services Authority to rein in rumour-mongering are probably futile.
Lex: In peril on the sea
To the usual list of recession beneficiaries – pawnbrokers and priests – add scrap metal merchants. Specifically those specialising in really big-ticket items, such as container ships. According to Ron Widdows, chief executive of Neptune Orient Lines , south-east Asia’s biggest carrier, now is as tough as it has ever been for the industry, thanks to a confluence of vanishing demand, a freeze in trade credit and chronic over-supply of vessels.
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